title-114•Title 114 W. Va. C.S.R.
Insurance Commission Insurance Commission
Series 01 Proxies, Consents And Authorizations Of Domestic Stock Insurers
W. Va. Code R. § 114-1-1 General
1.1. Scope. -- On June 8, 1964, Congress enacted the Securities Acts Amendments of 1964 (Public Law 88-467), which exempted securities issued by insurance companies from the application of the federal requirement of regulation by and periodic filings with the Securities and Exchange Commission provided certain conditions were met by the insurer and its domiciliary state. Section 12 (g), (2), (G), (i) of the Federal Act, as one of such conditions, requires that the company be " . . . subject to regulation by its domiciliary state of proxies, consents or authorizations in respect of securities issued by such company and such regulation conforms to that prescribed by the National Association of Insurance Commissioners (NAIC)." On December 3, 1964, the NAIC prescribed and adopted a "Proposal Regarding Proxies, Consents and Authorizations of Domestic Stock Insurers" and recommended that each state adopt or otherwise implement the proposal. Thereafter, the West Virginia Legislature amended article five of the Code by adding thereto section thirty-one to the Insurance Code authorizing the Insurance Commissioner to promulgate regulations governing the solicitation of proxies, consents and authorizations in respect to any voting security issued by a domestic insurer. Therefore, in compliance with the provisions of section thirty-one, article five, chapter thirty-three of the West Virginia Code of 1931, as amended, this regulation is hereby adopted. This regulation establishes the general procedure for domestic stock insurers in regard to their activities respecting proxies, consents and authorizations.
1.2. Authority. -- W. Va. Code '33-5-31 and '33-2-10.
1.3. Filing Date. -- May 1, 1966.
1.4. Effective Date. -- June 30, 1966.
W. Va. Code R. § 114-1-2 Procedures
2.1. Application of regulation. -- This regulation is applicable to all domestic stock insurers having one hundred (100) or more stockholders: Provided, however, That this regulation shall not apply to any insurer if ninety-five percent (95%) or more of its stock is owned or controlled by a parent or an affiliated insurer and the remaining shares are held by less than five hundred (500) stockholders. A domestic stock insurer which files with the Securities and Exchange Commission forms of proxies, consents and authorizations complying with the requirements of the Securities and Exchange Act of 1934 and the Securities and Exchange Acts Amendments of 1964 and Regulation X-14 of the Securities and Exchange Commission promulgated thereunder shall be exempt from the provisions of this regulation.
2.2. Proxies, consents and authorizations. -- No domestic stock insurer, or any director, officer or employee of such insurer subject to Section 2.1 of these rules hereof, or any other person, shall solicit, or permit the use of his name to solicit, by mail or otherwise, any proxy, consent or authorization in respect of any stock of such insurer in contravention of this regulation.
2.3. Disclosure of equivalent information. -- Unless proxies, consents or authorizations in respect of a stock of a domestic insurer subject to Section 2.1 of these rules hereof, are solicited by or on behalf of the management of such insurer from the holders of record of stock of such insurer in accordance with this regulation prior to any annual or other meeting, such insurer shall, in accordance with this regulation and/or such further regulations as the Commissioner may adopt, file with the Commissioner and transmit to all stockholders of record information substantially equivalent to the information which would be required to be transmitted if a solicitation were made.
2.4. Definitions.
(a) The definitions and instructions set out in Schedule SIS, as promulgated by the National Association of Insurance Commissioners, shall be applicable for purposes of this regulation.
(b) The terms "Solicit" and "Solicitation" for purposes of this regulation shall include:
(1) Any request for a proxy, whether or not accompanied by or included in a form of proxy; or (2) Any request to execute or not to execute, or to revoke, a proxy; or (3) The furnishing of a proxy or other communication to stockholders under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy.
(c) The terms "Solicit" and "Solicitation" shall not include:
(1) Any solicitation by a person in respect of stock of which he is the beneficial owner;
(2) Action by a broker or other person in respect to stock carried in his name or in the name of his nominee in forwarding to the beneficial owner of such stock soliciting material received from the company, or impartially instructing such beneficial owner to forward a proxy to the person, if any, to whom the beneficial owner desires to give a proxy, or impartially requesting instructions from the beneficial owner with respect to the authority to be conferred by the proxy and stating that a proxy will be given if the instructions are received by a certain date;
(3) The furnishing of a form of proxy to a stockholder upon the unsolicited request of such stockholder or the performance by any person of ministerial acts on behalf of a person soliciting a proxy.
2.5. Information to be furnished to stockholders.
(a) No solicitation subject to this regulation shall be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in Section 3 of these rules.
(b) If the solicitation is made on behalf of the management of the insurer and relates to an annual meeting of stockholders at which directors are to be elected, each proxy statement furnished pursuant to Subdivision (c) hereof shall be accompanied or preceded by an annual report (in preliminary or final form) to such stockholders containing such financial statements for the last fiscal year as are referred to in Schedule SIS under the heading "Financial Reporting to Stockholders." Subject to the foregoing requirements with respect to financial statements, the annual report to stockholders may be in any form deemed suitable by the management.
(c) Two (2) copies of each report sent to the stockholders pursuant to Section 2.5 of this part shall be mailed to the Commissioner not later than the date on which such report is first sent or given to stockholders or the date on which preliminary copies of solicitation material are filed with the Commissioner, pursuant to Subdivision (a), of Section 2.7 of this part, whichever date is later.
2.6. Requirements as to proxy.
(a) The form of proxy (i) shall indicate in bold-face type whether or not the proxy is solicited on behalf of the management, (ii) shall provide a specifically designated blank space for dating the proxy and (iii) shall identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the management or stockholders. No reference need be made to proposals as to which discretionary authority is conferred pursuant to Subdivision (c) hereof.
(b) Means shall be provided in the proxy for the person solicited to specify by ballot a choice between approval or disapproval of each matter or group of related matters referred to therein, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not so specified if the form of proxy states in bold-face type how it is intended to vote the shares or authorization represented by the proxy in each such case.
(c) A proxy may confer discretionary authority with respect to other matters which may come before the meeting: Provided, That the persons on whose behalf the solicitation is made are not aware a reasonable time prior to the time the solicitation is made that any other matters are to be presented for action at the meeting: And provided further, That a specific statement to that effect is made in the proxy statement or in the form of proxy.
(d) No proxy shall confer authority (i) to vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement, or (ii) to vote at any annual meeting other than the next annual meeting (or any adjournment thereof) to be held after the date on which the proxy statement and form of proxy are first sent or given to stockholders.
(e) The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the proxy will be voted and that where the person solicited specifies by means of ballot provided pursuant to Subdivision (b) hereof a choice with respect to any matter to be acted upon, the vote will be in accordance with the specifications so made.
(f) The information included in the proxy statement shall be clearly presented and the statements made shall be divided into groups according to subject matter, with appropriate headings. All printed proxy statements shall be clearly and legibly presented.
2.7. Material required to be filed.
(a) Two (2) preliminary copies of the proxy statement and form of proxy and any other soliciting material to be furnished to stockholders concurrently therewith shall be filed with the Commissioner at least ten (10) days prior to the date definitive copies of such material are first sent or given to stockholders or such shorter period prior to that date as the Commissioner may authorize upon a showing of good cause therefor.
(b) Two (2) preliminary copies of any additional soliciting material relating to the same meeting or subject matter to be furnished to stockholders subsequent to the proxy statements shall be filed with the Commissioner at least two (2) days (exclusive of Saturdays, Sundays or holidays) prior to the date copies of this material are first sent or given to stockholders or a shorter period prior to such date as the Commissioner may authorize upon a showing of good cause therefor.
(c) Two (2) definitive copies of the proxy statement, form of proxy and all other soliciting material, in the form in which this material is furnished to stockholders, shall be filed with, or mailed for filing to, the Commissioner not later than the date such material is first sent or given to the stockholders.
(d) Where any proxy statement, form of proxy or other material filed pursuant to these rules is amended or revised, two (2) of the copies shall be marked to clearly show such changes.
(e) Copies of replies to inquiries from stockholders requesting further information and copies of communications which do no more than request that forms of proxy theretofore solicited be signed and returned need not be filed pursuant to this section.
(f) Notwithstanding the provisions of Subdivisions (a) and (b) hereof and of Subdivision (e), of Section 2.10 of these rules, copies of soliciting material in the form of speeches, press releases and radio or television scripts may, but need not, be filed with the Commissioner prior to use or publication. Definitive copies, however, shall be filed with or mailed for filing to the Commissioner as required by Subdivision (c) hereof not later than the date such material is used or published. The provisions of Subdivisions (a) and (b) hereof and Subdivision (e), Section 2.10 of these rules, shall apply, however, to any reprints or reproductions of all or any part of such material.
2.8. False or misleading statements. -- No solicitation subject to this regulation shall be made by means of any proxy statement, form of proxy, notice of meeting, or other communication, written or oral, containing any statement which at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.
2.9. Prohibition of certain solicitations. -- No person making a solicitation which is subject to this regulation shall solicit any undated or postdated proxy or any proxy which provides that it shall be deemed to be dated as of any date subsequent to the date on which it is signed by the stockholder.
2.10. Special provisions applicable to election contests.
(a) Applicability. -- Section 2.10 of these rules shall apply to any solicitation subject to this regulation by any person or group for the purpose of opposing a solicitation subject to this regulation by any other person or group with respect to the election or removal of directors at any annual or special meeting of stockholders.
(b) Participant or participant in a solicitation.
(1) For purposes of Section 2.10 of these rules, the terms "Participant" and "Participant in a Solicitation" include: (i) The insurer; (ii) any director of the insurer and any nominee for whose election as a director proxies are solicited; (iii) any other person, acting alone or with one or more other persons, committees or groups, in organizing, directing or financing the solicitation.
(2) For the purposes of Section 2.10 of these rules, the terms "Participant" and "Participant in a Solicitation" do not include: (i) A bank, broker or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of stock and who is not otherwise a participant; (ii) any person or organization retained or employed by a participant to solicit stockholders or any person who merely transmits proxy soliciting material or performs ministerial or clerical duties; (iii) any person employed in the capacity of attorney, accountant, or advertising, public relations or financial adviser and whose activities are limited to the performance of his duties in the course of such employment; (iv) any person regularly employed as an officer or employee of the insurer or any of its subsidiaries or affiliates who is not otherwise a participant; or (v) any officer or director of, or any person regularly employed by any other participant if such officer, director or employee is not otherwise a participant.
(c) Filing of information required by Section 4 of these rules.
(1) No solicitation subject to Section 2.10 of these rules shall be made by any person other than the management of an insurer unless at least five (5) business days prior thereto, or such shorter period as the Commissioner may authorize upon a showing of good cause therefore, there has been filed, with the Commissioner by or on behalf of each participant in such solicitation, a statement in duplicate containing the information specified by Section 4 of these rules and a copy of any material proposed to be distributed to stockholders in furtherance of such solicitation. Where preliminary copies of any materials are filed, distribution to stockholders should be deferred until the Commissioner's comments have been received and complied with.
(2) Within five (5) business days after a solicitation subject to Section 2.10 of these rules is made by the management of an insurer, or such longer period as the Commissioner may authorize upon a showing of good cause therefor, there shall be filed with the Commissioner by or on behalf of each participant in such solicitation, other than the insurer, and by or on behalf of each management nominee for director, a statement in duplicate containing the information specified by Section 4 of these rules.
(3) If any solicitation on behalf of management or any other person has been made, or if proxy material is ready for distribution, prior to a solicitation subject to Section 2.10 of these rules, in opposition thereto, a statement in duplicate containing the information specified in Section 4 of these rules shall be filed with the Commissioner, by or on behalf of each participant in such prior solicitation, other than the insurer, as soon as reasonably practicable after the commencement of the solicitation in opposition thereto.
(4) If, subsequent to the filing of the statements required by Paragraphs (1), (2) and (3) of this subdivision, additional persons become participants in a solicitation subject to this rule, there shall be filed with the Commissioner, by or on behalf of each such person, a statement in duplicate containing the information specified by Section 4 of these rules, within three (3) business days after such person becomes a participant or such longer period as the Commissioner may authorize upon a showing of good cause therefor.
(5) If any material change occurs in the facts reported in any statement filed by or on behalf of any participant, an appropriate amendment to such statement shall be filed promptly with the Commissioner.
(6) Each statement and amendment thereto filed pursuant to this paragraph shall be part of the public files of the Commissioner.
(d) Solicitations prior to furnishing required proxy statement. Notwithstanding the provisions of Subdivision (a) of Section 2.5 of these rules, a solicitation subject to Section 2.10 of these rules, may be made prior to furnishing stockholders a written proxy statement containing the information specified in Section 3 of these rules with respect to such solicitation: Provided, That (1) The statements required by Subdivision (c) hereof are filed by or on behalf of each participant in such solicitation.
(2) No form of proxy is furnished to stockholders prior to the time the written proxy statement required by Subdivision (a), of Section 2.5 of these rules, is furnished to such persons: Provided, however, That this Paragraph (2) shall not apply where a proxy statement then meeting the requirements of Section 3 of these rules has been furnished to stockholders.
(3) At least the information specified in Paragraphs (2) and (3) of the statements required by Subdivision (c) hereof to be filed by each participant, or an appropriate summary thereof, are included in each communication sent or given to stockholders in connection with the solicitation.
(4) A written proxy statement containing the information specified in Section 3 of these rules, with respect to a solicitation is sent or given to stockholders at the earliest practicable date.
(e) Solicitations prior to furnishing required written proxy statements -filing requirement. -- Two (2) copies of any soliciting material proposed to be sent or given to stockholders prior to the furnishing of the written proxy statement required by Subdivision (a) of 2.5 of these rules, shall be filed with the Commissioner in preliminary form at least five (5) business days prior to the date definitive copies of such material are first sent or given to such persons or such shorter period as the Commissioner may authorize upon a showing of good cause therefor.
(f) Application of this section to report. -- Notwithstanding the provisions of Subdivisions (b) and (c) of 2.5 of these rules, two (2) copies of any portion of the report referred to in Subdivision (b) of Section 2.5 of these rules, which comments upon or refers to any solicitation subject to Section 2.10 of these rules, or to any participant in any such solicitation, other than the solicitation by the management, shall be filed with the Commissioner, as proxy material subject to this regulation. Such portion of the report shall be filed with the Commissioner, in preliminary form, at least five (5) business days prior to the date copies of the report are first sent or given to stockholders.
W. Va. Code R. § 114-1-3 Information Required In Proxy Statement
3.1. Revocability of proxy. -- State whether or not the person giving the proxy has the power to revoke it. If the right of revocation before the proxy is exercised is limited or is subject to compliance with any formal procedure, briefly describe such limitation or procedure.
3.2. Dissenters' rights of appraisal. -- Outline briefly the rights of appraisal or similar rights of dissenting stockholders with respect to any matter to be acted upon and indicate any statutory procedure required to be followed by such stockholders in order to perfect their rights. Where such rights may be exercised only within a limited time after the date of the adoption of a proposal, the filing of a charter amendment or other similar act, state whether the person solicited will be notified of such date.
3.3. Persons making solicitations not subject to Subsection 2.10 of these rules.
(1) If the solicitation is made by the management of the insurer, so state. Give the name of any director of the insurer who has informed the management in writing that he intends to oppose any action intended to be taken by the management and indicate the action which he intends to oppose.
(2) If the solicitation is made otherwise than by the management of the insurer, state the names and addresses of the persons by whom and on whose behalf it is made and the names and addresses of the persons by whom the cost of solicitation has been or will be borne, directly or indirectly.
(3) If the solicitation is to be made by specially engaged employees or paid solicitors, state (i) the material features of any contract or arrangement for such solicitation and identify the parties, and (ii) the cost or anticipated cost thereof.
3.4. Interest of certain persons in matters to be acted upon. -- Describe briefly any substantial interest, direct or indirect, by stockholdings or otherwise, of any director, nominee for election for director, officer and, if the solicitation is made otherwise than on behalf of management, each person on whose behalf the solicitation is made, in any matter to be acted upon other than elections to office.
3.5. Stocks and principal stockholders.
(a) State, as to each class of voting stock of the insurer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled.
(b) Give the date as of which the record list of stockholders entitled to vote at the meeting will be determined. If the right to vote is not limited to stockholders of record on that date, indicate the conditions under which other stockholders may be entitled to vote.
(c) If action is to be taken with respect to the election of directors and if the persons solicited have cumulative voting rights, make a statement that they have such rights and state briefly the conditions precedent to the exercise thereof.
3.6. Nominees and directors. -- If action is to be taken with respect to the election of directors furnish the following information, in tabular form to the extent practicable, with respect to each person nominated for election as a director and each other person whose term of office as a director will continue after the meeting:
(a) Name each such person, state when his term of office or the term of office for which he is a nominee will expire, and all other positions and offices with the insurer presently held by him, and indicate which persons are nominees for election as directors at the meeting.
(b) State his present principal occupation or employment and give the name and principal business of any corporation or other organization in which such employment is carried on. Furnish similar information as to all his principal occupations or employments during the last five (5) years, unless he is now a director and was elected to his present term of office by a vote of stockholders at a meeting for which proxies were solicited under this regulation.
(c) If he is or has previously been a director of the insurer, state the period or periods during which he has served as such.
(d) State, as of the most recent practicable date, the approximate amount of each class of stock of the insurer or any of its parents, subsidiaries or affiliates other than directors' qualifying shares, beneficially owned directly or indirectly by him. If he is not the beneficial owner of any such stocks make a statement to that effect.
3.7. Remuneration and other transactions with management and others. -- Furnish the information reported or required in Item One of Schedule SIS under the heading "Information Regarding Management and Directors" if action is to be taken with respect to (a) the election of directors, (b) any remuneration plan, contract or arrangement in which any director, nominee for election as a director or officer of the insurer will participate, (c) any pension or retirement plan in which any such person will participate, or (d) the granting or extension to any such person of any options, warrants or rights to purchase any stocks, other than warrants or rights issued to stockholders, as such, on a pro rata basis. If the solicitation is made on behalf of persons other than the management, information shall be furnished only as to Item One-A of the aforesaid heading of Schedule SIS.
3.8. Bonus, profit sharing and other remuneration plans. -- If action is to be taken with respect to any bonus, profit sharing or other remuneration plan of the insurer, furnish the following information:
(a) A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each such class, and the basis of such participation.
(b) The amounts which would have been distributable under the plan during the last calendar year to (1) each person named in Section 3.7 of these rules, (2) directors and officers as a group and (3) to all other employees as a group, if the plan had been in effect.
(c) If the plan to be acted upon may be amended (other than by a vote of stockholders) in a manner which would materially increase the cost thereof to the insurer or to materially alter the allocation of the benefits as between the groups specified in paragraph (b) of Section 3.8 of these rules, the nature of such amendments should be specified.
3.9. Pension and retirement plans. -- If action is to be taken with respect to any pension or retirement plan of the insurer, furnish the following information:
(a) A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each such class and the basis of such participation.
(b) State (1) the approximate total amount necessary to fund the plan with respect to past services, the period over which such amount is to be paid, and the estimated annual payments necessary to pay the total amount over such period; (2) the estimated annual payment to be made with respect to current services; and (3) the amount of such annual payments to be made for the benefit of (i) each person named in Section 3.7 of these rules, (ii) directors and officers as a group, and (iii) employees as a group.
(c) If the plan to be acted upon may be amended (other than by a vote of stockholders) in a manner which would materially increase the cost thereof of the insurer or to materially alter the allocation of the benefits as between the groups specified in Subparagraph (b) Subdivision (3) of Section 3.9 of these rules, the nature of such amendments should be specified.
3.10. Options, warrants or rights. -- If action is to be taken with respect to the granting or extension of any options, warrants or rights (all referred to herein as "Warrants") to purchase stock of the insurer or any subsidiary or affiliate, other than warrants issued to all stockholders on a pro rata basis, furnish the following information:
(a) The title and amount of stock called for or to be called for, the prices, expiration dates and other material conditions upon which the warrants may be exercised, the consideration received or to be received by the insurer, subsidiary of affiliate for the granting or extension of the warrants and the market value of the stock called for or to be called for by the warrants, as of the latest practicable date.
(b) If known, state separately the amount of stock called for or to be called for by warrants received or to be received by the following persons, naming each such person: (1) Each person named in 3.7 of this section, and (2) each other person who will be entitled to acquire five percent (5%) or more of the stock called for or to be called for by such warrants.
(c) If known, state also the total amount of stock called for or to be called for by such warrants, received or to be received by all directors and officers of the company as a group and all employees, without naming them.
3.11. Authorization or issuance of stock.
(a) If action is to be taken with respect to the authorization or issuance of any stock of the insurer furnish the title, amount and description of the stock to be authorized or issued.
(b) If the shares of stock are other than additional shares of common stock of a class outstanding, furnish a brief summary of the following, if applicable: Dividend, voting, liquidation, preemptive and conversion rights, redemption and sinking fund provisions, interest rate and date of maturity.
(c) If the shares of stock to be authorized or issued are other than additional shares of common stock of a class outstanding, the Commissioner may require financial statements comparable to those contained in the annual report.
3.12. Mergers, consolidations, acquisitions and similar matters.
(a) If action is to be taken with respect to a merger, consolidation, acquisition or similar matter, furnish in brief outline the following information:
(1) The rights of appraisal or similar rights of dissenters with respect to any matters to be acted upon. Indicate any procedure required to be followed by dissenting stockholders in order to perfect such rights.
(2) The material features of the plan or agreement.
(3) The business done by the company to be acquired or whose assets are being acquired.
(4) If available, the high and low sales prices for each quarterly period within two (2) years.
(5) The percentage of outstanding shares which must approve the transaction before it is consummated.
(b) For each company involved in a merger, consolidation or acquisition, the following financial statements should be furnished:
(1) A comparative balance sheet as of the close of the last two (2) fiscal years.
(2) A comparative statement of operating income and expenses for each of the last two (2) fiscal years and, as a continuation of each statement, a statement of earnings per share after related taxes and cash dividends paid per share.
(3) A pro forma combined balance sheet and income and expenses statement for the last fiscal year giving effect to the necessary adjustments with respect to the resulting company.
3.13. Restatement of accounts. -- If action is to be taken with respect to the restatement of any asset, capital, or surplus of the insurer, furnish the following information:
(a) State the nature of the restatement and the date as of which it is to be effective.
(b) Outline briefly the reasons for the restatement and for the selection of the particular effective date.
(c) State the name and amount of each account affected by the restatement and the effect of the restatement thereon.
3.14. Matters not required to be submitted. -- If action is to be taken with respect to any matter which is not required to be submitted to a vote of stockholders, state the nature of such matter, the reason for submitting it to a vote of stockholders and what action is intended to be taken by the management in the event of a negative vote on the matter by the stockholders.
3.15. Amendment of charter, bylaws or other documents. -- If action is to be taken with respect to any amendment of the insurer's charter, bylaws or other documents as to which information is not required above, state briefly the reasons for and general effect of such amendment and the vote needed for its approval.
W. Va. Code R. § 114-1-4 Information To Be Included In Statements Filed By Or On Behalf Of A Participant (Other Than The Insurer) In A Proxy Solicitation In An Election Contest
4.1. Insurer. -- State the name and address of the insurer.
4.2. Identity and background.
(a) State the following:
(1) Your name and business address.
(2) Your present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is carried on.
(b) State the following:
(1) Your residence address.
(2) Information as to all material occupations, positions, officers or employments during the last ten (10) years, giving starting and ending dates of each and the name, principal business and address of any business corporation or other business organization in which each such occupation, position, office or employment was carried on.
(c) State whether or not you are or have been a participant in any other proxy contest involving this company or other companies within the past ten (10) years. If so, identify the principals, the subject matter and your relationship to the parties and the outcome.
(d) State whether or not, during the past ten (10) years, you have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, give dates, nature of conviction, name and location of court, and penalty imposed or other disposition of the case. A negative answer to this Paragraph (d) need not be included in the proxy statement or other proxy soliciting material.
4.3. Interest in stock of the insurer.
(a) State the amount of each class of stock of the insurer which you own beneficially, directly or indirectly.
(b) State the amount of each class of stock of the insurer which you own of record but not beneficially.
(c) State with respect to the stock specified in Paragraph (a) and (b) of these rules the amounts acquired within the past two (2) years, the dates of acquisition and the amounts acquired on each date.
(d) If any part of the purchase price or market value of any of the stock specified in Paragraph (c) of these rules is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such stock, so state and indicate the amount of the indebtedness as of the latest practicable date. If such funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker or dealer, briefly describe the transaction and state the names of the parties.
(e) State whether or not you are a party to any contracts, arrangements or understandings with any person with respect to any stock of the insurer, including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. If so, name the persons with whom such contracts, arrangements or understandings exist and give the details thereof.
(f) State the amount of stock of the insurer owned beneficially, directly or indirectly, by each of your associates and the name and address of each such associate.
(g) State the amount of each class of stock of any parent, subsidiary or affiliate of the insurer which you own beneficially, directly or indirectly.
4.4. Further matters.
(a) Describe the time and circumstances under which you became a participant in the solicitation and state the nature and extent of your activities or proposed activities as a participant.
(b) Describe briefly and where practicable state the approximate amount of, any material interest, direct or indirect, of yourself and of each of your associates in any material transactions since the beginning of the company's last fiscal year or in any material proposed transactions, to which the company or any of its subsidiaries or affiliates was or is to be a party.
(c) State whether or not you or any of your associates have any arrangement or understanding with any person.
(1) With respect to any future employment by the insurer or its subsidiaries or affiliates; or (2) With respect to any future transactions to which the insurer or any of its subsidiaries or affiliates will or may be a party.
If so, describe such arrangement or understanding and state the names of the parties thereto.
4.5. Signature. -- The statement shall be dated and signed in the following manner:
I certify that the statements made in this statement are true, complete, and correct, to the best of my knowledge and belief. ___________________________ (Date)
Signature of participant or authorized representative)
114CSR1
Series 02 Licensing And Conduct Of Insurance Producers And Agencies
W. Va. Code R. § 114-2-1 General
1.1. Scope. -- This rule establishes the general requirements and practices of producers and brokers.
1.2. Authority. -- W. Va. Code §33-2-10.
1.3. Filing Date. -- April 20, 2012.
1.4. Effective Date. -- April 20, 2012.
W. Va. Code R. § 114-2-2 Requirements for Licensing
2.1. Trustworthiness. -- An insurer making application for an individual insurance producer’s appointment shall make an investigation as to the suitability of the appointee. The appointing company shall, prior to submitting the appointment to this office, satisfy itself that the appointee is a suitable person and is trustworthy and qualified to act as its individual insurance producer. The Insurance Commissioner may, at any time, direct the appointing company to furnish proof that the company has made the investigation required by this subsection and that the investigation was made prior to the execution of the application for appointment.
2.2. Competency. -- The competency of persons applying to the Insurance Commissioner for an individual insurance producer’s license shall be determined by examination, with the exception of those persons qualifying under subsection 2.3 of this section.
2.3. Waiver of examination. -- An examination is not required as proof of competency for those persons applying for a resident individual insurance producer’s license if such person:
2.3.a. With respect to the following lines of authority, holds one or more of the following professional designations or degrees:
2.3.a.1. Life Line of Authority -- Certified Employee Benefits Specialist (CEBS), Chartered Financial Consultant (ChFC), Certified Insurance Counselor (CIC), Certified Financial Planner (CFP), Chartered Life Underwriter (CLU), Fellow Life Management Institute (FLMI), Life Underwriting Training Counsel Fellow (LUTCF);
2.3.a.2. Health Line of Authority -- Registered Health Underwriter (RHU), Certified Employee Benefits Specialist (CEBS), Registered Employee Benefits Consultant (REBC), Health Information Administration (HIA);
2.3.a.3. Property and Casualty Lines of Authority -- Accredited Advisor in Insurance (AAI), Associate in Risk Management (ARM), Certified Insurance Counselor (CIC), Chartered Property Casualty Underwriter (CPCU); or
2.3.a.4. All lines of authority except crop -- College insurance degree.
2.3.b. Is currently licensed as a resident and in good standing in his or her home state and otherwise meets the requirements of W. Va. Code §33-12-14(a).
2.4. Any applicant who previously held a West Virginia insurance license which was terminated as a condition of public employment is exempt from re-examination provided that the public employment was in an insurance-related field and the license application was made within one year of the termination of the employment.
2.5. Limited lines insurance.
2.5.a. An examination is not required as proof of competency for those persons applying for a limited lines insurance license.
2.5.b. Each insurer that sells, solicits or negotiates any form of limited line insurance shall provide to each individual whose duties will include selling, soliciting or negotiating limited line insurance a program of instruction that may be approved by the Insurance Commissioner.
2.5.c. Limited lines insurance includes the following lines of insurance:
2.5.c.1. Car rental -- insurance offered, sold, or solicited in connection with and incidental to the rental of rental cars for a period not to exceed ninety (90) consecutive days, whether at the rental office or by pre-selection of coverage in master, corporate, group or individual agreements, that (i) is non-transferable; (ii) applies only to the rental car that is the subject of the rental agreement; and (iii) is limited to the following kinds of insurance:
2.5.c.1.A. Personal accident insurance for renters and other rental car occupants, for accidental death or dismemberment, and for medical expenses resulting from an accident that occurs with the rental car during the rental period;
2.5.c.1.B. Liability insurance that provides protection to the renters and other authorized drivers of a rental car for liability arising from the operation or use of the rental car during the rental period;
2.5.c.1.C. Personal effects insurance that provides coverage to renters and other vehicle occupants for loss of, or damage to, personal effects in the rental car during the rental period;
2.5.c.1.D. Roadside assistance and emergency sickness protection insurance; or
2.5.c.1.E. Any other coverage designated by the Insurance Commissioner.
2.5.c.2. Credit -- credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance, or any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation and that is designated by the Insurance Commissioner as limited line credit insurance.
2.5.c.3. Crop insurance -- insurance providing protection against damage to crops from unfavorable weather conditions, fire or lightning, flood, hail, insect infestation, disease or other yield-reducing conditions or perils provided by the private insurance market, or that is subsidized by the Federal Crop Insurance Corporation, including Multi-Peril Crop Insurance.
2.5.c.4. Surety -- insurance or bond that covers obligations to pay the debts of, or answer for the default of another, including faithlessness in a position of public or private trust. For purpose of limited line licensing, “Surety” does not include Surety Bail Bonds.
2.5.c.5. Travel -- insurance coverage for trip cancellation, trip interruption, baggage, life, sickness and accident, disability, and personal effects when limited to a specific trip and sold in connection with transportation provided by a common carrier.
2.6. Variable Contracts.
2.6.a. No individual shall be eligible to sell or offer for sale a variable contract unless, prior to making any solicitation or sale of such a contract, he or she has a producer license for a variable contract line of authority. For the purposes of this subsection, “variable contract” means one that is required to be registered under the Federal Securities Act of 1933 (15 U.S.C. 77(a) et seq.).
2.6.b. Any individual applicant for a variable line of authority must file with the Commissioner proof of passing the Financial Industry Regulatory Authority Series 6 or 7 examination or any superseding examination that grants authority to sell variable contracts.
W. Va. Code R. § 114-2-3 Requirements for Licensing Insurance Agencies
3.1. Each agency, as defined in W. Va. Code §33-12-2(e), shall file an application with the Commissioner for an agency insurance producer license on a form provided by this office. This requirement applies to each corporation, partnership, limited liability company, or other business entity in which more than one person has an interest or which operates under a corporate or trade name. The requirement for an agency insurance producer license does not apply to sole proprietors or partnerships in which there is only one licensed individual producer, so long as no other individual or agency insurance producer has any interest in, or affiliation with, the business of the individual insurance producer or his or her agency.
3.2. The Insurance Commissioner may refuse to grant a license to act as an agency insurance producer proposing to do business under a name which is likely to deceive or mislead the public in this state.
3.3. No agency insurance producer may be licensed in West Virginia which has or uses a name so similar to that of any agency insurance producer already so licensed as to cause uncertainty or confusion; except that in case of conflict of names between two agency insurance producers, the Commissioner may permit or require the newly licensed agency insurance producer to use in West Virginia a trade name that is reasonably necessary to avoid such conflict.
3.4. No license may be issued in a trade name except upon proof satisfactory to the Commissioner that the trade name has been lawfully registered.
3.5. Foreign corporations, limited partnerships and any other entities required by law to be registered with the Secretary of State must be so registered before a license will be issued.
3.6. Each application shall be accompanied by the fee required by W. Va. Code §33-12-10. Each insurer is required to notify every agency affiliated with the insurer of its responsibility to file an agency insurance producer application and to pay the required fee. No agency is required to obtain more than one agency insurance producer license regardless of the number of insurers it represents. When an agency ceases to have a stockholder, officer, director, member, employee or associate possessing a current individual insurance producer's license, the agency insurance producer license shall be considered terminated. The agency insurance producer shall surrender the terminated agency insurance producer license for cancellation not more than thirty (30) days after the last person to hold the individual insurance producer license ceased affiliation with the agency or was no longer so licensed.
3.7. A domestic insurance agency must be organized pursuant to the laws of this state and must maintain its principal place of business in this state.
3.8. Every business entity transacting insurance must be licensed as an agency insurance producer. For purposes of this section:
3.8.a. "Insurance" means all products defined or regulated by the State of West Virginia except: (i) limited lines insurance as defined in W. Va. Code §33-12-2(i) and (k); (ii) insurance placed by a lender in connection with collateral pledged for a loan when the debtor breaches the contractual obligation to provide this insurance; and (iii) private mortgage insurance.
3.8.b. "Transaction of insurance" means any of the following acts in this state effected by mail or otherwise considered to constitute the transaction of an insurance business in or from this state:
3.8.b.1. The making of or proposing to make an insurance contract;
3.8.b.2. The making of or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety;
3.8.b.3. The taking or receiving of an application for insurance;
3.8.b.4. The receiving or collection of any premium, commission, membership fees, assessments, dues or other consideration required for obtaining or renewing insurance;
3.8.b.5. The issuance or delivery in this state of certificates or contacts of insurance to residents of this state or to persons authorized to do business in this state;
3.8.b.6. The solicitation, negotiation, procurement or effectuation of insurance or renewals thereof;
3.8.b.7. The dissemination of information as to coverage or rates, or forwarding of applications, or delivery of policies or contracts, or inspection of risks, the fixing of rates or investigation or adjustment of claims or losses or the transaction of matters subsequent to effectuation of the contract and arising out of it, or any other manner of representing or assisting a person or insurer in the transaction of insurance with respect to any risk or exposure located or to be performed in this state;
3.8.b.8. The transaction of any kind of insurance business specifically recognized as transacting an insurance business within the meaning of the statutes relating to insurance;
3.8.b.9. The offering of insurance or the transacting of insurance business; or
3.8.b.10. Offering an agreement or contract which purports to alter, amend or void coverage of an insurance contract.
3.9. The licensee shall notify the Commissioner of all changes in status among its members, directors, and officers, and all other individuals designated in the application within ten (10) days after the change.
3.10. No individual whose individual insurance producer license has been revoked by order of the Commissioner or whose application for a license may be denied pursuant to W. Va. Code §33-12-24, nor any business entity in which such individual has a majority ownership interest, whether direct or indirect, may own any interest in any agency licensed under this section.
3.11. No individual insurance producer whose license has been revoked by order of the Commissioner or whose application for a license may be denied pursuant to W. Va. Code §33-12-24, may be employed by an insurance agency in any position that involves the transaction of insurance.
3.12. An agency insurance producer which allows its license to lapse may reinstate the same license by filing its application for renewal of its license within twelve (12) months from the due date of the renewal fee and paying a penalty in the amount of twenty-five dollars ($25) in addition to the unpaid renewal fee.
W. Va. Code R. § 114-2-4 Commissions and Commission Sharing
4.1. An individual insurance producer may pay a commission for or on account of the sale, solicitation or negotiation in this state of insurance on property or risks in this state only to another licensed individual insurance producer.
4.2. If an individual insurance producer who does not have an appointment from a particular insurance company (“non-appointed producer”) refers an application for an insurance policy from such company to an individual insurance producer or managing general agent who does have an appointment with that company (“appointed producer”), and such a referral results in the issuance of an insurance policy, the appointed producer may share the commission with the non-appointed producer.
4.3. Before a non-appointed producer refers an application for insurance to an appointed producer, he or she shall disclose to the applicant, on a form that is substantially similar to that set forth in Appendix A to this rule, that he or she is not authorized to bind coverage or to execute or issue a policy on the company’s behalf.
4.4. A non-appointed producer may solicit an application for insurance, prepare an application for such policy, collect and remit premiums and deliver the policy and any endorsements to the insured, but he or she may not sign or execute such policy or issue binders, endorsements or any other indication or coverage on behalf of that insurer. In any controversy between the insured or his or her beneficiary and the insurer issuing any policy upon such application, the non-appointed producer shall be regarded as the agent of the company and shall not be considered to be the agent of the insured for any purpose.
W. Va. Code R. § 114-2-5 Switching
5.1. No person who owns or is affiliated with an insurance agency or individual insurance producer may require, as a condition precedent to making a loan, that the borrower cancel insurance and purchase new insurance with the individual insurance producer or with an agency insurance producer with which the person is affiliated.
5.2. Any individual insurance producer who, directly or indirectly, or by subterfuge or artifice aids, abets or participates in violating this section is subject to the penalties prescribed by W. Va. Code §33-12-24.
5.3. The act of any person, who owns or is affiliated with an insurance agency or individual insurance producer in making a loan in violation of this section will be considered to be the act of the individual insurance producer or agency insurance producer with which the person making the loan is affiliated. The individual insurance producer or agency insurance producer will be held strictly accountable for the acts of a person who is affiliated with the individual insurance producer or agency insurance producer and who makes a loan in violation of this section.
5.4. Any insurance company licensed under the laws of West Virginia that accepts business from an insurance producer which it knows or reasonably should know to have violated this rule is subject to the penalties prescribed by W. Va. Code §33-3-11.
W. Va. Code R. § 114-2-6 Referrals
6.1. A person who is not licensed to sell insurance may refer a customer who seeks to purchase or seeks an opinion or advice on any insurance product to, or provide the phone number of, a person who sells or provides opinions or advice on such product, only if the person making the referral receives no fee or only a nominal fee for the referral and such fee is not based on the customer’s application for or purchase of the insurance product.
6.2. Any individual insurance producer or agency insurance producer licensed under the laws of West Virginia who violates this rule is subject to the penalties prescribed by W. Va. Code §33-12-24.
W. Va. Code R. § 114-2-7 Procedures Governing Persons Subject to 18 U.S.C. 1033
7.1. No person who has been convicted of a felony involving breach of trust or dishonesty or who has been convicted under 18 U.S.C. § 1033 may engage in the business of insurance in this state in any capacity without having first obtained a waiver from the Commissioner or from the insurance regulatory official of the person’s home state in accordance with the provisions of 18 U.S.C. § 1033(e)(2) and this rule.
7.2. No insurer, producer, or any other person or independent contractor involved in the business of insurance in this state may employ, appoint, contract with, or permit any prohibited person in any capacity to engage in the business of insurance without first determining that the prohibited person has obtained a waiver in accordance with 18 U.S.C. § 1033(e)(2) and this rule.
7.3. All prohibited persons seeking to obtain a waiver in accordance with subsection 7.1 of this section shall complete and file with the Commissioner an application for waiver on the form prescribed by the Commissioner, together with the nonrefundable application fee of one hundred dollars ($100).
7.4. All fees collected under this section shall be deposited, transferred and paid out in accordance with W. Va. Code §33-3-13.
7.5. West Virginia is the appropriate state from which an applicant must obtain a waiver where the applicant will be employed in the business of insurance in this state and:
7.5.a. The applicant would be required to obtain a resident producer's license to do business in this state; or
7.5.b. The applicant is or will be an officer, director or employee of a domestic insurer, reinsurer, producer, third-party administrator or independent contractor performing substantial insurance related activities for a domestic insurer or producer.
APPENDIX A
Producer Company Relationship Disclosure Non-Appointed Producer ___________ Name of Producer West Virginia Producer Number Name of Agency, Company or Firm West Virginia Agency Producer Number Address City State Zip Code Name of Applicant for Insurance Address City State Zip Code I, the above named applicant, have been advised by the above named individual insurance producer that he or she is not appointed with the insurer to which my application is being submitted, and the above named producer will be placing my application for insurance through an appointed producer. The above named producer has disclosed to me that he or she is not authorized to bind coverage or to execute or issue a policy on the company’s behalf. ____________________________________________________________________________________ Signature of Applicant Date ____________________________________________________________________________________ Signature of Individual Insurance Producer Date 114CSR2 114CSR2
Series 02A Fingerprinting Requirements For Applicants For Insurance Producer License and Insurance Adjuster License
W. Va. Code R. § 114-2A-1 General
W. Va. Code R. § 114-2A-2 Definitions
W. Va. Code R. § 114-2A-3 Producer Fingerprints
W. Va. Code R. § 114-2A-4 Provisional Work Authority; Change in Residence Status
W. Va. Code R. § 114-2A-5 Fingerprint Format and Complete Application
W. Va. Code R. § 114-2A-6 Use of Fingerprints
W. Va. Code R. § 114-2A-7 Nonresident Producers
TITLE 114
LEGISLATIVE RULE
INSURANCE COMMISSIONER
SERIES 2A
FINGERPRINTING REQUIREMENTS FOR APPLICANTS
FOR INSURANCE PRODUCER LICENSE AND INSURANCE ADJUSTER LICENSE
W. Va. Code R. § 114-2A-1 General
1.1. Scope. -- This legislative rule establishes standards and processes for the procurement of fingerprints from applicants for resident insurance producer licenses and resident insurance adjuster licenses for the purpose of obtaining a criminal history record check from the Federal Bureau of Investigation and State Police.
1.2. Authority. -- W.Va. Code §§33-2-10, 33-12-37, 33-12B-6, and 33-12B-12.
1.3. Filing Date. -- April 8, 2026.
1.4. Effective Date. -- April 8, 2026.
1.5. Sunset Date. -- This rule shall terminate and have no further force or effect upon August 1, 2036.
W. Va. Code R. § 114-2A-2 Definitions
2.1. “Applicant” means a natural person applying for:
2.1.1. An initial home state license as an individual insurance producer or individual insurance adjuster;
2.1.2. An additional line of authority under an existing home state individual insurance producer or individual insurance adjuster license where a criminal history record check has not been obtained; or
2.1.3. A resident individual insurance producer or individual insurance adjuster license under a change of home state provision.
2.2. “Fingerprint” means an impression of the lines on the finger taken for the purpose of identification. The impression may be obtained electronically or in ink converted to an electronic format.
2.3. “Initial home state license” means an insurance producer license issued to a West Virginia resident pursuant to the provisions of W.Va. Code §33-12-1 et seq. to authorize such individual to sell, solicit and negotiate insurance in this state; an initial home state license does not include a temporary license issued pursuant to the provisions of W.Va. Code §33-12-16 or a reinstatement of a resident license pursuant to the provisions of W.Va. Code §33-12-9(c). “Initial home state license” also means an insurance adjuster license issued to a West Virginia resident pursuant to the provisions of W.Va. Code §33-12B-1 et seq. to authorize such individual to investigate, negotiate or settle insurance claims in this state; an initial home state license does not include a temporary license issued pursuant to the provisions of W.Va. Code §33-12B-4 or a reinstatement of a resident license pursuant to the provisions of W.Va. Code §33-12B-10.
2.4. “Licensee” means a person who has been issued a license by the Insurance Commissioner, pursuant to W.Va. Code §§33-12-1 et seq. or 33-12B-1 et seq. to act as an individual insurance producer or individual insurance adjuster in this state.
W. Va. Code R. § 114-2A-3 Producer Fingerprints
3.1. Every applicant must:
3.1.1. Provide for the collection of a complete set of fingerprints in accordance with section 5 of this rule and submit the completed fingerprint card to the Insurance Commissioner with his or her application;
3.1.2. Pay the applicable fee to cover the fingerprint vendor and processing fees charged by the West Virginia State Police and the Federal Bureau of Investigation to perform the criminal history record checks. The fee will be payable to the vendor that collects the prints or, if the prints are collected by an approved law enforcement agency, directly to the Insurance Commissioner with the application; and
3.1.3. Submit all additional identifying information required by the West Virginia State Police and the Federal Bureau of Investigation to complete the criminal history record check.
3.2. The Insurance Commissioner may waive the fingerprint requirement if the applicant previously provided the commissioner a complete, legible fingerprint card or electronic set of fingerprints as part of an earlier application that was granted under W.Va. Code §33-12-1 et seq., W.Va. Code §33-12B-1 et seq. or W.Va. Code §33-12C-1 et seq. and which license is in good standing on, or within the previous sixty (60) days prior to, the date of the subsequent application: Provided, That the Insurance Commissioner may require a complete set of fingerprints and payment of all fingerprint processing fees from an applicant if the previously submitted set of fingerprints is unable to be used to obtain a criminal history record check.
3.3. The Insurance Commissioner may waive any requirements of this rule if it is impossible for the applicant to provide fingerprints due to physical injury.
3.4. Failure to provide a complete set of fingerprints and the required fees and information in accordance with this rule constitutes grounds for denial of an application.
W. Va. Code R. § 114-2A-4 Provisional Work Authority; Change in Residence Status
4.1. The Insurance Commissioner may issue a provisional license prior to receipt of a criminal history record check to an applicant who has submitted in proper form the items required by section 3 of this rule if the submission does not disclose any matter that may disqualify the applicant from being licensed. A provisional license issued pursuant to this section shall expire on the earlier of the expiration date set forth on the provisional license or the issuance of the Insurance Commissioner’s decision granting or denying the license applied for.
4.2. An applicant seeking a resident insurance producer license or resident insurance adjuster license under change of home state provisions shall, within thirty (30) days after establishing residency in West Virginia, notify the Insurance Commissioner of his or her change of address and contact information and, within ninety (90) days of establishing residency, submit an application to qualify as a resident insurance producer or resident insurance adjuster in West Virginia. The licensee shall submit completed fingerprint forms in a format prescribed by the Insurance Commissioner, including electronic fingerprinting. Upon the Insurance Commissioner’s approval of the application, the licensee’s status shall be changed from nonresident to resident.
W. Va. Code R. § 114-2A-5 Fingerprint Format and Complete Application
5.1. Every applicant shall provide a complete set of his or her fingerprints to an examination vendor or a criminal law enforcement agency (including a sheriff's office or police department) that has been approved by the Insurance Commissioner. The applicant shall pay the vendor or the law enforcement agency the fee it charges for collecting the fingerprints. The amount of any collection fee and the manner in which it is to be paid shall be set forth in a contract or agreement between the Insurance Commissioner and the vendor or agency. Applicants are advised that processing time and rejection rates for applications and submissions with paper fingerprint cards may be substantially greater than with electronic fingerprints.
5.2. Approved vendors and law enforcement agencies may obtain fingerprint cards by sending a written request to the Licensing and Education Division of the Offices of the West Virginia Insurance Commissioner.
5.3. All fingerprint impressions must be legible and suitable for use by the West Virginia State Police and Federal Bureau of Investigation.
5.4. An application for licensure is not complete until the Insurance Commissioner receives the criminal history record information.
W. Va. Code R. § 114-2A-6 Use of Fingerprints
The Insurance Commissioner shall submit all fingerprints received pursuant to this rule to the West Virginia State Police and the Federal Bureau of Investigation to obtain criminal history record checks and use the information obtained only to determine applicants’ fitness for licensure, authorization, certification, permit, registration or control of an entity holding or seeking a license, authorization, certificate, permit, or registration.
W. Va. Code R. § 114-2A-7 Nonresident Producers
7.1. As authorized under W.Va. Code §33-12-33, the Insurance Commissioner may waive the requirement in W.Va. Code §33-12-37 to promote reciprocal licensing between the states for nonresident individuals holding an individual insurance producer license in their state of residence or to the extent necessary to comply with federal law.
7.2. The requirements of this rule do not alter the reporting requirements set forth in W.Va. Code §33-12-34.
114CSR2A
114CSR2A
114CSR2A
Series 03 Cancellation And Nonrenewal Of Automobile Liability Policies
W. Va. Code R. § 114-3-1 General
1.1. Scope. -- This regulation is to establish the procedure whereby any person whose automobile liability insurance policy has been canceled or whose policy has not been renewed in violation of article six-a, chapter thirty-three of the West Virginia Code of 1931, as amended, may appeal to the insurance commissioner for hearing and review.
1.2. Authority. -- W. Va. Code §§33-2-10, 33-6A-4a and 33-6A-5.
1.3. Filing Date. -- May 6, 2005.
1.4. Effective Date. -- May 6, 2005.
W. Va. Code R. § 114-3-2 Notice of Cancellation or Nonrenewal
2.1. All nonrenewal notices issued by insurers pursuant to sections four and four-a, article six-a, chapter thirty-three of the West Virginia Code, shall state the specific reason or reasons for issuance of the notice and shall advise the insured that nonrenewal of the policy for any reason is subject to a hearing and review by the insurance commissioner. All cancellation notices issued pursuant to section three, article six-a, chapter thirty-three of the West Virginia Code shall specify the reason or reasons relied upon by the insurer for the cancellation or at the written request of the named insured the insurer shall specify the reason or reasons relied upon by the insurer for the cancellation. The written reason or reasons in a notice of nonrenewal or cancellation must be sufficiently clear that a reasonable person can understand them. A statement such as “underwriting reasons,” “claims,” or “increase in risk” will not be considered sufficiently clear. Nothing in this rule will prevent the insurer from providing more information in the notice relating to the reason or reasons for nonrenewal or cancellation than is required by this section.
W. Va. Code R. § 114-3-3 Informal Procedure For Review Of Complaint Regarding Cancellation Or Nonrenewal
3.1. General. -- The procedure set forth in this section is recommended for persons filing a complaint with the insurance commissioner that their automobile liability insurance has been canceled or nonrenewed in violation of article six-a, chapter thirty-three of the West Virginia Code.
3.2. Complaints filed in person or in writing. -- All complaints regarding automobile liability cancellation or nonrenewal may be filed with the insurance commissioner in person or in writing.
a. Complaint filed in person. -- If the complainant desires to present the complaint in person he or she may do so by visiting the Office of the Insurance Commissioner in Charleston, West Virginia, on any weekday during regular business hours.
b. Complaint filed in writing. -- If the complainant desires to submit the complaint in writing he or she should direct the written complaint to the Consumer Services Division within the Office of the Insurance Commissioner at its mailing address in Charleston, West Virginia.
3.3. Policies and related correspondence needed for review. -- Whether the complaint be lodged in person or in writing, the complainant should attach his or her insurance policy and all related papers or correspondence received from the respondent insurer regarding the cancellation or nonrenewal. If the complaint is submitted in writing, a letter from the complainant, written in the narrative, should accompany the policy and related papers explaining generally the basis for the complaint.
3.4. Decision that favors respondent insurer. -- If, upon review of the complaint, the insurance commissioner is of the opinion that there has been no violation of the insurance laws regarding cancellation and nonrenewal, the commissioner will explain to the complainant his or her rights and privileges under article six-a, chapter thirty-three of the West Virginia Code and why the facts presented would not be a violation of article six-a.
3.5. Explanation by respondent insurer. -- If, upon review of the complaint, it is found by the insurance commissioner that the respondent insurer may have violated article six-a, chapter thirty-three of the West Virginia Code, the commissioner will contact the respondent insurer and require an explanation of the cancellation or nonrenewal.
3.6. Letter of recommendation. -- If, after a review of information received from both the complainant and respondent insurer, the insurance commissioner is of the opinion that article six-a, chapter thirty-three of the West Virginia Code appears to have been violated by the respondent insurer, the commissioner will write a letter of recommendation to the insurer. This letter of recommendation will describe in what respects the respondent's decision to cancel or nonrenew the complainant's policy appears to violate the provisions of article six-a, chapter thirty-three of the West Virginia Code and will contain a recommendation by the insurance commissioner that the respondent insurer fully comply with those provisions.
3.7. Variance in procedure not prejudicial. -- This section is to be construed as a guideline by which an aggrieved party may file a complaint with the insurance commissioner regarding cancellation or nonrenewal of automobile liability insurance in violation of article six-a, chapter thirty-three of the West Virginia Code and any variance by a complainant in the procedure recommended in this section shall not prejudice any rights or privileges of the complainant set forth in any insurance law or regulation of the state of West Virginia.
3.8. Compliance with forty-five (45) day requirement. -- If a complainant lodges a complaint with the insurance commissioner that his or her automobile liability insurance policy has been canceled or nonrenewed in violation of article six-a, chapter thirty-three of the West Virginia Code, it will be construed by the insurance commissioner as an appeal for hearing and review for the purpose of satisfying the forty-five (45) day requirement within which time appeal to the insurance commissioner must be made as provided in section five, article six-a, chapter thirty-three of the West Virginia Code.
W. Va. Code R. § 114-3-4 Hearing Regarding Canceling And Nonrenewal
4.1. Hearing at request of complainant. -- If, after review of the complaint, it is the opinion of the insurance commissioner that there has been no violation of article six-a, chapter thirty-three of the West Virginia Code and the complainant is informed of these findings as prescribed in subsection 2.4 of this rule, the complainant may demand a formal hearing before the insurance commissioner.
4.2. Hearing at request of respondent insurer. -- If, after review of the complaint, it is the opinion of the insurance commissioner that there has been a violation of article six-a, chapter thirty-three of the West Virginia Code and the respondent insurer is informed of these findings as prescribed in subsection 2.6 of this rule, the respondent insurer may demand a formal hearing before the insurance commissioner.
4.3. Hearing called by insurance commissioner. -- If, after review of the complaint, the commissioner feels a hearing will be necessary to resolve the complaint, the commissioner may call a hearing by virtue of the authority provided under article two, chapter thirty-three of the West Virginia Code.
4.4. Hearing. -- The hearing, whether it be initiated by the complainant, the respondent insurer or the insurance commissioner, shall follow the same procedure respecting notice and rights of the parties as is prescribed in article two, chapter thirty-three and chapter twenty-nine-a of the West Virginia Code. If the hearing relates to a notice of cancellation or non-renewal issued pursuant to W. Va. Code §§33-6A-1 or 33-6A-4, the subject matter of the hearing will be the adequacy of the notice of nonrenewal or cancellation, and the ground or grounds upon which the insurer’s action is based. If the hearing relates to a notice of nonrenewal issued pursuant to W. Va. Code §33-6A-4a, the subject matter of the hearing will be limited to whether the nonrenewal notice:
a. Failed to provide forty-five (45) days advance notice to the named insured of the insurer’s intent to nonrenew the policy;
b. Was issued for a discriminatory reason;
c. Was based upon an underwriting standard found to be in violation of chapter thirty-three of the West Virginia Code; or d. Causes the insurer to have issued nonrenewal notices in excess of the limitation set forth in W. Va. Code §33-6A-4a(d).
W. Va. Code R. § 114-3-5 Filing of Underwriting Guidelines
5.1. Each insurer writing private passenger automobile liability insurance policies in this state shall file with the commissioner a copy of its underwriting standards for private passenger automobile liability insurance which must comply with generally accepted underwriting principles. Any subsequent modifications to the insurer’s underwriting standards must be filed with the commissioner within thirty (30) business days after the modifications have been implemented.
114CSR3
114CSR3
Series 04 Insider Trading Of Equity Securities Of A Domestic Stock Insurer
W. Va. Code R. § 114-4-1 General
1.1. Scope. -- The purpose of this regulation is to require the disclosure of the ownership of Equity Securities of Domestic Stock Insurance Companies and to prevent any unfair practices by officers or directors where they are also beneficial owners of Equity Securities of a Domestic Insurance Company. The general form of this regulation was proposed by the National Association of Insurance Commissioners. This regulation establishes the general procedure to be followed by domestic stock insurers in regard to their activities respecting insider trading.
1.2. Authority. -- W. Va. Code '33-5-30 and '33-2-10
1.3. Filing Date. -- March 5, 1968
1.4. Effective Date. -- April 16, 1968
W. Va. Code R. § 114-4-2 General Application
2.1. Definition of certain terms.
(a) "Insurer" means any Domestic Stock Insurance Company with an equity security subject to the provisions of section thirty, article five, chapter thirty-three of the West Virginia Code of 1931, as amended, and not exempt thereunder.
(b) "Act" means section thirty, article five, chapter thirty-three of the West Virginia Code.
(c) "Officer" means a president, vice president, treasurer, actuary, secretary, controller and any other person who performs for the insurer functions corresponding to those performed by the foregoing officers.
(d) "Equity Security" means any stock or similar security; or any voting trust certificate or certificate of deposit for such a security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right.
(e) Securities "Held of Record."
(1) For the purpose of determining whether the equity securities of an insurer are held of record by one hundred (100) or more persons, securities shall be deemed to be "Held of Record" by each person who is identified as the owner of such securities on records of security holders maintained by or on behalf of the insurer, subject to the following:
(A) In any case where the records of security holders have not been maintained in accordance with accepted practice, any additional person who would be identified as such an owner on such records if they had been maintained in accordance with accepted practice shall be included as a holder of record.
(B) Securities identified as held of record by a corporation, a partnership, a trust whether or not the trustees are named or other organization shall be included as so held by one (1) person.
(C) Securities identified as held of record by one or more persons as trustees, executors, guardians, custodians or in other fiduciary capacities with respect to a single trust, estate or account shall be included as held of record by one (1) person.
(D) Securities held by two (2) or more persons as co-owners shall be included as held by one (1) person.
(E) Each outstanding unregistered or bearer certificate shall be included as held of record by a separate person, except to the extent that the insurer can establish that, if such securities were registered, they would be held of record, under the provisions of this rule, by a lesser number of persons.
(F) Securities registered in substantially similar names where the insurer has reason to believe because of the address or other indications that such names represent the same person, may be included as held of record by one (1) person.
(2) Notwithstanding Subsection (1) of this paragraph:
(A) Securities held, to the knowledge of the insurer, subject to a voting trust, deposit agreement or similar arrangement shall be included as held of record by the record holders of the voting trust certificates, certificates of deposit, receipts or similar evidences of interest in such securities: Provided, however, That the insurer may rely in good faith on such information as is received in response to its request from a nonaffiliated insurer of the certificates or evidences of interest.
(B) If the insurer knows or has reason to know that the form of holding securities of record is used primarily to circumvent the provisions of the Act, the beneficial owners of such securities shall be deemed to be the record owners thereof.
(f) "Class" means all securities of an insurer which are of substantially similar character and the holders of which enjoy substantially similar rights and privileges.
2.2. Transactions exempted from the operation of subsection (b) of the Act. -- Any acquisition or disposition of any equity security by a director or officer of an insurer within six (6) months prior to the date on which the Act shall first become applicable with respect to the equity securities of such insurer shall not be subject to the operation of subsection (b) of the Act.
W. Va. Code R. § 114-4-3 Regulations Under Subsection (a) Of West Virginia Code Section Thirty, Article Five, Chapter Thirty-three
3.1. Filing of statements. -- Initial statements of beneficial ownership of equity securities required by subsection (a) of the Act shall be filed on Form 3, attached hereto. Statements of changes in such beneficial ownership required by subsection (a) of the Act shall be filed on Form 4, attached hereto. All such statements shall be prepared and filed in accordance with the requirements of the applicable form.
3.2. Ownership of more than ten percent (10%) of an equity security. -- In determining, for the purpose of subsection (a) of the Act whether a person is the beneficial owner, directly or indirectly, of more than ten percent (10%) of any class of any equity security, such class shall be deemed to consist of the total amount of such class outstanding, exclusive of any securities of such class held by or for the account of the insurer or a subsidiary of the insurer; except that for the purpose of determining percentage ownership of voting trust certificates or certificates of deposit for equity securities, the class of voting trust certificates or certificates of deposit shall be deemed to consist of the amount of voting trust certificates or certificates of deposit issuable with respect to the total amount of outstanding equity securities of the class which may be deposited under the voting trust agreement or deposit agreement in question, whether or not all of such outstanding securities have been so deposited. For the purpose of this section a person acting in good faith may rely on the information contained in the latest Convention Form Statement filed with the Commissioner with respect to the amount of securities of a class outstanding or in the case of voting trust certificates or certificates of deposit the amount thereof issuable.
3.3. Disclaimer of beneficial ownership. -- Any person filing a statement may expressly declare therein that the filing of such statement shall not be construed as an admission that such person is, for the purpose of the West Virginia Code section thirty, article five, chapter thirty-three, the beneficial owner of any equity securities covered by the statement.
3.4. Exemptions from subsections (a) and (b) of West Virginia Code section thirty, article five, chapter thirty-three.
(a) During the period of twelve (12) months following their appointment and qualification, securities held by the following persons shall be exempt from subsections (a) and (b) of the Act:
(1) Executors or administrators of the estate of a decedent;
(2) Guardians or committees for an incompetent; and (3) Receivers, trustees in bankruptcy, assignees for the benefit of creditors, conservators, liquidating agents and other similar persons duly authorized by law to administer the estate or assets of other persons.
(b) After the twelve (12) month period following their appointment or qualification the foregoing persons shall be required to file reports with respect to the securities held by the estates which they administer under subsection (a) of the Act and shall be liable for profits realized from trading in such securities pursuant to subsection (b) of the Act only when the estate being administered is a beneficial owner of more than ten percent (10%) of any class of equity security of an insurer subject to the Act.
(c) Securities reacquired by or for the account of an insurer and held by it for its account shall be exempt from subsections (a) and (b) of the Act during the time they are held by the insurer.
3.5. Exemption from the Act of securities purchased or sold by odd-lot dealers. -- Securities purchased or sold by an odd-lot dealer (1) in odd lots so far as reasonably necessary to carry on odd-lot transactions or (2) in round lots to offset odd-lot transactions previously or simultaneously executed or reasonably anticipated in the usual course of business, shall be exempt from the provisions of the Act with respect to participation by such odd-lot dealer in such transactions.
3.6. Certain transactions subject to subsection (a) of the Act. -- The acquisition or disposition of any transferable option, put, called, spread or straddle shall be deemed such a change in the beneficial ownership of the security to which such privilege relates as to require the filing of a statement reflecting the acquisition or disposition of such privilege. Nothing in this section, however, shall exempt any person from filing the statements required upon the exercise of such option, put, call, spread or straddle.
3.7. Ownership of securities held in trust.
(a) Beneficial ownership of a security for the purpose of subsection (a) of the Act shall include:
(1) The ownership of securities as a trustee where either the trustee or members of his immediate family have a vested interest in the income or corpus of the trust;
(2) The ownership of a vested beneficial interest in a trust; and (3) The ownership of securities as a settlor of a trust in which the settlor has the power to revoke the trust without obtaining the consent of all the beneficiaries.
(b) Except as provided in Paragraph (c) hereof, beneficial ownership of securities solely as a settlor or beneficiary of a trust shall be exempt from the provisions of Subsection (a) where less than twenty percent (20%) in market value of the securities having a readily ascertainable market value held by such trust, determined as of the end of the preceding fiscal year of the trust, consists of equity securities with respect to which reports would otherwise be required. Exemption is likewise accorded from Subsection (a) with respect to any obligation which would otherwise be imposed solely by reason of ownership as settlor or beneficiary of securities held in trust, where the ownership, acquisition or disposition of such securities by the trust is made without prior approval by the settlor or beneficiary. No exemption pursuant to this subsection of this regulation shall, however, be acquired or lost solely as a result of changes in the value of the trust assets during any fiscal year or during any time when there is no transaction by the trust in the securities otherwise subject to the reporting requirements of subsection (a) of the Act.
(c) In the event that ten percent (10%) of any class of any equity security of an insurer is held in a trust, that trust and the trustees thereof as such shall be deemed a person required to file the reports specified in subsection (a) of the Act.
(d) Not more than one (1) report need be filed to report any holdings or with respect to any transaction in securities held by a trust, regardless of the number of officers, directors, or ten percent (10%) stockholders who are either trustees, settlors, or beneficiaries of a trust: Provided, That the report filed shall disclose the names of all trustees, settlors and beneficiaries who are officers, directors or ten percent (10%) stockholders. A person having an interest only as a beneficiary of a trust shall not be required to file any such report so long as he relies in good faith upon an understanding that the trustee of such trust will file whatever reports might otherwise be required of such beneficiary.
(e) As used in Section 3.7 of these rules, the "Immediate Family" of a trustee means:
(1) A son or daughter of the trustee, or descendant of either, (2) A stepson or stepdaughter of the trustee, (3) The father or mother of the trustee, or an ancestor of either, (4) A stepfather or stepmother of the trustee, (5) A spouse of the trustee.
For the purpose of determining whether any of the foregoing relations exists, a legally adopted child of a person shall be considered a child of such person by blood.
(f) In determining, for the purposes of subsection (a) of the Act, whether a person is the beneficial owner, directly or indirectly, of more than ten percent (10%) of any class of any equity security, the interest of such person in the remainder of a trust shall be excluded from the computation.
(g) No report shall be required by any person, whether or not otherwise subject to the requirement of filing reports under subsection (a) of the Act, with respect to his indirect interest in portfolio securities held by:
(1) A pension or retirement plan holding securities of an insurer whose employees generally are the beneficiaries of the plan;
(2) A business trust with over twenty-five (25) beneficiaries.
(h) Nothing in Section 3.7 of these rules shall be deemed to impose any duties or liabilities with respect to reporting any transaction or holding prior to its effective date.
3.8. Exemption for small transactions.
(a) Any acquisition of securities shall be exempt from subsection (a) of the Act where:
(1) The person effecting the acquisition does not within six (6) months thereafter effect any disposition, otherwise than by way of gift, of securities of the same class; and (2) The person effecting such acquisition does not participate in acquisitions or in dispositions of securities of the same class having a total market value in excess of three thousand dollars ($3,000) for any six (6) months' period during which the acquisition occurs.
(b) Any acquisition or disposition of securities by way of gift, where the total amount of such gifts does not exceed three thousand dollars ($3,000) in market value for any six (6) months' period, shall be exempt from subsection (a) of the Act and may be excluded from the computations prescribed in Paragraph (a) Subdivision (2) of Section 3.8 of this regulation.
(c) Any person exempted by Paragraph (a) or (b) of this section shall include in the first report filed by him after a transaction within the exemption a statement showing his acquisitions and dispositions for each six (6) months' period or portion thereof which has elapsed since his last filing.
3.9. Exemption from subsection (b) of the Act of transactions which need not be reported under subsection (a) of the Act. -- Any transaction which has been or shall be exempted from the requirements of subsection (a) of the Act shall, insofar as it is otherwise subject to the provisions of subsection (b) of the Act be likewise exempted from subsection (b) of the Act.
W. Va. Code R. § 114-4-4 Regulations Under Subsection (b) Of West Virginia Code Section Thirty, Article Five, Chapter Thirty-three
4.1. Exemption from subsection (b) of the Act of certain transactions effected in connection with a distribution.
(a) Any transaction of purchase and sale, or sale and purchase, of a security which is effected in connection with the distribution of a substantial block of securities shall be exempt from the provisions of subsection (b) of the Act, to the extent specified in this section as not comprehended within the purpose of said subsection of the Act, upon the following conditions:
(1) The person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of such business, in the distribution of such block of securities;
(2) The security involved in the transaction is (A) a part of such block of securities and is acquired by the person effecting the transaction, with a view to the distribution thereof, from the insurer or other person on whose behalf such securities are being distributed or from a person who is participating in good faith in the distribution of such block of securities or (B) a security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with such distribution; and (3) Other persons not within the purview of subsection (b) of the Act are participating in the distribution of such block of securities on terms at least as favorable as those on which such person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of subsection (b) of the Act by this section. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing such functions shall not preclude an exemption which would otherwise be available under this section.
(b) The exemption of a transaction pursuant to this section with respect to the participation therein of one (1) party thereto shall not render such transaction exempt with respect to participation of any other party therein unless such other party also meets the conditions of this section.
4.2. Exemption from subsection (b) of the Act of acquisitions of shares of stock and stock options under certain stock bonus, stock option or similar plans. -- Any acquisition of shares of stock (other than stock acquired upon the exercise of an option, warrant or right) pursuant to a stock bonus, profit sharing, retirement, incentive, thrift, savings or similar plan, or any acquisition of a qualified or restricted stock option pursuant to a qualified or restricted stock option plan, or a stock option pursuant to an employee stock purchase plan, by a director or officer of an insurer issuing such stock or stock option shall be exempt from the operation of subsection (b) of the Act if the plan meets the following conditions:
(a) The plan has been approved, directly or indirectly, (1) by the affirmative votes of the holders of a majority of the securities of such insurer present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of the State of West Virginia, or (2) by the written consent of the holders of a majority of the securities of such insurer entitled to vote: Provided, That if such vote or written consent was not solicited substantially in accordance with the Proxy Rules and Regulations prescribed by the National Association of Insurance Commissioners, if any, in effect at the time of such vote or written consent, the insurer shall furnish in writing to the holders of record of the securities entitled to vote for the plan substantially the same information concerning the plan which would be required by any such Rules and Regulations so prescribed and in effect at the time such information is furnished, if proxies to be voted with respect to the approval or disapproval of the plan were then being solicited, on or prior to the date of the first annual meeting of security holders held subsequent to the later of (i) the date the Act first applies to such insurer, or (ii) the acquisition of an equity security for which exemption is claimed. Such written information may be furnished by mail to the last known address of the security holders of record within thirty (30) days prior to the date of mailing. Four (4) copies of such written information shall be filed with, or mailed for filing to, the Commissioner not later than the date on which it is first sent or given to security holders of the insurer. For the purposes of this paragraph, the term "Insurer" includes a predecessor corporation if the plan or obligations to participate thereunder were assumed by the insurer in connection with the succession.
(b) If the selection of any director of officer of the insurer to whom stock may be allocated or to whom qualified, restricted or Employee Stock Purchase Plan stock options may be granted pursuant to the plan or the determination of the number or maximum number of shares of stock which may be allocated to any such director or officer or which may be covered by qualified, restricted or Employee Stock Purchase Plan stock options granted to any such director or officer, is subject to the discretion of any person, then such discretion shall be exercised only as follows:
(1) With respect to the participation of directors;
(A) By the Board of Directors of the insurer, a majority of which board and a majority of the directors acting in the manner are disinterested persons; or (B) By, or only in accordance with the recommendations of, a committee of three (3) or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons; or (C) Otherwise in accordance with the plan, if the plan (i) specifies the number or maximum number of shares of stock which directors may acquire or which may be subject to qualified, restricted or Employee Stock Purchase Plan stock options granted to directors and the terms upon which, and the times at which, or the periods within which, such stock may be acquired or such options may be acquired and exercised; or (ii) sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the insurer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time or similar factors.
(2) With respect to the participation of officers who are not directors;
(A) By the Board of Directors of the insurer or a committee of three (3) or more directors; or (B) By, or only in accordance with the recommendations of, a committee of three (3) or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons.
For the purpose of this paragraph, a director or committee member shall be deemed to be a disinterested person only if such person is not at the time such discretion is exercised eligible and has not at any time within one (1) year prior thereto been eligible for selection as a person to whom stock may be allocated or to whom qualified, restricted or Employee Stock Purchase Plan stock options may be granted pursuant to the plan or any other plan of the insurer or any of its affiliates entitling the participants therein to acquire stock or qualified, restricted or Employee Stock Purchase Plan stock options of the insurer or any of its affiliates.
(3) The provisions of this paragraph shall not apply with respect to any option granted, or other equity security acquired, prior to the date that subsections (a), (b), and (c) of the Act first become applicable with respect to any class of equity securities of any insurer.
(c) As to each participant or as to all participants the plan effectively limits the aggregate dollar amount or the aggregate number of shares of stock which may be allocated, or which may be subject to qualified, restricted, or Employee Stock Purchase Plan stock options granted, pursuant to the plan. The limitations may be established on an annual basis, or for the duration of the plan, whether or not the plan has a fixed termination date; and may be determined either by fixed or maximum dollar amount or fixed or maximum numbers of shares or by formulas based upon earnings of the insurer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors which will result in an effective and determinable limitation. Such limitations may be subject to any provisions for adjustment of the plan or of stock allocable or options outstanding thereunder to prevent dilution or enlargement of rights.
(d) Unless the context otherwise requires, all terms used in Section 4.2 of these rules shall have the same meaning as in the Act and in Section 2.1 of these regulations. In addition, the following definitions apply:
(1) The term "Plan" includes any plan, whether or not set forth in any formal written document or documents and whether or not approved in its entirety at one (1) time.
(2) The definition of the terms "Qualified Stock Option" and "Employee Stock Purchase Plan" that are set forth in Sections 422 and 423 of the Internal Revenue Code of 1954, as amended, are to be applied to those terms where used in this section. The term "Restricted Stock Option" as defined in Section 424 (b) of the Internal Revenue Code of 1954, as amended, shall be applied to that term as used in this section: Provided, That for the purposes of this section an option which meets all of the conditions of that section, other than the date of issuance, shall be deemed to be a "Restricted Stock Option."
(3) The term "Exercise of an Option, Warrant or Right" contained in the parenthetical clause of the first paragraph of this section shall not include (i) the making of any election to receive under any plan an award of compensation in the form of stock or credits therefore: Provided, That such election is made prior to the making of the award: Provided, however, That such election is irrevocable until at least six (6) months after termination of employment; (ii) the subsequent crediting of such stock; (iii) the making of any election as to a time for delivery of such stock after termination of employment: Provided further, That such election is made at least six (6) months prior to any such delivery; (iv) the fulfillment of any condition to the absolute right to receive such stock; or (v) the acceptance of certificates for shares of such stock.
4.3. Exemption from subsection (b) of the Act of certain transactions in which securities are received by redeeming other securities. -- Any acquisition of an equity security (other than a convertible security or right to purchase a security) by a director or officer of an insurer issuing such security shall be exempt from the operation of subsection (b) of the Act upon condition that:
(a) The equity security is acquired by way of redemption of another security of an insurer substantially all of whose assets other than cash (or Government bonds) consist of securities of the insurer issuing the equity security so acquired, and which (1) Represented substantially and in practical effect a stated or readily ascertainable amount of such equity security;
(2) Had a value which was substantially determined by the value of such equity security;
(3) Conferred upon the holder the right to receive such equity security without the payment of any consideration other than the security redeemed;
(b) No security of the same class as the security redeemed was acquired by the director or officer within six (6) months prior to such redemption or is acquired within six (6) months after such redemption;
(c) The insurer issuing the equity security acquired has recognized the applicability of Paragraph (a) of this section by appropriate corporation action.
4.4. Exemption of long term profits incident to sales within six (6) months of the exercise of an option.
(a) To the extent specified in Paragraph (b) of this section, the Commissioner hereby exempts as not comprehended within the purposes of subsection (b) of the Act any transaction or transactions involving the purchase and sale, or sale and purchase, of any equity security where such purchase is pursuant to the exercise of an option or similar right either (1) acquired more than six (6) months before its exercise, or (2) acquired pursuant to the terms of an employment contract entered into more than six (6) months before its exercise.
(b) In respect of transactions specified in Paragraph (a) of this section the profits inuring to the insurer shall not exceed the difference between the proceeds of sale and the lowest market price of any security of the same class within six (6) months before or after the date of sale. Nothing in Section 4.4 of these rules shall be deemed to enlarge the amount of profit which would inure to such insurer in the absence of Section 4.4 of these rules.
(c) The Commissioner also hereby exempts, as not comprehended within the purposes of subsection (b) of the Act, the disposition of a security, purchased in a transaction specified in Paragraph (a) of Section 4.4 of these rules, pursuant to a plan or agreement for merger or consolidation, or reclassification of the insurer's securities, or for the exchange of its securities for the securities of another person which has acquired its assets, or which is in control, as defined in Section 368 (c) of the Internal Revenue Code of 1954, of a person which has acquired its assets, where the terms of such plan or agreement are binding upon all stockholders of the insurer except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings.
(d) The exemptions proved by Section 4.4 of these rules shall not apply to any transaction made unlawful by subsection (c) of the Act or by any rules and regulations thereunder.
(e) The burden of establishing market price of a security for the purpose of Section 4.4 of these rules shall rest upon the person claiming the exemption.
4.5. Exemption from subsection (b) of the Act of certain acquisitions and dispositions of securities pursuant to merger or consolidations.
(a) The following transactions shall be exempt from the provisions of subsection (b) of the Act as not comprehended within the purpose of said subsection:
(1) The acquisition of a security of an insurer, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, owned eighty-five percent (85%) or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company;
(2) The disposition of a security, pursuant to a merger or consolidation of an insurer which, prior to said merger or consolidation, owned eighty-five percent (85%) or more of the equity securities of all other companies involved in the merger or consolidation, except, in the case of consolidation, the resulting company;
(3) The acquisition of a security of an insurer, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, held over eighty-five percent (85%) of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation as determined by reference to their most recent available financial statements for a twelve (12) month period prior to the merger or consolidation;
(4) The disposition of a security, pursuant to a merger or consolidation, of an insurer which, prior to said merger or consolidation, held over eighty-five percent (85%) of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to merger or consolidation, as determined by reference to their most recent available financial statements for a twelve (12) month period prior to the merger or consolidation.
(b) A merger within the meaning of Section 4.5 of these rules shall include the sale or purchase of substantially all the assets of one insurer by another in exchange for stock which is then distributed to the security holders of the insurer which sold its assets.
(c) Notwithstanding the foregoing, if an officer, director or stockholder shall make any purchase (other than a purchase exempted by Section 4.5 of these rules) of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by Section 4.5 of these rules) of a security in any other company involved in the merger or consolidation within any period of less than six (6) months during which the merger or consolidation took place, the exemption provided by Section 4.5 of these rules shall be unavailable to such officer, director or stockholder.
4.6. Exemption from subsection (b) of the Act of certain securities received upon surrender of similar equity securities. -- Any acquisition or disposition of an equity security involved in the deposit of such security under, or the withdrawal of such security from, a voting trust or deposit agreement, and the acquisition or disposition in connection therewith of the certificate representing such security, shall be exempt from the operation of subsection (b) of the Act if substantially all of the assets held under the voting trust or deposit agreement immediately after the deposit or immediately prior to the withdrawal, as the case may be, consisted of equity securities of the same class as the security deposited or withdrawn: Provided, That Section 4.6 of these rules shall not apply to the extent that there shall have been either (a) a purchase of an equity security of the class deposited and a sale of any certificate representing an equity security of such class, or (b) a sale of an equity security of the class deposited and a purchase of any certificate representing an equity security of such class (otherwise than in a transaction involved in such deposit or withdrawal or in a transaction exempted by any other provision of the regulations under subsection (b) of the Act) within a period of less than six (6) months which includes the date of the deposit or withdrawal.
4.7. Exemption from subsection (b) of the Act of certain transactions involving an exchange of similar securities.
(a) Any acquisition or disposition of an equity security involved in the conversion of an equity security which, by its terms or pursuant to the terms of the insurer's charter or other governing instruments, is convertible immediately or after a stated period of time into another equity security of the same insurer, shall be exempt from the operation of subsection (b) of the Act: Provided, That Section 4.7 of these rules shall not apply to the extent that there shall have been either (1) a purchase of any equity security of the class convertible (including any acquisition of or change in a conversion privilege) and a sale of any equity security of the class issuable upon conversion, or (2) a sale of any equity security of the class convertible and any purchase of any equity security issuable upon conversion (otherwise than in a transaction involved in such conversion or in a transaction exempted by any other provision of the regulations under subsection (b) of the Act) within a period of less than six (6) months which includes the date of conversion.
(b) For the purpose of Section 4.7 of these rules, an equity security shall not be deemed to be acquired or disposed of upon conversion of an equity security if the terms of the equity security converted require the payment or entail the receipt, in connection with such conversion, of cash or other property (other than equity securities involved in the conversion) equal in value at the time of conversion to more than fifteen percent (15%) of the value of the equity security issued upon conversion.
(c) For the purpose of Section 4.7 of these rules, an equity security shall be deemed convertible if it is convertible at the option of the holder or of some other person or by operation of the terms of the security or the governing instruments.
W. Va. Code R. § 114-4-5 Regulations Under Subsection (c) Of The Act
5.1. Exemption of certain securities from subsection (c) of the Act. -- Any security shall be exempt from the operation of subsection (c) of the Act to the extent necessary to render lawful under such subsection the execution by a broker of an order for an account in which he has no direct or indirect interest.
5.2. Exemption from subsection (c) of the Act of certain transactions effected in connection with a distribution.
Any security shall be exempt from the operation of subsection (c) of the Act to the extent necessary to render lawful under such section any sale made by or on behalf of a dealer in connection with a distribution of a substantial block of securities, upon the following conditions:
(a) The sale is represented by an over-allotment in which the dealer is participating as a member of an underwriting group, or dealer or person acting on his behalf intends in good faith to offset such sale with a security to be acquired by or on behalf of the dealer as a participant in an underwriting, selling or soliciting-dealer group of which the dealer is a member at the time of sale, whether or not the security to be so acquired is subject to a prior offering to existing security holders or some other class of persons; and (b) Other persons not within the purview of subsection (c) of the Act are participating in the distribution of such block of securities on terms at least as favorable as those on which such dealer is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of subsection (c) of the Act by Section 5.2 of these rules. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing such functions shall not preclude an exemption which would otherwise be available under Section 5.2 of these rules.
5.3. Exemption from subsection (c) of the Act of sales of securities to be acquired.
(a) Whenever any person is entitled, as an incident to his ownership of an issued security and without the payment of consideration, to receive another security "When Issued" or "When Distributed," the security to be acquired shall be exempt from the operation of subsection (c): Provided, That (1) The sale is made subject to the same conditions as those attaching to the right of acquisition; and (2) Such person exercises reasonable diligence to deliver such security to the purchaser promptly after his right of acquisition matures; and (3) Such person reports the sale on the appropriate form for reporting transactions by persons subject to subsection (a) of the Act.
(b) This section shall not be construed as exempting transactions involving both a sale of a security "When Issued" or "When Distributed" and a sale of the security by virtue of which the seller expects to receive the "When-Issued" or "When-Distributed" security, if the two (2) transactions combined result in a sale of more units than the aggregate of those owned by the seller plus those to be received by him pursuant to his right of acquisition.
W. Va. Code R. § 114-4-6 Regulation Under Subsection (e) Of The Act
6.1. Arbitrage transactions under subsection (e) of the Act. -- It shall be unlawful for any director or officer of an insurer to effect any foreign or domestic arbitrage transaction in any equity security of such insurer, unless he shall include such transaction in the statements required by subsection (a) of the Act and shall account to such insurer for the profits arising from such transaction, as provided in subsection (b) thereof. The provisions of subsection (c) of the Act shall not apply to such arbitrage transactions. The provisions of the Act shall not apply to any bona fide foreign or domestic arbitrage transaction insofar as it is effected by any person other than such director or officer of the insurer.
114CSR4
Series 05 Procedures To Be Followed By Fire Rating Organizations
W. Va. Code R. § 114-5-1 General
1.1. Scope. -- This regulation is to establish procedures to be followed by fire rating organizations in rating and inspecting West Virginia cities or towns, any division thereof or risk therein.
1.2. Authority. -- W. Va. Code '33-20-6
1.4. Filing Date. -- March 9, 1968
1.5. Effective Date. -- April 18, 1968
W. Va. Code R. § 114-5-2 Filing Procedures For Fire Rating Organizations
2.1. Notification of cities or towns of proposed grading schedule changes. -- Within thirty (30) days after the Insurance Commissioner has received any filing made by any fire rating organization, if the filing contains changes in standard schedule for grading cities and towns of the United States, the Commissioner may forward to the city official of all towns or cities affected by such filing a letter, which shall contain the following information:
a) Notification that the fire rating organization has made said filing including the date of filing.
b) A synopsis of the proposed changes.
c) An analysis of how the proposed changes, if approved, may generally affect the towns or cities.
d) Notification to towns or cities of their right to request a hearing regarding the filing before action is taken by the Commissioner.
2.2. Cities' or towns' right to hearing. -- All towns or cities in West Virginia affected by said filing may file within ten (10) days of receipt of the notification letter referred to in Section 2.1 of this regulation, a request in writing for hearing before the Insurance Commissioner to allow the towns or cities a right to be heard in connection with said filing. A copy of said request shall also be directed to the fire rating organization in question.
2.3. Form of written request for hearing. -- Any town or city which desires a hearing under the provisions of this regulation should also set forth in said written request the general objections which it has to the filing.
2.4. Notice of hearing. -- Upon receipt of the request for hearing from any town or city, the Commissioner shall notify said town or city and the fire rating organization involved of the time and place of hearing, which notice shall be in compliance with chapters twenty-nine-a and thirty-three of the West Virginia Code of 1931, as amended.
2.5. Hearing procedures, review period, decision by commissioner. -- The general procedures for hearing, time within which the Commissioner may make the decision to approve or disapprove said filing and notification to interested parties of the Commissioner's decision are set forth in section thirteen, article two, chapter thirty-three of the West Virginia Code of 1931, as amended.
W. Va. Code R. § 114-5-3 Town Inspections By Fire Rating Organizations And Change In Classification
3.1. Inspection results filed with city. -- After a fire rating organization has completed its inspection of any town or city in West Virginia, it shall, as soon as practicable, file with the city officials of such town or city a copy of the inspection result.
3.2. Certain inspection results to be filed with Commissioner. -- All fire rating organizations shall file with the Insurance Commissioner, any town or city inspection result which contains information indicating that the town or city should be placed in a rating class higher than its previous classification for fire rating purposes. In addition to this inspection result, the fire rating organizations shall also file with the Commissioner the preceding inspection result for that particular city or town along with a cover letter in which the fire rating organization shall enumerate wherein that particular town or city has become deficient.
3.3. Cities' or towns' right to hearing to object to inspection result. -- Any town or city, after receiving its inspection result, shall have the right to request a hearing in order to give said town or city the opportunity to object to the content of the result or manner in which the inspection was conducted. Such request for hearing, if desired, should set forth the objections thereto in writing and be submitted to the Insurance Commissioner within thirty (30) days after said town or city has received its copy of the inspection result. A copy of such request for hearing shall be directed to the fire rating organization in question.
3.4. Moratorium of no less than one (1) year before downgrading classification of risk. -- The fire rating organizations shall not place any town or city, any division thereof or risk therein, into a higher fire rate classification until all of the following requirements have been met:
a) A period of thirty (30) days, as referred to in Section 3.3 of these rules, has passed and no request for hearing has been made by the town or city or after the hearing referred to in Section 3.3 of these rules, the Commissioner overrules the objections made by the town or city to such inspection result; and b) The fire rating organization has extended to said town or city, any division thereof or risk therein, a period of one (1) year to improve the deficiencies set forth in the inspection result.
c) If there is reasonable evidence that no improvement of existing deficiencies will be promptly undertaken, the Commissioner may waive the moratorium and permit retrograded class of protection to apply.
3.5. Extension of moratorium if substantial progress toward correcting deficiencies. -- If, at the end of the moratorium period which is set forth in Section 3.4 of this regulation and after reinspection by the fire rating organization, it is found that there has been substantial progress by the town or city, any division thereof or risk therein, in correcting the deficiencies, the fire rating organization shall extend said moratorium for a period of no less than six (6) months from the date of said reinspection result.
3.6. Moratorium only applicable to certain risk. -- The requirement of moratorium referred to in Sections 3.4 and 3.5 of this regulation shall only be applicable to dwellings which are classified in the following categories:
a) Dwellings.
b) Seasonal dwellings and camp cottages.
c) Apartment houses (with twenty (20) apartments or less in a single building).
d) Private boarding and rooming houses (not over twenty (20) rooms for lodging nor more than twenty (20) boarders).
e) Nurses and sisters' homes.
f) Chapter, fraternity and sorority houses.
g) Trailer homes.
h) Farm property.
i) Motels, tourist courts and tourist cabins (with twenty (20) units or less in a single building).
j) Private garages and private outbuildings used in connection therewith.
3.7. Annual report to Commissioner by fire rating organizations. -- All fire rating organizations shall file with the Insurance Commissioner on March 1 of each year a report regarding city or town inspections which shall contain the following information:
a) A list of all cities or towns in West Virginia inspected during the preceding year.
b) The date of inspection of those cities or towns.
c) Whether the report indicated a result that the protection was improved to warrant a better classification, deteriorated to warrant a poorer classification or remained the same as the previous classification.
(d) If the moratorium, as set forth in Section 3.4 or 3.5 of these rules, has been extended by the fire rating organizations, a listing of such town and the termination date of such moratorium.
114CSR5
Series 06 Credit Life Insurance, Credit Accident And Sickness Insurance, And Credit Unemployment Insurance
W. Va. Code R. § 114-6-1 General
1.1. Scope. -- The purpose of this rule is to set forth requirements to be followed by insurers which are transacting credit life insurance, credit accident and sickness insurance, and credit unemployment insurance in West Virginia for the protection of West Virginia debtors who are participating in such insurance. Section 7 of this rule is based on the National Association of Insurance Commissioners’ “Consumer Credit Insurance Regulation” (Model 370) as adopted in 1996.
1.2. Authority. -- W. Va. Code §§33-2-10 and 46A-3-109(c).
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- July 1, 2011.
W. Va. Code R. § 114-6-2 Definitions
2.1. “Commissioner” means the West Virginia Insurance Commissioner.
2.2. “Credit Accident and Sickness Insurance” means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy.
2.3. “Credit Life Insurance” means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction.
2.4. “Credit unemployment insurance” means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is unemployed as defined in the policy.
2.5. “Creditor” means the lender of money or vendor or lesser goods, services, or property, rights or privileges, for which payment is arranged through a credit transaction, or any successor to the right, title or interest of any such lender, vendor, or lessor, and an affiliate, associate or subsidiary of them or any director, officer, or employee of any of them or any other person in any way associated with any of them.
2.6. “Debtor” means a borrower of money or purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction.
2.7. "Indebtedness" means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction.
2.8. “Indebtedness” means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction.
W. Va. Code R. § 114-6-3 Amount of Credit Life Insurance and Credit Accident and Sickness Insurance. 3.1
3.1.a. Amounts payable -- Credit Life Insurance. -- The initial amount of credit life insurance shall not exceed the total amount repayable under the contract of indebtedness and, where an indebtedness is repayable in substantially equal installments, the amount of unpaid indebtedness, whichever is greater.
3.1.b. Notwithstanding the provisions of paragraph a of this subsection, insurance on agricultural credit transaction commitments, not exceeding two (2) years in duration may be written up to the amount of the loan commitment, on a nondecreasing or level term plan. Notwithstanding the provisions of paragraph a of this subsection or any other section of this rule, insurance on educational credit transaction commitments may be written for the amount of the portion of the commitment that has not been advanced by the creditor.
3.2. Amounts payable -- Credit accident and sickness insurance. -- The total amount of periodic indemnity payable by credit accident and sickness insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness; and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments.
W. Va. Code R. § 114-6-4 Term of Credit Life Insurance and Credit Accident and Sickness Insurance
4.1. Commencement date. -- The term of any credit life insurance or credit accident and sickness insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor, the date from which interest or finance charges accrued or the date the debtor applied for the insurance, whichever is later, except that, where a group policy provides coverage with respect to existing obligations, the insurance on a debtor with respect to the indebtedness shall commence on the effective date of the policy.
4.2. Commencement date where evidence of insurability required. -- Where evidence of insurability is required and the evidence is furnished more than thirty (30) days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date which the insurance company determines the evidence to be satisfactory and in that event there shall be an appropriate refund or adjustment by the insurer of any charge to the debtor for insurance. The term of the insurance shall not extend more than fifteen (15) days beyond the scheduled maturity date of the indebtedness except when extended by the insurer without additional cost to the debtor.
4.3. Termination date. -- All credit life and credit accident and sickness insurance shall be terminated by the insurer if the indebtedness is discharged due to prepayment by the debtor, renewal or refinancing prior to the scheduled maturity date: Provided, That where no new insurance is issued in connection with a renewed or refinanced indebtedness, insurance furnished under individual policies may be continued if the debtor so elects in a separate written instrument signed and delivered to the insurer at the time of the renewal or refinancing. In all cases of termination prior to scheduled maturity, a refund shall be paid or credited by the insurer as provided in section 6.8 of this rule.
W. Va. Code R. § 114-6-5 Provisions of Policies, Certificates, Applications and Notices of Proposed Insurance
5.1. Policy or certificate required. -- All credit life insurance and credit accident and sickness insurance shall be evidenced by an individual policy, or in the case of group insurance by a certificate of insurance. The insurer shall deliver the individual policy or group certificate of insurance to the debtor.
5.2. Certain information required on policy or certificate. -- Each individual policy or group certificate of credit life insurance and/or credit accident and sickness insurance shall, in addition to other requirements of law, set forth (i) the name and home office address of the insurer, (ii) the names of the debtor or in the case of a certificate under a group policy, the identity by name or otherwise of the debtor, (iii) the premium or amount of payment, if any, by the debtor separately for credit life insurance and credit accident and sickness insurance, (iv) a description of the coverage including the amount of term thereof and any exceptions, limitations and restrictions, and (v) shall state that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness. When the amount of insurance exceeds the unpaid indebtedness, any excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his or her estate.
5.3. Delivery. -- The individual policy or group certificate of insurance shall be delivered by the insurer to the insured debtor at the time the indebtedness is incurred except as provided in this section. If the individual policy or group certificate of insurance is not a copy of the application for the policy or a notice of proposed insurance, signed by the debtor setting forth the name and home office address of the insurer, the name or names of the debtor(s), the premium or amount of payment by the debtor, if any, separately for credit life insurance and credit accident and sickness insurance, the amount, term and brief description of the coverage provided, the policy shall be delivered by the insurer to the debtor at the time the indebtedness is incurred. The copy of the application for, or notice of proposed insurance, shall also refer exclusively to insurance coverage, and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless set forth in a separate provision on the face or reverse side of the instrument in type at least equal in size and prominence to the type used for the provisions of the instrument: Provided, That the name of the debtor proposed for insurance, any figures relating to the amount of the coverage, and the rate or amount of payment for insurance by the debtor need not be contained in a separate provision of the instrument but may be set forth elsewhere in the instrument. Upon acceptance of the insurance by the insurer and within forty-five (45) days of the date upon which the indebtedness is incurred, the insurer shall cause the individual policy or group certificate of insurance to be delivered to the debtor. The application or notice of proposed insurance shall state that upon acceptance by the insurer, the insurance becomes effective as provided in Section 4 [§114-6-4] of this rule.
5.4. Substituted insurer. -- If the named insurer does not accept the risk, then the debtor must receive from the substituted insurer a policy or certificate of insurance setting forth the name and home office address of the substituted insurer and the amount of the premium to be charged and if the amount of premium is less than that set forth in the notice of proposed insurance an appropriate refund shall be made.
W. Va. Code R. § 114-6-6 Rates and Refunds of Credit Life Insurance and Credit Accident and Sickness Insurance. 6.1
6.1.a. Credit life insurance. -- Prima facie reasonable rates. -- W. Va. Code §33-6-9(e) provides that the Commissioner shall disapprove any form of policy, application, rider or endorsement or withdraw any previous approval if the benefits provided therein are unreasonable in relation to the premium charged. A single premium rate of sixty-five cents ($.65) per annum per one hundred dollars ($100) of decreasing term life insurance discounted at three percent (3%) per annum for interest and mortality after the first twelve (12) months (or its actuarial equivalent if other than single premium) is prima facie reasonable and any rate in this amount or less will be approved without statistical justification. A premium payable monthly at a rate of one dollar ($1.00) per one thousand dollars ($1,000) of outstanding unpaid insured indebtedness or a single premium of one dollar and twenty cents ($1.20) per annum per one hundred dollars ($100) of level term credit life insurance, is the actuarial equivalent of the sixty-five cent ($.65) rate.
6.1.b. A single premium rate of one dollar ($1.00) per annum per one hundred dollars ($100) of decreasing term joint life insurance discounted at three percent (3%) per annum for interest and mortality after the first twelve (12) months (or its actuarial equivalent if other than single premium) is prima facie reasonable and any rate in this amount or less will be approved without statistical justification.
6.1.c. For dismemberment benefit, the premium rate shall be not more than five cents ($.05) per one hundred dollars ($100) per annum.
6.2. Credit life insurance -- Exceptions, exclusions and limitations on coverage. -- The rates referred to in Section 6.1 of this rule, are presumed reasonable only if the policies contain no exceptions, limitations or exclusions other than for suicide and contain no age restrictions, or only age restrictions making ineligible for the coverage, debtors sixty-five (65) or older at the time the indebtedness is incurred, or debtors who will have attained age sixty-six (66) or over on the maturity date of the indebtedness. 6.3.
6.3.a. Accident and sickness insurance -- Prima facie reasonable rates. -- For credit accident and sickness insurance the following single premium rates per one hundred dollars ($100) of initial insured indebtedness are prima facie reasonable: (See Table 114.6A found at the end of this rule.)
6.3.b. Rates for policies of credit accident and sickness insurance on which premiums are paid other than on a single premium basis or for benefits on a basis other than illustrated in this section shall be actuarially consistent with the rates specified in this section. 6.4.
6.4.a. Credit accident and sickness insurance -- Exceptions, exclusions and limitations on coverage. -- The premium rates referred to in Table 114-6A, Schedule A, Section 6.3 of this rule are for policies which contain no exclusion for preexisting conditions except for those conditions which manifested themselves to the insured by requiring medical diagnosis or treatment within the six (6) months preceding the taking of the application for insurance and which caused loss within six (6) months following the effective date of coverage: Provided, That disability commencing after six months from the application date resulting from preexisting conditions shall be covered.
6.4.b. The premium rates referred to in Table 114-6A, Schedule B, Section 6.3 of this rule are for policies which contain no exclusions for preexisting conditions.
6.4.c. Any contract to which the foregoing rates apply may contain provisions excluding or restricting coverage in the event of total disability resulting from pregnancy, intentionally self-inflicted injuries, foreign travel or residence, flight in nonscheduled aircraft, war or military service. (Except in unusual cases this insurance should not be sold to military persons, since their pay continues through periods of disability.) The policies may contain the same age limitation for eligibility as set forth for credit life policies.
6.5. Premium payment. -- The amount charged to a debtor for credit life or credit accident and sickness insurance shall not exceed the premiums charged by the insurer as computed at the time the charge to the debtor is determined.
6.6. Restrictive coverage. -- Separate rate filings required. -- If credit life or credit accident and sickness coverage is offered which is more restrictive than provided in Sections 6.2 and 6.4 of this rule, the insurer shall, by a separate filing, demonstrate to the satisfaction of the Commissioner that the schedule of premium rates applicable to the more restrictive forms will or can reasonably be expected to produce a loss ratio of sixty percent (60%).
6.7. Deviations from prima facie reasonable rates. -- An insurer may receive approval of a higher premium rate to be used, on a credible case, or a class of business, or in connection with a particular policy form, for insurance on debtors of creditors if the insurer demonstrates, to the satisfaction of the Commissioner, that the mortality or morbidity experience will or can reasonably be expected to produce a loss ratio of sixty percent (60%).
6.8. Refunds. -- With respect to policies issued and certificates subject to this rule:
6.8.a. The refund of an unearned amount paid by or charged to the debtor for insurance in the case of reducing term credit life insurance or of credit accident sickness insurance, on which the charges to the debtor are payable by other than a single sum and of level term credit life insurance shall be no less than the pro rata gross unearned amount charged;
6.8.b. The refund of an unearned amount paid by or charged to the debtor for insurance in the case of reducing term credit life insurance or of credit accident and sickness insurance, on which the insurance charges to the debtor are paid in a single sum shall not be less than the amount computed by the "Sum of the Digits" formula, commonly known as the "Rule of 78";
6.8.c. A premium refund or credit need not be made if the amount of the refund or credit is less than one dollar ($1.00);
6.8.d. A creditor, such as a retailer, lending institution or other entity, that is a creditor in a consumer credit sale or consumer loan and the seller of credit insurance on that loan must automatically cancel the insurance and refund unearned consumer credit insurance premiums when a consumer credit sale or consumer loan, refinancing, or consolidation is paid in full. If credit insurance is sold to a consumer/debtor, the creditor, such as a retailer, lending institution or other entity, that is the creditor in a consumer credit sale or consumer loan, but is not the seller of a credit insurance policy on the sale or loan must notify a consumer debtor/insured of his or her right to cancel his or her credit insurance policy and to receive a refund for any unearned premiums paid when a consumer credit sale or loan, refinancing or consolidation is paid in full. The following forms shall be used by creditors:
6.8.d.1. The form incorporated into this rule as Appendix A, which a retailer, lending institution or other entity that is the creditor on the loan and seller or provider of the consumer credit insurance may use to notify a consumer debtor/insured when his or her insurance coverage has been cancelled and the unearned premiums have been automatically refunded by deducting these premiums from the loan balance; provided, that the retailer, lending institution or other entity may use an alternative notice form, which is consistent with the general course of business of the creditor and which advises the consumer debtor/insured of cancellation of his/her credit insurance and the application of a refund of his/her credit insurance;
6.8.d.2. The form incorporated into this rule as Appendix B, which a retailer, lending institution or other entity that is the creditor on the loan and the seller of the insurance policy shall use to notify the insurer that the debtor/insured's policy has been cancelled and that the insurer must refund any unearned premiums to the consumer debtor/insured; and
6.8.d.3. The form incorporated into this rule as Appendix C, which a retailer, lending institution or other entity that is the creditor on the loan but not the seller of the insurance policy must use to notify a consumer debtor/insured of his or her right to cancel any credit insurance policy and to receive a refund of any unearned premiums paid for this insurance.
6.9. Responsibility for reviewing lender's accounts. -- It is the responsibility of the insurer to review each lender's account at least every eighteen (18) months verifying the accuracy of premium payments, or other identifiable insurance charges, premium refunds, and claims incurred and to be prepared to exhibit the results of the review upon request of the Commissioner.
6.10. Filing of experience information. -- An insurer doing credit life and/or credit accident and sickness insurance business in this State shall annually file with the Insurance Department a report of the insurer's credit life insurance experience and credit accident and sickness insurance experience separately on reporting forms prescribed by the Commissioner.
6.11. Separability. -- If any provision of this rule is held invalid, the remainder of the rule shall not be affected by that section's invalidity.
W. Va. Code R. § 114-6-7 Credit Unemployment Insurance Rates
7.1. Each insurer filing rates for credit unemployment insurance shall include in its rate filing with the Commissioner the appropriate rate formula upon which its rates are based, including a provision for anticipated losses. Anticipated losses that develop or are expected to develop a loss ratio of not less than sixty percent (60%) shall be presumed reasonable. Anticipated losses may include an amount for fluctuation in loss due to catastrophe based on the experience of at least the latest nine (9) policy years or as long as the company has been writing this line of business.
7.2. Credit unemployment insurance policies must contain benefits at least as favorable to insureds as the provisions below:
7.2.a. Coverage for unemployment for any reason, except that coverage may be excluded for:
7.2.a.1. Voluntary forfeiture of salary, wage or other employment income;
7.2.a.2. Resignation;
7.2.a.3. Retirement;
7.2.a.4. General strike;
7.2.a.5. Illegal walk out;
7.2.a.6. War;
7.2.a.7. Separation from the military;
7.2.a.8. Willful misconduct or criminal misconduct or unlawful behavior; and
7.2.a.9. Disability caused by injury, sickness or pregnancy.
7.2.b. For credit unemployment insurance that provides for a monthly benefit in the event of unemployment, benefits must start after a waiting period of not longer than thirty (30) days but need not be retroactive to the first day of unemployment and must have a maximum benefit period that is no shorter than six (6) months.
7.3. Credit unemployment insurance policies may not contain eligibility requirements more restrictive than the restrictions below:
7.3.a. Exclusion from qualification for coverage:
7.3.a.1. Self employed individuals;
7.3.a.2. Workers in seasonal or temporary jobs, defined as jobs designed to last six (6) consecutive months or less; and,
7.3.a.3. Debtors who have been notified either orally or in writing of any layoff or of employment termination either now or within the next sixty (60) days. This exclusion must be disclosed to all prospective insureds.
7.3.b. No employment requirement more restrictive than one requiring that the debtor be employed full-time on the effective date of coverage for at least twelve (12) consecutive months prior to the effective date of coverage. "Full time" means a regular work week of not less than thirty (30) hours.
7.3.c. An age restriction providing that no insurance will become effective on debtors on or after the attainment of age sixty-six (66) and that all insurance will terminate upon attainment by the debtor of age sixty-six (66).
W. Va. Code R. § 114-6-8 Experience Reports and Adjustment of Prima Facie Rates
8.1. Each insurer doing insurance business in this state shall annually file with the Commissioner and the National Association of Insurance Commissioners (NAIC) Support and Services Office a report of consumer credit insurance written on a calendar year basis. The report shall utilize the Credit Insurance Supplement--Annual Statement Blank as approved by the NAIC, and shall contain data separately for each state, rather than an allocation of the company's countrywide experience. The filing shall be made in accordance with and no later than the due date in the Instructions to the Annual Statement.
8.2. The Commissioner will, on a triennial basis, review the loss ratio standards set forth in sections 6 and 7 and the prima facie rates set forth in section 6 and determine therefrom the rate of expected claims on a statewide basis, compare such rate of expected claims with the rate of actual claims for the preceding three (3) years determined from the incurred claims and earned premiums at prima facie rates reported in the Annual Statement Supplement or other available source, and publish the adjusted actual statewide prima facie rates to be used by insurers during the next triennium. The rates will reflect the difference between actual claims based on experience and expected claims based on the loss ratio standards set forth in section 4 applied to the prima facie rates set forth in section 6.
Table 114.6A Schedule A (6 months preexist)
No. of Months Nonretroactive Benefits Retroactive Benefits in which indebted- 14-day 30-day 14-day 30-day ness is repayable Nonretro Nonretro Retro Retro 1-6 $1.30 $.75 $1.90 $1.40 7-12 1.75 1.20 2.30 1.85 13-24 2.50 1.95 3.00 2.60 25-36 3.00 2.45 3.45 3.05 3d7-48 3.25 2.65 3.65 3.30 49-60 3.50 2.90 3.90 3.55 61-72 3.75 3.15 4.15 3.80 73-84 3.95 3.40 4.35 4.00 85-96 4.15 3.60 4.55 4.20 97-108 4.35 3.80 4.75 4.40 109-120 4.55 4.00 4.95 4.60 Schedule B (No preexist)
No. of Month Nonretroactive Benefits Retroactive Benefits in which indebted- 14-day 30-day 14-day 30-day ness is repayable Nonretro Nonretro Retro Retro 1-6 $1.45 $.90 $2.15 $1.55 7-12 1.95 1.40 2.65 2.15 13-24 2.80 2.20 3.35 2.85 25-36 3.45 2.80 4.00 3.50 37-48 3.75 3.05 4.30 3.80 49-60 4.05 3.35 4.55 4.05 61-72 4.35 3.60 4.80 4.35 73-84 4.65 3.90 5.05 4.60 85-96 4.90 4.20 5.30 4.85 97-108 5.10 4.40 5.55 5.10 109-120 5.30 4.60 5.75 5.35
Appendix A (Name and Address of Financial Institution, Retailer, or Company)
Re: Credit Insurance with (Name of Insurance Company)
Dear (Debtor/Insured):
As a result of your payment in full of account number __________, the credit insurance policy or certificate issued in conjunction with this account has been cancelled. Remaining unearned premiums (if any) from your policy or certificate have been deducted from your loan balance to arrive at your payoff amount.
If you have other credit insurance policies in effect on this account, you must notify the insurer(s) that you have paid off this account and request that the insurer refund you any unearned insurance premiums.
Appendix B (Name and Address of Institution, Retailer, or Company)
Re: (Name and Address, Account #, & Insurance Policy #)
Dear (Name of Insurance Company):
As a result of the payment in full of the above account, the credit insurance policy or certificate issued in conjunction with this account is cancelled. You are obligated, by law, to pay to the insured any refund of unearned premiums within 45 days of receipt of this notice of cancellation.
Appendix C (Name and Address of Institution, Retailer or Company)
Dear (Debtor/Insured):
As a result of your payment in full of account number _______, you have the right to cancel any credit insurance policy or certificate issued in conjunction with that account and receive a refund of any unearned insurance premiums.
To cancel the credit insurance policy or certificate, please notify, in writing, the seller(s) of this insurance listed below:
Seller: _________________________________ (Address) _________________________________ _________________________________ Insurer: _________________________________ (Address) _________________________________ _________________________________ 114CSR6 114CSR6
Series 08 Replacement Of Life Insurance Policies And Annuity Contracts
W. Va. Code R. § 114-8-1 General
1.1. Scope. -- The purposes of this rule are to regulate the activities of insurers and producers with respect to the replacement of existing life insurance and annuities and to protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct to be observed in replacement or financed purchase transactions. It will assure that purchasers receive information with which a decision can be made in his or her own best interest, reduce the opportunity for misrepresentation and incomplete disclosure, and establish penalties for failure to comply with requirements of this rule. This rule is based on the National Association of Insurance Commissioners' "Life Insurance And Annuities Replacement Model Regulation (Model 613)," as amended in 2006; the 2008 amendments to this rule reflect the promulgation of 114CSR11C, which adopted the NAIC model rule on life insurance illustrations.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-13-48.
1.3. Filing Date. -- May 5, 2008.
1.4. Effective Date. -- August 1, 2008.
W. Va. Code R. § 114-8-2 Definitions
2.1. "Direct-response solicitation" means a solicitation through a sponsoring or endorsing entity or individually solely through mails, telephone, the Internet or other mass communication media.
2.2. "Existing insurer" means the insurance company whose policy or contract is or will be changed or affected in a manner described within the definition of "replacement."
2.3. "Existing policy or contract" means an individual life insurance policy ("policy") or annuity contract ("contract") in force, including a policy under a binding or conditional receipt or a policy or contract that is within an unconditional refund period.
2.4. "Financed purchase" means the purchase of a new policy involving the actual or intended use of funds obtained by the withdrawal or surrender of, or by borrowing from values of an existing policy to pay all or part of any premium due on the new policy. For purposes of a regulatory review of an individual transaction only, if a withdrawal, surrender or borrowing involving the policy values of an existing policy is used to pay premiums on a new policy owned by the same policyholder and issued by the same company within four (4) months before or thirteen (13) months after the effective date of the new policy, it will be deemed prima facie evidence of the policyholder's intent to finance the purchase of the new policy with existing policy values. This prima facie standard is not intended to increase or decrease the monitoring obligations contained in subdivision e., subsection 5.1. of this rule.
2.5. "Illustration" means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years as defined in 114CSR11C-3.8.
2.6. "Policy summary" means:
a. For policies or contracts other than universal life policies, a written statement regarding a policy or contract which contains, to the extent applicable, but is not necessarily limited to, the following information: current death benefit; annual contract premium; current cash surrender value; current dividend; application of current dividend; and amount of outstanding loan.
b. For universal life policies, a written statement that contains at least the following information: the beginning and end date of the current report period; the policy value at the end of the previous report period and at the end of the current report period; the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders); the current death benefit at the end of the current report period on each life covered by the policy; the net cash surrender value of the policy as of the end of the current report period; and the amount of outstanding loans, if any, as of the end of the current report period.
2.7. "Producer" means agents, brokers and producers.
2.8. "Replacing insurer" means the insurance company that issues or proposes to issue a new policy or contract that replaces an existing policy or contract or is a financed purchase.
2.9. "Registered contract" means a variable annuity contract or variable life insurance policy subject to the prospectus delivery requirements of the Securities Act of 1933.
2.10. "Replacement" means a transaction in which a new policy or contract is to be purchased and in which the proposing producer, or the proposing insurer if there is no producer, knows or should know that by reason of the transaction, an existing policy or contract has been or is to be:
a. Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated;
b. Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;
c. Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;
d. Reissued with any reduction in cash value; or e. Used in a financed purchase.
2.11. "Sales material" means a sales illustration or any written, printed or electronically presented information created, completed or provided by the company or producer and used in the presentation to the policy or contract owner related to the policy or contract purchased.
W. Va. Code R. § 114-8-3 Exemptions
3.1. Unless otherwise specifically included, this rule shall not apply to transactions involving:
a. Credit life insurance;
b. Group life insurance or group annuities where there is no direct solicitation of individuals by an insurance producer. "Direct solicitation" does not include any group meeting held by an insurance producer solely for the purpose of educating or enrolling individuals or, when initiated by an individual member of the group, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual. Group life insurance or group annuity certificates marketed through direct response solicitation shall be subject to the provisions of section 8 of this rule;
c. Group life insurance and annuities used to fund prearranged funeral contracts;
d. An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or when a term conversion privilege is exercised among corporate affiliates;
e. Proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same company; f.
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Policies or contracts used to fund (A) an employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA); (B) a plan described by Sections 401(a), 401(k) or 403(b) of the Internal Revenue Code (IRC), where the plan, for purposes of ERISA, is established or maintained by an employer; (C) a governmental or church plan defined in Section 414 of the IRC, a governmental or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the IRC; or (D) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor.
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Notwithstanding paragraph 1 of this subdivision, this rule applies to policies or contracts used to fund any plan or arrangement that is funded solely by contributions an employee elects to make, whether on a pre-tax or after-tax basis, and where the insurer has been notified that plan participants may choose from among two or more insurers and there is a direct solicitation of an individual employee by an insurance producer for the purchase of a contract or policy. As used in this subsection, "direct solicitation" does not include any group meeting held by an insurance producer solely for the purpose of educating individuals about the plan or arrangement or enrolling individuals in the plan or arrangement or, when initiated by an individual employee, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual employee;
g. Where new coverage is provided under a life insurance policy or contract and the cost is borne wholly by the insured's employer or by an association of which the insured is a member;
h. Existing life insurance that is a non-convertible term life insurance policy that will expire in five (5) years or less and cannot be renewed;
i. Immediate annuities that are purchased with proceeds from an existing contract. Immediate annuities purchased with proceeds from an existing policy are not exempted from the requirements of this rule; or j. Structured settlements.
3.2. Registered contracts are exempt from the requirements of subdivision b., subsection 6.1. and subsection 7.2. of this rule with respect to the provision of policy summaries; however, premium or contract contribution amounts and identification of the appropriate prospectus or offering circular shall be required instead.
W. Va. Code R. § 114-8-4 Duties of Producers
4.1. A producer who initiates an application shall submit to the insurer, with or as part of the application, a statement signed by both the applicant and the producer as to whether the applicant has existing policies or contracts. If the answer is "no," the producer's duties with respect to replacement are complete. 4.2.
a. If the applicant answered "yes" to the question regarding existing coverage referred to in subsection 4.1. of this section, the producer shall present and read to the applicant, not later than at the time of taking the application, a notice regarding replacements in the form as described in Appendix A or other substantially similar form approved by the commissioner. However, no approval is required when amendments to the notice are limited to the omission of references not applicable to the product being sold or replaced. The notice shall be signed by both the applicant and the producer, attesting that the notice has been read aloud by the producer or that the applicant did not wish the notice to be read aloud (in which case the producer need not have read the notice aloud), and left with the applicant.
b. The notice shall list all life insurance policies or annuities proposed to be replaced, properly identified by name of insurer, the insured or annuitant, and policy or contract number if available; and shall include a statement as to whether each policy or contract will be replaced or whether a policy will be used as a source of financing for the new policy or contract. If a policy or contract number has not been issued by the existing insurer, alternative identification, such as an application or receipt number, shall be listed.
4.3. In connection with a replacement transaction, the producer shall leave with the applicant at the time an application for a new policy or contract is completed the original or a copy of all sales material. Electronically presented sales material shall be provided to the policy or contract owner in printed form no later than at the time of policy or contract delivery.
4.4. Except as provided in subsection 6.3. of this rule, in connection with a replacement transaction the producer shall submit to the insurer to which an application for a policy or contract is presented, a copy of each document required by this section, a statement identifying any preprinted or electronically presented company approved sales materials used and copies of any individualized sales materials, including any illustrations related to the specific policy or contract purchased.
W. Va. Code R. § 114-8-5 Duties of All Insurers that Use Producers
Each insurer shall:
5.1. Maintain a system of supervision and control to insure compliance with the requirements of this rule that shall, at least:
a. Inform its producers of the requirements of this rule and incorporate the requirements of this rule into all relevant producer training manuals prepared by the insurer;
b. Provide to each producer a written statement of the company's position with respect to the acceptability of replacements which provides guidance to its producer as to the appropriateness of these transactions;
c. Provide a system to review the appropriateness of each replacement transaction that the producer does not indicate is in accord with subdivision b. of this subsection.
d. Provide procedures to confirm that the requirements of this rule have been met; and e. Provide procedures to detect transactions that are replacements of existing policies or contracts by the existing insurer, but that have not been reported as such by the applicant or producer. Compliance with this rule may include, but is not limited to, systematic customer surveys, interviews, confirmation letters, or programs of internal monitoring;
5.2. Have the capacity to monitor each producer's life insurance policy and annuity contract replacements for that insurer, and shall produce, upon request, and make such records available to the Insurance Commissioner. The capacity to monitor shall include the ability to produce records for each producer's:
a. Life replacements, including financed purchases, as a percentage of the producer's total annual sales for life insurance;
b. Number of lapses of policies by the producer as a percentage of the producer's total annual sales for life insurance;
c. Annuity contract replacements as a percentage of the producer's total annual annuity contract sales;
d. Number of transactions that are unreported replacements of existing policies or contracts by the existing insurer detected by the company's monitoring system as required by subdivision e., subsection 5.1. of this section; and e. Replacements, indexed by replacing producer and existing insurer;
5.3. Require, with or as a part of each application for life insurance or an annuity, a signed statement by both the applicant and the producer as to whether the applicant has existing policies or contracts;
5.4. Require, with each application for life insurance or an annuity that indicates an existing policy or contract, a completed notice regarding replacements as contained in Appendix A;
5.5. When the applicant has existing policies or contracts, be able to produce copies of any sales material required by subsection 4.4. of this rule, the basic illustration and any supplemental illustration related to the specific policy or contract that is purchased, and the producer's and applicant's signed statements with respect to financing and replacement for at least five (5) years after the termination or expiration of the proposed policy or contract;
5.6. Ascertain that the sales material and illustrations required by subsection 4.4. of this rule meets the requirements of this rule and are complete and accurate for the proposed policy or contract;
5.7. If an application does not meet the requirements of this rule, notify the producer and applicant and fulfill the outstanding requirements; and
5.8. Maintain records in paper, photograph, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.
W. Va. Code R. § 114-8-6 Duties of Replacing Insurers that Use Producers
6.1. Where a replacement is involved in the transaction, the replacing insurer shall:
a. Verify that the required forms are received and are in compliance with this rule;
b. Notify any other existing insurer that may be affected by the proposed replacement within five (5) business days of receipt of a completed application indicating replacement or when the replacement is identified if not indicated on the application, and mail a copy of the available illustration or policy summary for the proposed policy or available disclosure document for the proposed contract within five (5) business days of a request from an existing insurer;
c. Be able to produce copies of the notification regarding replacement required in subsection 4.2. of this rule, indexed by producer, for at least five (5) years or until the next regular examination by the insurance department of a company's state of domicile, whichever is later; and d. Provide to the policy or contract owner notice of the right to return the policy or contract within thirty (30) days of the delivery of the contract and receive an unconditional full refund of all premiums or considerations paid on it, including any policy fees or charges or, in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender value provided under the policy or contract plus the fees and other charges deducted from the gross premiums or considerations or imposed under such policy or contract; such notice may be included in Appendix A or C.
6.2. In transactions where the replacing insurer and the existing insurer are the same or subsidiaries or affiliates under common ownership or control allow credit for the period of time that has elapsed under the replaced policy's or contract's incontestability and suicide period up to the face amount of the existing policy or contract. With regard to financed purchases, the credit may be limited to the amount the face amount of the existing policy is reduced by the use of existing policy values to fund the new policy or contract.
6.3. If an insurer prohibits the use of sales material other than that approved by the company, as an alternative to the requirements made of an insurer pursuant to subsection 4.4. of this rule, the insurer may:
a. Require with each application a statement signed by the producer that:
- The producer used only company-approved sales material; and 2. Copies of all sales material were left with the applicant in accordance with subsection 4.3. of this rule.
b. Within ten (10) days of the issuance of the policy or contract:
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Notify the applicant by sending a letter to or by verbal communication with the applicant by a person whose duties are separate from the marketing area of the insurer, that the producer has represented that copies of all sales material have been left with the applicant in accordance with subsection 4.3. of this rule;
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Provide the applicant with a toll free number to contact company personnel involved in the compliance function in case the applicant did not receive copies of all sales material;
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Stress the importance of retaining copies of the sales material for future reference; and 4. Be able to produce a copy of the letter or other verification in the policy file for at least five (5) years after the termination or expiration of the policy or contract.
W. Va. Code R. § 114-8-7 Duties of the Existing Insurer
Where a replacement is involved in the transaction, the existing insurer shall:
7.1. Retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least five (5) years or until the conclusion of the next regular examination conducted by the insurance department of its state of domicile, whichever is later.
7.2. Send a letter to the policy or contract owner of the right to receive information regarding the existing policy or contract values including, if available, an in force illustration or a policy summary. The information shall be provided within five (5) business days of receipt of the request from the policy or contract owner.
7.3. Upon receipt of a request to borrow, surrender or withdraw any policy values, send a notice advising the policy owner that the release of policy values may affect the guaranteed elements, non-guaranteed elements, face amount or surrender value of the policy from which the values are released. The notice shall be sent separate from the check if the check is sent to anyone other than the policy owner. In the case of consecutive automatic premium loans, the insurer is only required to send the notice at the time of the first loan.
W. Va. Code R. § 114-8-8 Duties of Insurers with Respect to Direct Response Solicitations
8.1. In the case of an application that is initiated as a result of a direct response solicitation, the insurer shall require, with or as part of each completed application for a policy or contract, a statement asking whether the applicant, by applying for the proposed policy or contract, intends to replace, discontinue or change an existing policy or contract. If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer shall send the applicant, with the policy or contract, a notice regarding replacement in Appendix B, or other substantially similar form approved by the commissioner.
8.2. If the insurer has proposed the replacement or if the applicant indicates a replacement is intended, and the insurer continues with the replacement, the insurer shall:
a. Provide to applicants or prospective applicants with the policy or contract a notice, described in Appendix C, or other substantially similar form approved by the commissioner. In these instances the insurer may delete the references to the producer, including the producer's signature, and references not applicable to the product being sold or replaced, without having to obtain approval of the form from the commissioner. The insurer's obligation to obtain the applicant's signature is satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the notice referred to in this paragraph. The requirement to make a diligent effort is deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed notice referred to in this section; and b. Comply with the requirements of subdivision b., subsection 6.1. of this rule, if the applicant furnishes the names of the existing insurers, and the requirements of subdivisions c. and d., subsection 6.1. and the requirements of subsection 6.2. of this rule.
W. Va. Code R. § 114-8-9 Violations and Penalties
9.1. Any failure to comply with this rule shall be considered a violation of the Unfair Trade Practices Act, W. Va. Code §§33-11-1 et seq. Examples of violations include:
a. Any deceptive or misleading information set forth in sales material;
b. Failing to ask the applicant in completing the application the pertinent questions regarding the possibility of financing or replacement;
c. The intentional incorrect recording of an answer;
d. Advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer; or e. Advising a policy or contract owner to write directly to the company in such a way as to attempt to obscure the identity of the replacing producer or company.
9.2. A policy and contract owner may replace an existing life insurance policy or annuity contract after indicating in or as a part of the application for new coverage that replacement is not his or her intention; however, patterns of such action by policy or contract owners of the same producer shall be deemed prima facie evidence of the producer's knowledge that replacement was intended in connection with the identified transactions, and these patterns of action shall be deemed prima facie evidence of the producer's intent to violate this rule.
9.3. Where it is determined that the requirements of this rule have not been met, the replacing insurer shall provide to the policyowner an in force illustration if available or policy summary for the replacement policy or available disclosure document for the replacement contract and the appropriate notice regarding replacements in Appendix A or C.
9.4. Violations of this rule shall subject the violators to penalties that may include the revocation or suspension of a producer's or company's license, monetary fines and the forfeiture of any commissions or compensation paid to a producer as a result of the transaction in connection with which the violations occurred. In addition, where the commissioner has determined that the violations were material to the sale, the insurer may be required to make restitution, restore policy or contract values and pay interest on the amount refunded in cash.
APPENDIX A
IMPORTANT NOTICE:
REPLACEMENT OF LIFE INSURANCE OR ANNUITIES
This document must be signed by the applicant and the producer, if there is one, and a copy left with the applicant.
You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing policy or contract. If so, a replacement is occurring. Financed purchases are also considered replacements.
A replacement occurs when a new policy or contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing policy or contract, or an existing policy or contract is surrendered, forfeited, assigned to the replacing insurer, or otherwise terminated or used in a financed purchase.
A financed purchase occurs when the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the policy values, including accumulated dividends, of an existing policy to pay all or part of any premium or payment due on the new policy. A financed purchase is a replacement.
You should carefully consider whether a replacement is in your best interests. You will pay acquisition costs and there may be surrender costs deducted from your policy or contract. You may be able to make changes to your existing policy or contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing policy and may reduce the amount paid upon the death of the insured.
We want you to understand the effects of replacements before you make your purchase decision and ask that you answer the following questions and consider the questions on the back of this form.
- Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract?
___ YES ___ NO
- Are you considering using funds from your existing policies or contracts to pay premiums due on the new policy or contract?
___ YES ___ NO
If you answered "yes" to either of the above questions, list each existing policy or contract you are contemplating replacing (include the name of the insurer, the insured or annuitant and the policy or contract number if available) and whether each policy will be replaced or used as a source of financing:
INSURER NAME CONTRACT OR INSURED OR REPLACED (R) OR
POLICY # ANNUITANT FINANCING (F) 1. 2. 3.
Make sure you know the facts. Contact your existing company or its agent for information about the old policy or contract. If you request one, a policy summary or available disclosure documents must be sent to you by the existing insurer. Ask for and retain all sales material used by the agent in the sales presentation. Be sure that you are making an informed decision.
The existing policy or contract is being replaced because _______________________________.
I certify that the responses herein are, to the best of my knowledge, accurate:
Applicant’s Signature and Printed Name Date Producer’s Signature and Printed Name Date I do not want this notice read aloud to me. ________ (Applicants must initial only if they do not want the notice read aloud.)
A replacement may not be in your best interest, or your decision could be a good one. You should make a careful comparison of the costs and benefits of your existing policy or contract and the proposed policy or contract. One way to do this is to ask the company or agent that sold you your existing policy or contract to provide you with information concerning your existing policy or contract. This may include an illustration of how your existing policy or contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare policies or contracts. You should discuss the following with your agent to determine whether replacement or financing your purchase makes sense:
PREMIUMS: Are they affordable?
Could they change?
You're older -- are premiums higher for the proposed new policy?
How long will you have to pay premiums on the new policy? On the old policy?
POLICY VALUES: New policies usually take longer to build cash values and to pay dividends.
Acquisition costs for the old policy may have been paid, you will incur costs for the new one.
What surrender charges do the policies have?
What expense and sales charges will you pay on the new policy?
Does the new policy provide more insurance coverage?
INSURABILITY: If your health has changed since you bought your old policy, the new one could cost you more, or you could be turned down.
You may need a medical exam for a new policy.
Claims on most new policies for up to the first two years can be denied based on inaccurate statements.
Suicide limitations may begin anew on the new coverage.
IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW POLICY:
How are premiums for both policies being paid?
How will the premiums on your existing policy be affected?
Will a loan be deducted from death benefits?
What values from the old policy are being used to pay premiums?
IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST SENSITIVE LIFE PRODUCT:
Will you pay surrender charges on your old contract?
What are the interest rate guarantees for the new contract?
Have you compared the contract charges or other policy expenses?
OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:
What are the tax consequences of buying the new policy?
Is this a tax free exchange? (See your tax advisor.)
Is there a benefit from favorable "grandfathered" treatment of the old policy under the federal tax code?
Will the existing insurer be willing to modify the old policy?
How does the quality and financial stability of the new company compare with your existing company?
APPENDIX B
NOTICE REGARDING REPLACEMENT
REPLACING YOUR LIFE INSURANCE POLICY OR ANNUITY?
Are you thinking about buying a new life insurance policy or annuity and discontinuing or changing an existing one? If you are, your decision could be a good one -- or a mistake. You will not know for sure unless you make a careful comparison of your existing benefits and the proposed policy or contract's benefits.
Make sure you understand the facts. You should ask the company or agent that sold you your existing policy or contract to give you information about it.
Hear both sides before you decide. This way you can be sure you are making a decision that is in your best interest.
APPENDIX C
IMPORTANT NOTICE:
REPLACEMENT OF LIFE INSURANCE OR ANNUITIES
You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing policy or contract. If so, a replacement is occurring. Financed purchases are also considered replacements.
A replacement occurs when a new policy or contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing policy or contract, or an existing policy or contract is surrendered, forfeited, assigned to the replacing insurer, or otherwise terminated or used in a financed purchase.
A financed purchase occurs when the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the policy values, including accumulated dividends, of an existing policy, to pay all or part of any premium or payment due on the new policy. A financed purchase is a replacement.
You should carefully consider whether a replacement is in your best interests. You will pay acquisition costs and there may be surrender costs deducted from your policy or contract. You may be able to make changes to your existing policy or contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing policy and may reduce the amount paid upon the death of the insured.
We want you to understand the effects of replacements and ask that you answer the following questions and consider the questions on the back of this form.
- Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract?
___ YES ___ NO
- Are you considering using funds from your existing policies or contracts to pay premiums due on the new policy or contract?
___ YES ___ NO
Please list each existing policy or contract you are contemplating replacing (include the name of the insurer, the insured, and the policy or contract number if available) and whether each policy will be replaced or used as a source of financing:
INSURER NAME CONTRACT OR INSURED OR REPLACED (R) OR
POLICY # ANNUITANT FINANCING (F) 1. 2. 3.
Make sure you know the facts. Contact your existing company or its agent for information about the old policy or contract. If you request one, a policy summary or available disclosure documents must be sent to you by the existing insurer. Ask for and retain all sales material used by the agent in the sales presentation. Be sure that you are making an informed decision.
I certify that the responses herein are, to the best of my knowledge, accurate:
Applicant’s Signature and Printed Name Date A replacement may not be in your best interest, or your decision could be a good one. You should make a careful comparison of the costs and benefits of your existing policy or contract and the proposed policy or contract. One way to do this is to ask the company or agent that sold you your existing policy or contract to provide you with information concerning your existing policy or contract. This may include an illustration of how your existing policy or contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare policies or contracts. You should discuss the following with your agent to determine whether replacement or financing your purchase makes sense:
PREMIUMS: Are they affordable?
Could they change?
You're older -- are premiums higher for the proposed new policy?
How long will you have to pay premiums on the new policy? On the old policy?
POLICY VALUES: New policies usually take longer to build cash values and to pay dividends.
Acquisition costs for the old policy may have been paid, you will incur costs for the new one.
What surrender charges do the policies have?
What expense and sales charges will you pay on the new policy?
Does the new policy provide more insurance coverage?
INSURABILITY: If your health has changed since you bought your old policy, the new one could cost you more, or you could be turned down.
You may need a medical exam for a new policy.
Claims on most new policies for up to the first two years can be denied based on inaccurate statements.
Suicide limitations may begin anew on the new coverage.
IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW POLICY:
How are premiums for both policies being paid?
How will the premiums on your existing policy be affected?
Will a loan be deducted from death benefits?
What values from the old policy are being used to pay premiums?
IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST SENSITIVE LIFE PRODUCT:
Will you pay surrender charges on your old contract?
What are the interest rate guarantees for the new contract?
Have you compared the contract charges or other policy expenses?
OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:
What are the tax consequences of buying the new policy?
Is this a tax free exchange? (See your tax advisor.)
Is there a benefit from favorable "grandfathered" treatment of the old policy under the federal tax code?
Will the existing insurer be willing to modify the old policy?
How does the quality and financial stability of the new company compare with your existing company?
114CSR8
114CSR8
Series 100 Health Benefit Plan Network Access and Adequacy
W. Va. Code R. § 114-100-1 General
W. Va. Code R. § 114-100-2 Definitions
W. Va. Code R. § 114-100-3 Network Adequacy Standards
W. Va. Code R. § 114-100-4 Network Access Plan Standards
W. Va. Code R. § 114-100-5 Coordination and Continuity of Care
W. Va. Code R. § 114-100-6 Network Access Plan Disclosures; Attestations
W. Va. Code R. § 114-100-7 Provider Directories
Appendix A – Geographic Accessibility Standards TITLE 114 LEGISLATIVE RULE INSURANCE COMMISSIONER SERIES 100 HEALTH BENEFIT PLAN NETWORK ACCESS AND ADEQUACY
W. Va. Code R. § 114-100-1 General
1.1. Scope. -- This rule provides insurance carriers offering health benefit plans with standards and guidance regarding network access plan filings and provider directories. These standards shall serve as the measurable criteria used by the Commissioner to evaluate the adequacy of carrier network access plan filings and provider directories. This rule applies to all health carriers that offer network plans in West Virginia.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-55-9.
1.3. Filing Date. -- March 27, 2024.
1.4. Effective Date. – April 1, 2024.
1.5. Sunset Provision. -- This rule shall terminate and have no further force or effect upon August 1, 2034.
W. Va. Code R. § 114-100-2 Definitions
2.1. “Commissioner” means the Insurance Commissioner of this state.
2.2. “County designation” means the classification of each county based upon population size and density. These parameters are set annually by the Centers of Medicare and Medicaid Services (CMS). There are five classifications: Large Metro, Metro, Micro, Rural, and Counties with Extreme Access Considerations (CEAC). A county must meet both the population and density threshold for the designation:
County Type Classification Population Density(person/mi2)
Large Metro > 1,000,000 > 1,000/mi2 500,000 – 999,999 > 1,500/mi2 Any > 5,000/mi2 Metro > 1,000,000 10 – 999.9/mi2 500,000 – 999,999 10 – 1,499.9/mi2 200,000 – 499,999 10 – 4,999.9/mi2 50,000 – 199,999 100 – 4,999.9/mi2 10,000 – 49,999 1,000 – 4,999.9/mi2 Micro 50,000 – 199,999 10 – 99.9 /mi2 10,000 – 49,999 50 – 999.9/mi2 Rural 10,000 – 49,999 10 – 49.9/mi2 <10,000 10 – 4,999.9/mi2 CEAC Any <10/mi2
2.3. “Covered benefit” or “benefit” means those health care services to which a covered person is entitled under the terms of a health benefit plan.
2.4. “Covered person” means a policyholder, subscriber, enrollee, or other individual participating in a health benefit plan.
2.5. “Essential community provider” or “ECP” means a provider that:
2.5.1. Serves predominantly low-income, medically underserved individuals, including a health care provider defined in Section 340B(a)(4) of the Public Health Service Act (PHSA); or
2.5.2. Is described in Section 1927(c)(1)(D)(i)(IV) of the Social Security Act, as set forth by Section 221 of Pub. L. 111-8.
2.6. “Facility” means an institution providing health care services or a health care setting, including, but not limited to, hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, urgent care centers, diagnostic, laboratory and imaging centers, and rehabilitation and other therapeutic health settings.
2.7. “Health benefit plan” means a policy, contract, certificate or agreement entered into, offered or issued by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services.
2.8. “Health care professional” means a physician or other health care practitioner licensed, accredited or certified to perform specified (physical, mental or behavioral) health care services consistent with their scope of practice under state law.
2.9. “Health care provider” or “provider” means a health care professional, a pharmacy or a facility.
2.10. “Health care services” means services for the diagnosis, prevention, treatment, cure or relief of a physical, mental or behavioral health condition, illness, injury, or disease, including mental health and substance use disorders.
2.11. “Health carrier” or “carrier” means an entity subject to the insurance laws and rules of this state, or subject to the jurisdiction of the commissioner, that contracts or offers to contract, or enters into an agreement to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including an insurer issuing an accident and sickness insurance policy pursuant to W.Va. Code §33-15-1 et seq. of this code, an insurer issuing an accident and sickness group policy pursuant to W.Va. Code §33-16-1 et seq. of this code, a hospital medical and dental corporation licensed pursuant to W.Va. Code §33-24-1 et seq. of this code, a health care corporation licensed pursuant to W.Va. Code §33-25-1 et seq. of this code, or a health maintenance organization licensed pursuant to W.Va. Code §33-25A-1 et seq. of this code. For purposes of this rule, the term “health carrier” or “carrier” does not include insurers or managed care organizations with respect to their Medicaid or CHIP plans or contracts which are reviewed and approved by the Department of Health and Human Resources Bureau for Medical Services.
2.12. “Limited scope dental plan” means a plan that provides coverage, substantially all of which is for treatment of the mouth, including any organ or structure within the mouth, which is provided under a separate policy, certificate, or contract of insurance or is otherwise not an integral part of a group benefit plan.
2.13. “Limited scope vision plan” means a plan that provides coverage, substantially all of which is for treatment of the eye, that is provided under a separate policy, certificate, or contract of insurance or is otherwise not an integral part of a group benefit plan.
2.14. “Material change” means changes in the health carrier’s network of providers or type of providers available in the network to provide health care services or specialty health care services to covered persons that may render the carrier’s network non-compliant with one or more network adequacy standards. Types of changes that could be considered material include:
2.14.1. A significant reduction in the number of primary or specialty care physicians available in a network;
2.14.2. A reduction in a specific type of provider such that a specific covered service is no longer available;
2.14.3. A change to the tiered, multi-tiered, layered or multi-level network plan structure; and
2.14.4. A change in inclusion of a major health system that causes the network to be significantly different from what the covered person initially purchased.
2.15. “Network” means the group or groups of participating providers providing services under a network plan.
2.16. “Network plan” means a health benefit plan that either requires a covered person to use, or creates incentives, including financial incentives, for a covered person to use health care providers managed, owned, under contract with or employed by the health carrier.
2.17. “Participating provider” means a provider who, under a contract with the health carrier or with its contractor or subcontractor, has agreed to provide health care services to covered persons with an expectation of receiving payment, other than coinsurance, copayments, or deductibles, directly or indirectly from the health carrier.
2.18. “Pediatric” means the specialty of medical science concerned with the physical, mental, and social health of children from birth up to the age of nineteen.
2.19. “Primary care” means health care services for a range of common physical, mental, or behavioral health conditions provided by a physician or nonphysician primary care professional.
2.20. “Primary care professional” means a participating health care professional designated by the health carrier to supervise, coordinate, or provide initial care or continuing care to a covered person, and who may be required by the health carrier to initiate a referral for specialty care and maintain supervision of health care services rendered to the covered person.
2.21. “SERFF” means the National Association of Insurance Commissioners’ System for Electronic Rate and Form Filing.
2.22. “Specialist” means a physician or non-physician health care professional, including a subspecialist who has additional training and recognition above and beyond his or her specialty training, who:
2.22.1. Focuses on a specific area of physical, mental, or behavioral health or a group of patients; and
2.22.2. Has successfully completed required training and is recognized by the state in which he or she practices to provide specialty care.
2.23. “Specialty care” means advanced medically necessary care and treatment of specific physical, mental, or behavioral health conditions or those health conditions which may manifest in particular ages or subpopulations, that are provided by a specialist, preferably in coordination with a primary care professional or other health care professional.
2.24. “Telemedicine” or “telehealth” means health care services provided through telecommunications technology by a health care professional who is at a location other than where the covered person is located.
2.25. “Tiered network” means a network that identifies and groups some or all types of providers and facilities into specific groups to which different provider reimbursement, covered person cost-sharing, or provider access requirements, or any combination thereof, apply for the same services.
W. Va. Code R. § 114-100-3 Network Adequacy Standards
3.1. The geographic accessibility standards set forth in Appendix A shall be met by a health carrier in order to comply with network adequacy requirements.
3.1.1. The Commissioner shall publish a notice with the county designation of each West Virginia county by July 1st of each year or as soon as that information becomes available from CMS.
3.1.2. The geographic accessibility standards for dental shall be met by limited scope dental plans and by health benefit plans with embedded dental benefits.
3.1.3. At least 90 percent of a health carrier’s members must live within the maximum distance to at least one provider of each type to satisfy geographic accessibility network adequacy standards.
3.2. The following appointment wait times standards shall be met by a health carrier in order to comply with network adequacy requirements:
Provider/Facility Specialty Type Appointments Must Be Available Within Behavioral Health 10 business days Primary Care (Routine) 15 business days Specialty Care (Non-Urgent) 30 business days
3.2.1. At least 90 percent of a health carrier’s providers must meet the wait time standards to satisfy network adequacy standards regarding wait times.
3.3. If a carrier cannot meet the network adequacy standards set forth in section 3 of this rule, the carrier must have a process to assure that a covered person obtains a covered benefit at an in-network level of benefits from a nonparticipating provider or make other arrangements acceptable to the Commissioner, which may include contracting with the nearest like provider.
W. Va. Code R. § 114-100-4 Network Access Plan Standards
4.1. For health benefit plan years beginning January 1, 2025, a health carrier shall file with the Commissioner an access plan meeting the requirements of this rule and W. Va. Code §33-55-3. An access plan for a newly offered network must be filed for review and approval on or before July 1st of the year preceding the plan year. For the purposes of this rule, a “newly offered network” includes an existing network at the time this amended rule becomes effective irrespective of whether the Commissioner has approved the network.
4.2. A health carrier shall file, maintain and make available on their website an access plan, absent proprietary information, for each network plan that the carrier offers in West Virginia. The health carrier may request the Commissioner to deem sections of the access plan as proprietary information that not be made public.
4.3. A health carrier shall prepare and file an access plan prior to offering a new network plan, and shall notify the Commissioner of any material change to any existing network plan within 15 business days after the change occurs, including a reasonable timeframe within which it will file an update to an existing access plan.
4.4. A health carrier shall make an access plan, absent proprietary information pursuant to W. Va. Code §33-55-3(e)(2), available to any person upon request.
4.5. All health benefit plans and marketing materials of a health carrier shall clearly disclose the existence and availability of the access plan.
4.6. All rights and responsibilities of the covered person under a health benefit plan shall be included in the contract provisions of the health benefit plan, regardless of whether or not such provisions are also specified in the access plan.
4.7. A health carrier shall submit access plans to the Commissioner through SERFF.
4.8. An access plan shall describe, contain, or address the following:
4.8.1. The health carrier’s network, including how the use of telemedicine or telehealth or other technology may be used to meet network access standards, if applicable;
4.8.2. The factors used by the health carrier to build its network, including a description of the criteria used to select providers;
4.8.3. Establishing that the health carrier’s network has an adequate number of providers and facilities within a reasonable distance of covered persons;
4.8.4. The specific provider and facility types within the network per West Virginia county;
4.8.5. The health carrier’s documented, quantifiable and measurable process for monitoring and assuring the sufficiency of the network in order to meet the health care needs of covered persons on an ongoing basis;
4.8.6. The carrier’s process to assure that a covered person is able to obtain a covered benefit, at the in-network benefit level, from a non-participating provider should the carrier’s network prove to not be sufficient;
4.8.7. The health carrier’s procedures for making and authorizing referrals within and outside its network. The procedures should address the health carrier’s processes regarding:
4.8.7.a. The provision of a comprehensive listing of the health carrier’s network of participating providers and facilities to covered persons and primary care providers;
4.8.7.b. Timely referrals for access to specialty care;
4.8.7.c. Expedition of the referral process when indicated by the covered person’s medical condition; and
4.8.7.d. Member access to services outside the network when necessary;
4.8.8. The health carrier’s process for enabling covered persons to change primary care providers (PCP), if applicable;
4.8.9. The health carrier’s quality assurance standards, which must be adequate to identify, evaluate and remedy problems relating to access, continuity and quality of care;
4.8.10. The health carrier’s methods for assessing the health care needs of covered persons and their satisfaction with services;
4.8.11. The health carrier’s efforts to address the needs of covered persons, including, but not limited to, children and adults, including those with limited English proficiency or illiteracy, diverse cultural or ethnic backgrounds, physical or mental disabilities, and serious, chronic, or complex medical conditions. This includes the carrier’s efforts, when appropriate, to include various types of ECPs in its network;
4.8.12. The health carrier’s method of informing covered persons of the plan’s covered services and features, including, but not limited to:
4.8.12.a. The plan’s grievance and appeal procedures;
4.8.12.b. Its process for choosing and changing providers;
4.8.12.c. Its process for updating its provider directories for each of its network plans;
4.8.12.d. A statement of health care services offered, including those services offered through the preventive care benefit, if applicable; and
4.8.12.e. Its procedures for covering and approving emergency, urgent and specialty care, if applicable;
4.8.13. The health carrier’s proposed plan for providing continuity of care in the event of contract termination between the health carrier and any of its participating providers, or in the event of the health carrier’s insolvency or other inability to continue operations. The description shall explain how covered persons will be notified of the contract termination, or the health carrier’s insolvency or other cessation of operations, and transitioned to other providers in a timely manner; and
4.8.14. The health carrier’s process for monitoring access to physician specialist services in emergency room care, anesthesiology, radiology, hospitalist care and pathology/laboratory services at their participating hospitals. This subdivision does not apply to limited scope vision plans or limited scope dental plans as defined in W.Va. Code §33-55-1.
4.9. The Commissioner may develop forms to be completed by the health carrier regarding the information required by subsection 4.8 of this rule.
W. Va. Code R. § 114-100-5 Coordination and Continuity of Care
5.1. A health carrier shall address its process for ensuring the coordination and continuity of care for its covered persons in the access plan for each network offered by the carrier.
5.2. The process for ensuring the coordination and continuity of care shall include, but is not limited to, the following:
5.2.1. The heath carrier’s documented process for ensuring the coordination and continuity of care for covered persons referred to specialty providers;
5.2.2. The health carrier’s documented process for ensuring the coordination and continuity of care for covered persons using ancillary services, including social services and other community resources;
5.2.3. The health carrier’s documented process for ensuring appropriate discharge planning;
5.2.4. The health carrier’s process for enabling covered persons to change primary care providers; and
5.2.5. The health carrier’s proposed plan and process for providing continuity of care in the event of contract termination between the carrier and any of its participating providers or in the event of the carrier’s insolvency or other inability to continue operations. The proposed plan and process shall include an explanation of how covered persons will be notified in the case of a provider contract termination, the health carrier’s insolvency, or of any other cessation of operations, as well as how policyholders impacted by such events will be transferred to other providers in a timely manner.
W. Va. Code R. § 114-100-6 Network Access Plan Disclosures; Attestations
6.1. In the access plan for each network plan offered, a health carrier shall explain its method for informing covered persons of the plan’s services and features through disclosures to covered persons.
6.1.1. Required disclosures include:
6.1.1.a. The health carrier’s grievance and appeal procedures;
6.1.1.b. The extent to which specialty medical services, including but not limited to physical therapy, occupational therapy and rehabilitation services, are available;
6.1.1.c. The health carrier’s procedures for providing and approving emergency and non-emergency medical care;
6.1.1.d. The health carrier’s process for choosing and changing network providers;
6.1.1.e. The health carrier’s documented process to address the needs, including access and accessibility of services, of covered persons with limited English proficiency and illiteracy, with diverse cultural and ethnic backgrounds, and with physical or mental disabilities; and
6.1.1.f. The health carrier’s documented process to identify the potential needs of special populations.
6.2. The following attestations shall be submitted with the access plan:
6.2.1. Health carrier attests that each of its health benefit plans having a network plan will maintain a network that is sufficient in number and types of providers, including providers that specialize in mental health, behavioral health and substance abuse care services, to assure that the services will be accessible without unreasonable delay. The attestation should include language stating that the health carrier’s network is in compliance with the network adequacy standards set forth in section 3 of this rule.
6.2.2. Health carrier attests that each of its health benefit plans having a provider network include in its provider network(s) a sufficient number and geographic distribution of ECPs, where available, to ensure reasonable and timely access to a broad range of such providers for low-income, medically underserved individuals in their service areas.
6.2.3. If the health carrier does not immediately meet access plan standards, the carrier will include an attestation adequately addressing how it plans to meet the standards specified in sections 3 and 4 of this rule. Such changes shall be implemented and filed by the health carrier in accordance with the reasonable schedule established by the carrier and reviewed by the Commissioner.
W. Va. Code R. § 114-100-7 Provider Directories
7.1. Provider directories shall be maintained by a health carrier for each of its health benefit plans having a network plan. Sample screen shots of the carrier’s electronic provider directory and a PDF sample of the carriers printed provider directory must both be filed in SERFF with the access plan filing.
7.2. Provider directories maintained by a health carrier shall meet all of the following requirements:
7.2.1. A health carrier shall post electronically a current and accurate provider directory for each of its network plans with the information and search functions as described in W.Va. Code §33-55-4;
7.2.2. When making the directory available electronically, the health carrier shall ensure that the general public is able to view all of the current providers for a network through a clearly identifiable link or tab without requiring an individual to create or access an account or requiring the entry of a policy or contract number;
7.2.3. The health carrier shall include a disclosure in the directory of the date of the most recent update for electronic directories, or the date of printing for printed directories. This disclosure shall state that the information included in the directory is accurate, to the best of the carrier’s knowledge, as of the date of updating/printing, and that covered persons or prospective covered persons should consult the carrier’s electronic provider directory on its website, or call the carrier’s customer service telephone number, to obtain current provider directory information;
7.2.4. A health carrier shall provide a print copy of the requested pertinent portion of the current provider directory to a covered person or a prospective covered person within five business days of the request;
7.2.5. A health carrier shall include, in both the electronic and print directory, the following general information for each of its provider networks:
7.2.5.a. A description of the criteria the health carrier has used to build its provider network;
7.2.5.b. A note that an authorization or referral may be required to access some providers;
7.2.5.c. A description of the criteria the health carrier has used to tier providers; and
7.2.5.d. A description of how the health carrier designates the different provider tiers or levels in the network and identifies (e.g., by name, symbols or grouping) which tier or level the following are placed in:
7.2.5.d.1. Each specific provider;
7.2.5.d.2. Each specific hospital; and
7.2.5.d.3. Each specific other type of facility in the network;
7.2.6. A health carrier shall make it clear, in both its electronic and print directories, which provider directory applies to a particular health benefit plan, such as including the specific name of the health benefit plan as marketed and issued in West Virginia;
7.2.7. The health carrier shall include, in both its electronic and print directories, customer service contact information by electronic means such as email, text, social media, telephone number, and an electronic link that covered persons or the general public may use to notify the carrier of inaccurate provider directory information;
7.2.8. For the items of information required in a provider directory pursuant to W.Va. Code §33-55-4 pertaining to a health care professional, a hospital, or a facility other than a hospital, the health carrier shall make available, through the directory, the source of the information and any limitations; and
7.2.9. A provider directory, whether in electronic or print format, shall accommodate the communication needs of individuals with disabilities, and include a link to or information regarding available assistance for persons with limited English proficiency.
7.3. A health carrier shall update each electronic provider directory at least monthly. Current provider directories shall be made available to the Commissioner, upon request.
7.4. No less frequently than three times during each plan year, a health carrier shall audit at least 50% of the providers contained in its provider directories for accuracy and update that directory based upon its findings. Every provider in the directory must be audited at least once during each plan year.
7.5. Audits shall be conducted such that all entries in a provider directory will be audited at least once every eighteen months. Documentation of the process and findings of all audits and the information required by this rule shall be retained for no less than 36 months and shall be made available to the Commissioner upon request.
Appendix A Provider Specialty Geographic Accessibility Standards Maximum Time (in minutes) and Distance (in miles) Standards Large Metro Metro Micro Rural CEAC Allergy and Immunology Cardiology Cardiothoracic Surgery Chiropractor Dermatology Dental Emergency Medicine Endocrinology ENT/Otolaryngology Gastroenterology General Surgery Gynecology, OB/GYN Infectious Diseases Nephrology Neurology Neurosurgery Occupational Therapy Oncology - Medical, Surgical Oncology - Radiation Ophthalmology Orthopedic Surgery
Appendix A (continued)
Provider Specialty Geographic Accessibility Standards Maximum Time (in minutes) and Distance (in miles) Standards Large Metro Metro Micro Rural CEAC Outpatient Clinical Behavioral Health Physical Medicine and Rehabilitation Physical Therapy Plastic Surgery Podiatry Primary Care – Adult Primary Care – Pediatric Psychiatry Pulmonology Rheumatology Speech Therapy Urology Vascular Surgery
Appendix A (continued)
Facility Specialty Geographic Accessibility Standards Maximum Time (in minutes) and Distance (in miles) Standards Large Metro Metro Micro Rural CEAC Acute Inpatient Hospitals (must have Emergency services available 24/7)
Cardiac Catheterization Services Cardiac Surgery Critical Care Services (ICU)
Diagnostic Radiology Inpatient or Residential Behavioral Health Facility Services Mammography Outpatient Infusion/Chemotherapy Skilled Nursing Surgical Services Urgent Care
Series 101 Exempt Purchasing
W. Va. Code R. § 114-101-1 General
1.1. Scope. -- This rule contains the procedures of the West Virginia Insurance Commissioner for procurements exempt from the requirements of the West Virginia State Purchasing Division in compliance with W. Va. Code §5A-1-12, under which agencies exempt from some or all of the requirements of Chapter 5A of the West Virginia Code are to adopt purchasing procedures.
1.2. Authority. -- W. Va. Code §5A-1-12, W. Va. Code §23-1-1f, W.Va. Code §23-1-1g, W. Va. Code §33-2-9, W. Va. Code §33-2-21a, W. Va. Code §33-4A-3, and W. Va. Code §33-20E-7.
1.3. Filing Date. -- February 2, 2021.
1.4. Effective Date. -- March 4, 2021.
W. Va. Code R. § 114-101-2 Definitions
2.1. “Award” means the written determination of the selection of a vendor to perform under a contract issued after encumbrance and final OIC approval.
2.2. “Best value procurement” means a procurement method used in awarding a contract based on evaluating and comparing all established quality criteria, and cost is not the sole determining factor in the award. This includes RFPs, RFIs, and EOIs.
2.3. “Bid” means an offer by a vendor in response to a procurement document to provide commodities or services in accordance with the specifications of the OIC issued procurement document and includes a proposal to an RFP.
2.4. “Change order” means a written modification or amendment to an OIC issued contract in the manner provided in the contract or upon the mutual consent of the OIC and the vendor.
2.5. “Chief financial officer” means the OIC employee designated as such who manages the OIC’s Financial Accounting Department and is responsible for oversight and management of financial, investment, reporting, purchasing, and budgeting functions for the agency.
2.6. “Commodities” means goods, supplies, materials, equipment, or any other tangible item.
2.7. “Contract” means the binding agreement entered into between the OIC and a vendor to provide the commodities or services requested in the procurement and includes a purchase order.
2.8. “Cooperative contract” means a contract awarded by another entity, including but not limited to, another state of West Virginia agency, board, or commission, or another organization regularly involved in the procurement of commodities or services for which the process of procurement and award were determined by the OIC to be in accordance with reasonable procurement standards.
2.9. “Direct award” means the procurement method to award a contract to a vendor able to provide the commodities and services without competitive bidding when there is no known competition.
2.10. “Emergency procurement” means an acquisition method used when time is of the essence, unforeseen causes arise that include a threat to public health, welfare, safety, circumstances warrant immediate action to stabilize the situation, or safeguarding the state’s assets, and not because of poor planning, neglect, or lack of organization.
2.11. “Expression of interest” or “EOI” means a procurement method that seeks vendors to provide information and express an interest in a procurement.
2.12. “FOIA” means the Freedom of Information Act found in W. Va. Code §29B-1-1 et seq.
2.13. “Life cycle costing” means a procurement method that takes into consideration the cost of the commodity and service being acquired over its expected life or usage and for which cost is considered but is not a determining factor.
2.14. “Master agreement” means a contract with specified terms and conditions except quantity, which is also known as an open-end contract.
2.15. “Non-disclosure agreement” means a contract between two or more parties to prohibit the release of information defined in the agreement as confidential, sensitive, or private in a manner that violates the non-disclosure agreement.
2.16. “OIC” means the Offices of the West Virginia Insurance Commissioner.
2.17. “OIC Procurement” means the unit within the OIC’s Administrative Services Division with personnel who manage the functionality of OIC procurement.
2.18. “Procurement” means the process of contracting for, purchasing, renting, leasing, or otherwise acquiring, receiving, and maintaining commodities and services.
2.19. “Procurement document” means an RFP, RFI, EOI, and other document and all attachments related to the bidding or other means of acquiring commodities and services.
2.20. “Protest” means a formal written statement from a prospective or an actual vendor that declares the vendor’s dissent or disagreement as to a procurement document or process pertaining to an OIC procurement.
2.21. “Request for information” or “RFI” means a document that seeks information to aid in preparing specifications.
2.22. “Request for proposal” or “RFP” means a document issued by the OIC to obtain commodities and services for which cost is not the sole determining factor for award.
2.23. “Request for quotation” or “RFQ” means a document issued by the OIC to obtain a quotation or bid.
2.24. “Requisition” means a written or electronic request for the purchase of commodities and services.
2.25. “Responsible vendor” means a vendor believed to have the capability to perform a contract and the integrity and reliability to assure good faith performance.
2.26. “Responsive vendor” means a vendor submitting a bid that conforms in all material respects to the requirements and specifications of a procurement document.
2.27. “Services” means intangible items, that include labor, time, expertise, maintenance, software, and service agreements.
2.28. “Specification” means a clear and accurate description of the physical, functional, or performance characteristics or nature of a commodity being acquired, and may include requirements for inspection, testing, and performance.
2.29. “State” means the State of West Virginia.
2.30. “Total ownership or operational cost” means a procurement method that takes into consideration the costs of designing, bidding, implementing, operating, training, transitional costs, residual value, disposal, and processes for a commodity or service for which cost is not the determining factor in award.
2.31. “Vendor” means a person or entity considering or submitting a bid, a person or entity selected as the lowest responsible and responsive vendor in connection with a bid, or a person or entity that has been awarded the contract.
2.32. “wvOASIS” means the state’s accounting system managed by the Enterprise Resource Planning Board in conjunction with the West Virginia Department of Administration and the State Auditor’s Office.
W. Va. Code R. § 114-101-3 General information
3.1. OIC procurements for commodities and services shall be centrally processed within the OIC to provide economical and efficient services at a reasonable cost, using fair and reasonable competition methods and providing equitable treatment of vendors.
3.2. Methods used to determine the appropriate commodities and services needed by the OIC may include:
3.2.1. Best value procurement;
3.2.2. Life cycle costing; and
3.2.3. Total ownership or operational costing.
3.3. The requirements or limitations in a procurement document shall be reasonable in consideration of OIC needs.
3.4. Documentation shall be maintained for all procurements and purchases by OIC Procurement to protect the processes.
3.5. The Chief Financial Officer shall audit OIC exempt procurement and exempt purchasing processes and files every two years beginning in 2023 to cover the period of the effective date of this rule through December 31, 2022, and then every two years thereafter. In lieu thereof, the OIC may contract with a licensed public accounting firm to conduct this audit.
3.6. OIC contracts shall comply with all applicable laws, rules, and regulations. Procurement documents must contain standard agency terms and conditions to aid in compliance with West Virginia law.
3.7. Bids and direct award opportunities must be publicly solicited via wvOASIS.
3.8. There shall be a blackout period from the release of an RFQ, RFP or EOI by the OIC until award or cancellation during which the only contact with the OIC is through OIC Procurement.
3.9. Vendors shall be provided with instructions for submitting bids and may contact OIC Procurement as needed.
3.10. Every contract issued shall contain a clause that permits the OIC to cancel the contract upon 30 days written notice to the vendor without penalty.
3.11. Bids shall not be altered and are considered public records available for review or copying after they are opened. After award, the entire file shall be public records and available for review or copying.
3.12. Use of a purchasing card offered through the West Virginia State Auditor’s Office may be required in any procurement if use is determined appropriate.
3.13. Bid openings must be witnessed by two OIC staff members, one of whom is with OIC Procurement. OIC Procurement personnel shall read aloud the names of the vendors submitting bids. For bids received pursuant to an RFP, OIC Procurement shall confirm that each original package contains a separately sealed cost proposal.
3.14. OIC Procurement shall provide timely written notice to the vendors that were unsuccessful in their bid not being awarded.
3.15. Bid evaluators shall have no financial, personal, or other conflict of interest relating to any vendor or vendor representative that has submitted a bid. Bid evaluators must sign a form certifying no conflicts of interest with respect to each bid.
3.16. Negotiation may be used to finalize a contract and when needing a change order to amend or modify a current contract. Negotiation of a change in scope is permitted when circumstances dictate. A justification for a negotiated change order must be included in the file.
3.17. The length of the term of a contract and any extensions shall be considered at the time the procurement documents are issued and then determined at the time the contract is issued. The OIC will use life cycle costing, total ownership or operational cost, or other reasonable methods to determine the appropriate length of a term and any extensions or renewals. A written justification must be in the file for any contract term longer than five years with renewals, as well as for extensions or renewals.
3.18. The OIC will evaluate existing contracts with terms exceeding five years every other year prior to termination using life cycle costing and total ownership or operation cost procurement methods to determine whether the commodities or services should be bid.
3.19. The OIC shall abide by the West Virginia Ethics Act and the associated promulgated rules and shall not make a purchase from a conflicted vendor or a vendor with a significant financial interest as prohibited under the West Virginia Ethics Act.
W. Va. Code R. § 114-101-4 Purchasing requirements
4.1. Documentation associated with all procurements shall be maintained in files in accordance with OIC record retention policy.
4.2. All purchases of commodities and services shall be subject to expenditure approval.
4.3. Contracts shall be issued for all procurements regardless of dollar amounts to assist with tracking and ensure proper internal controls. As defined herein, the term contract includes purchase orders.
4.4. Vendors shall be responsible for submitting a correct and accurate bid to OIC Procurement by the specified bid opening time, date, and location and in accordance with the procurement documents.
4.5. Prior to an award of a contract, vendors must be a registered vendor as required by the West Virginia State Purchasing Division, document any required license or insurance, and be in good standing with state and local entities, including but not limited to the OIC with respect to workers’ compensation insurance and the West Virginia Secretary of State.
4.6. Vendors to be awarded a contract of $1 million or more or a series of related contracts for which the cumulative total exceeds $1 million shall submit to the OIC a fully completed Disclosure of Interested Parties form authorized by the West Virginia Ethics Commission.
4.7. A vendor shall not commence work on any procurement without receipt of the awarded contract and any required notice to proceed. The OIC shall not be responsible for any work by a vendor prior to and not in accordance with the contract awarded.
4.8. All requests for commodities or services shall be submitted in a requisition to OIC Procurement via email, written memo, or other acceptable method. All requests require the approval of a division director or other person with the appropriate signature authority.
4.9. Upon receipt, a requisition shall be reviewed to determine the sourcing method for the procurement.
4.9.1. Sourcing methods to be considered shall include review of inventory from stockroom; state sources (e.g., correctional industries, sheltered workshops, surplus property); statewide or agency master agreements; cooperative contracts; or obtaining bids if required by the procurement method levels.
4.9.2. Any OIC contract usable by another state entity or a political subdivision shall declare such use.
4.10. Purchases and contracts for commodities and services shall be based on competitive bid whenever possible, subject to the following:
4.10.1. Competitive bids may, but are not required to be obtained, when the value of the item or service is $2,500 or less;
4.10.2. A minimum of three verbal bids shall be required, when possible, when the value of the item or service is between $2,500.01 and $10,000;
4.10.3. A minimum of three written bids shall be required, when possible, when the value of the item or service is between $10,000.01 and $25,000; and
4.10.4. Purchases expected to exceed $25,000 must be the subject of competitive bid solicitation unless otherwise allowed under subsection 4.11 of this rule.
4.11. OIC Procurement may authorize purchases directly from a vendor without competitive bidding under the following circumstances:
4.11.1. It is determined that a direct award is appropriate because there is no other source for the product or service, or that no other source would be willing or able to replace the existing source without a detrimental effect on the OIC, in which case the OIC will document its due diligence in making this determination;
4.11.2. In the event of an emergency, including but not limited to unforeseen events or circumstances, delays by contractors, delays in transportation, or an unanticipated volume of work, as well as procurements related to an official declaration of emergency by the Governor or federal officials. Notwithstanding the existence of an emergency as described in this subdivision, the OIC shall attempt to obtain three bids whenever possible. “Emergency” does not include circumstances caused by the OIC’s neglect, poor planning, or lack of organization;
4.11.3. The commodity or service being sought is included on the “Impossible to Bid” list set forth in Section 9 of the West Virginia State Purchasing Division Procedures Handbook; or
4.11.4. Competitive bidding is not expressly required by statute.
4.11.4.a. When competitive bidding is not expressly required by statute and not used for a direct award, the OIC will evaluate vendors based upon the following criteria, where applicable, and will document its evaluation:
4.11.4.a.1. Overall experience;
4.11.4.a.2. Professional certifications or designations;
4.11.4.a.3. Company specific experience;
4.11.4.a.4. Company type experience;
4.11.4.a.5. Knowledge of company or line of business;
4.11.4.a.6. Prior work for the OIC;
4.11.4.a.7. Professional reputation;
4.11.4.a.8. Availability and commitment to required timeframes;
4.11.4.a.9. Adequacy of staffing, including the ability of assigned staff members to complete the contract without substitution;
4.11.4.a.10. Quality of work;
4.11.4.a.11. Experience with National Association of Insurance Commissioners’ accreditation review process and knowledge of the National Association of Insurance Commissioners’ examination handbook and guidelines;
4.11.4.a.12. References from other insurance regulators or subject matter experts;
4.11.4.a.13. Projected costs;
4.11.4.a.14. Conflicts of interest;
4.11.4.a.15. Support services available to the vendor, including but not limited to information technology services and actuarial services; and
4.11.4.a.16. Any other guidelines or procedures the OIC considers appropriate.
4.12. Any required vendor terms and conditions must be submitted and approved before a contract is awarded. The OIC will obtain approval from the Attorney General as to contract form and conformity with applicable law when required by statute or when deemed necessary by OIC Procurement.
4.13. All procurement documents issued for a procurement shall include a specific date, time, and location for submission of bids.
4.13.1. Bids not submitted by the specified date and time to the specific location shall be rejected and not be considered.
4.13.2. OIC Procurement shall stamp bids with the date and time of actual receipt for bids physically received. Bids received through wvOASIS are stamped by the system.
4.13.3. Bids shall remain sealed until the specified date and time, at which time OIC Procurement will open the bids.
4.13.4. No bid received may be altered after opening.
4.13.5. A vendor submitting a bid may withdraw the bid at any time prior to bid opening.
4.14. Aggregate procurements in excess of $25,000 by the OIC shall not circumvent the formal procurement requirements in any 12-month rolling period.
4.15. Receiving reports shall be prepared and submitted in accordance with W. Va. Code §12-3-10f.
4.16. OIC Procurement must reject a bid that is found to be non-responsive. A non-responsive bid is one that fails to conform to the solicitation in all material respects.
W. Va. Code R. § 114-101-5 Formal procurement documents and processes
5.1. Request for Quotation (RFQ)
5.1.1. An RFQ shall contain a detailed description of, or specification for, the item(s) being purchased, any required delivery date, quantities, bid price per unit, and information on how to complete and submit the RFQ bid and deadlines.
5.1.2. Bids shall be reviewed by OIC Procurement and the OIC division requesting the item(s) to verify each bid meets the requirements of the RFQ.
5.1.3. An award shall be made to the responsible and responsive vendor having the lowest bid.
5.2. Direct Awards
5.2.1. A direct award shall be a procurement method occurring only if:
5.2.1.a. The procurement file contains the following:
5.2.1.a.1. Written justification that the direct award is in the best interests of the state;
5.2.1.a.2. Documentation of efforts used to determine that there is no other source or that no other source would be willing or able to replace the existing source without a detrimental effect; and
5.2.1.a.3. No other vendor expresses an interest in providing the commodity or service in question.
5.2.1.b. A direct award may be used for procurements determined to be non-competitive, including the list of commodities and services in Section 9 of the West Virginia State Purchasing Division Procedures Handbook.
5.2.1.c. A direct award contract may be extended or renewed if the request is substantiated by a written justification of continuation of the contract.
5.3. Request for Proposal (RFP)
5.3.1. RFP documentation shall define the commodities and services desired to allow comparability of bids as submitted.
5.3.2. Procurements by RFP shall be advertised through media considered advisable and not cost prohibitive, including professional publications, wvOASIS, the OIC’s website, and emails to potential vendors.
5.3.3. RFPs must contain provisions for a two-part evaluation, the first part being technical aspects of the proposal and the second part being cost to the state. The two components will be evaluated, scored, and combined to form a total score. Technical proposals must be opened first and fully evaluated prior to cost proposals being opened. Vendors shall be notified of the date and time of opening the cost portion. The highest scoring vendor will be awarded the contract.
5.3.4. At the date, time, and location of the bid opening, the bids received shall be opened and the names of the vendors submitting a bid read aloud and documented. OIC Procurement shall verify that the technical and cost portions of the bids are separate, and the cost portion is sealed.
5.3.5. If there is more than one bidder responding to the RFP, OIC Procurement may negotiate a lower price with the highest ranked bidder. If the contract is not awarded to the highest scoring bidder, OIC Procurement may close negotiations with that bidder and enter into negotiations with the next highest scoring bidder and may continue to do so in like manner with the remaining responsive and responsible bidders. OIC Procurement shall only extend an offer after it is offered to all prior bidders in order of rank.
5.4. Emergency Procurements
5.4.1. In the event the Governor, OIC, or other authorized official declares an emergency exists, OIC Procurement shall determine to what extent the procedures set forth in this section will apply to procurements and authorize emergency procurements.
5.4.2. An emergency procurement shall use the procurement methods in this rule to the extent practicable.
5.4.3. OIC Procurement shall assist in obtaining bids, preparing documentation, verifying any required vendor registration and licensing, and issue any contracts necessary.
W. Va. Code R. § 114-101-6 Information technology
6.1. A procurement of information technology (IT) may include many types of IT, such as software, hardware, services and support, and maintenance. The procurement of IT carries a high level of risk because of the importance, requirements, rapid industry changes, security, sophistication, and privacy issues associated with IT.
6.2. Software procurement requires consideration of whether the software meets the needs of the OIC, type of license, any available alternative software, costs, how the software is hosted, security, legal requirements, effects of a breach, compatibility with current systems, frequency of updates, any associated changes that will be needed over time, and ongoing support and maintenance.
6.3. A license term of use must be flexible, as well as associated services, support and maintenance. If OIC determines services, support and maintenance are needed beyond the current term of the contract, the contract may be extended or renewed at the discretion of OIC and the vendor.
6.4. If a current contract provides for future support and maintenance at the fees set by the vendor or as negotiated, the vendor shall provide a quotation of the fees and the period covered by those fees. The parties shall negotiate in good faith. Once OIC finds the quotation acceptable, then a change order to the current contract shall be issued with the quotation attached. A new contract is not needed.
6.5. If OIC believes only one vendor may reasonably provide specific commodities and services, including support and maintenance, the procurement may be handled as a direct procurement.
6.6. If the OIC, the vendor, or the law requires changes to a current contract, the parties shall negotiate in good faith to reach agreement. If an agreement is reached and put into writing signed by both parties, OIC Procurement shall issue a change order to the current contract containing the agreed language.
6.7. At least one year before an IT contract in the amount of $2,500 or more and with a term longer than one year for software, hardware, or IT system terminates, including all available extensions, and the OIC desires to extend or renew the contract, OIC will evaluate and justify the extension or renewal using life cycle costing, total ownership or operational cost, or any other methods considered appropriate by the OIC. Additional factors to consider include current and anticipated work environment needs, compliance issues, current performance, availability of alternate sources, and costs. If the OIC determines the contract should not be rebid, it will determine the length of term for the renewal.
6.8. The OIC shall obtain approval from the West Virginia Office of Technology regarding the purchasing of computer software, hardware, services, support and maintenance.
W. Va. Code R. § 114-101-7 Vendor complaints and protests
7.1. Complaints – A vendor may verbally or in writing complain about a procurement or purchase to OIC Procurement. OIC Procurement will provide a written response to the complaint.
7.2. Protests
7.2.1. Types of Protests
7.2.1.a. Protests of Requirements, Specifications or Terms – Any protest relating to a procurement document, including any requirement, specification, or term, or any combination thereof, must be filed in writing with the OIC no later than five business days prior to the specified bid opening date and time. Protests received after that date shall not be considered.
7.2.1.b. Protests of Award – After selection of the apparent successful vendor in a procurement using an RFP, OIC Procurement will send a written notice of intent to award to each vendor submitting a bid stating the name of the apparent successful vendor and the date and time for a protest to be received by OIC Procurement. Protests received after the stated date and time shall not be considered.
7.2.1.c. Direct Awards – Any vendor desiring to protest the specifications of a planned direct award may do so prior to five working days before the direct award process opening date. Any vendor desiring to protest a direct award may do so within five working days of the direct award.
7.2.2. Written Letter of Protest – A letter of protest must be submitted in writing and contain the name and address of the protesting vendor, the procurement document number, a statement explaining why the protest has been filed, the relief sought, and any other information that may assist the OIC in reaching a decision on the matter. The OIC must receive the letter of protest by the established deadline to be considered.
7.2.3. Review of Protest and Issuing Decision – The OIC shall review the letter of protest and issue a written decision. The OIC may contact the protesting vendor or any other entity or perform such research or investigation it considers necessary to reach a decision. Opening of the bids, evaluation of the bids, or award of the contract may be delayed as considered appropriate by the OIC.
W. Va. Code R. § 114-101-8 Public records
8.1. A bid shall be available to the public after opening.
8.2. Procurement documents shall inform vendors that the entire OIC file for that procurement and any resulting contract will be considered public documents after award. As public documents, procurement documents may be disclosed to the public following the award of a contract in accordance with FOIA. Any bid or other document in a procurement file may be disclosed pursuant to a FOIA request even if the bid or other document contains statements or labels attempting to prevent disclosure, such as confidential, trade secret, private, or any other claim.
8.3. The OIC shall not be liable for any disclosure of a procurement document pursuant to this rule.
8.4. If a vendor requests the OIC execute a non-disclosure agreement to protect portions of its bid from disclosure for an RFP procurement, it must make the request to OIC Procurement at least one week prior to the date of the bid opening. A non-disclosure agreement may be executed at any time to prospectively protect any procurement documents, contracts, or information.
W. Va. Code R. § 114-101-9 Violations
9.1. Any person who authorizes or approves a purchase or contract in violation of federal or state law, this rule, or any policy or procedure adopted by the OIC may be held personally liable for the cost of the procurement or contract. Procurements and contracts violating federal or state law or this rule are void and of no effect.
9.2. The OIC will follow vendor suspensions and debarments by the federal government or the West Virginia State Purchasing Division.
Series 102 Term and Universal Life Insurance Reserve Financing
W. Va. Code R. § 114-102-1 General
W. Va. Code R. § 114-102-2 Definitions
W. Va. Code R. § 114-102-3 Actuarial Method
W. Va. Code R. § 114-102-4 Requirements Applicable to Covered Policies to Obtain Credit for Reinsurance; Opportunity for Remediation
W. Va. Code R. § 114-102-5 Prohibition Against Avoidance
W. Va. Code R. § 114-102-6 Exemptions
TITLE 114
LEGISLATIVE RULE
INSURANCE COMMISSIONER
SERIES 102
TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING
W. Va. Code R. § 114-102-1 General
1.1. Scope. -- The purpose and intent of this rule is to establish uniform, national standards governing reserve financing arrangements pertaining to life insurance policies containing guaranteed nonlevel gross premiums, guaranteed nonlevel benefits and universal life insurance policies with secondary guarantees; and to ensure that, with respect to each such financing arrangement, funds consisting of primary security and other security are held by or on behalf of ceding insurers in the forms and amounts required herein. In general, reinsurance ceded for reserve financing purposes has one or more of the following characteristics: some or all of the assets used to secure the reinsurance treaty or to capitalize the reinsurer (1) are issued by the ceding insurer or its affiliates; (2) are not unconditionally available to satisfy the general account obligations of the ceding insurer; or (3) create a reimbursement, indemnification or other similar obligation on the part of the ceding insurer or any of its affiliates (other than a payment obligation under a derivative contract acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty). This rule shall apply to reinsurance treaties that cede liabilities pertaining to covered policies issued by any life insurance company domiciled in this state. This rule and 114CSR40 shall both apply to such reinsurance treaties. However, in the event of a direct conflict between the provisions of this rule and 114CSR40, the provisions of this rule shall apply, but only to the extent of the conflict. This rule is based upon the National Association of Insurance Commissioners’ “Term and Universal Life Insurance Reserve Financing Model Regulation,” Model 787, as amended in 2017.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-4-15a(e).
1.3. Filing Date. -- June 6, 2022.
1.4. Effective Date. -- July 1, 2022.
1.5. Sunset Provision. -- This rule shall terminate and have no further force or effect on August 1, 2027.
W. Va. Code R. § 114-102-2 Definitions
2.1. “Actuarial method” means the methodology used to determine the required level of primary security, as described in section 3 of this rule.
2.2. “Commissioner” means the West Virginia Insurance Commissioner.
2.3. “Covered policies” means the following: Subject to the exemptions described in section 6 of this rule, covered policies are those policies, other than grandfathered policies, of the following policy types:
2.3.1. Life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies; or
2.3.2. Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.
2.4. “Grandfathered policies” means policies of the types described in subsections 2.3.1 and 2.3.2 of this rule that were:
2.4.1. Issued prior to January 1, 2015; and
2.4.2. Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in section 6 of this rule had that section then been in effect.
2.5. “Non-covered policies” means any policy that does not meet the definition of covered policies, including grandfathered policies.
2.6. “Required level of primary security” means the dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.
2.7. “Primary security” means the following forms of security:
2.7.1. Cash meeting the requirements of W. Va. Code §33-4-15a(c)(2)(A);
2.7.2. Securities listed by the Securities Valuation Office meeting the requirements of W. Va. Code §33-4-15a(c)(2)(B), but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and
2.7.3. For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:
2.7.3.a. Commercial loans in good standing of CM3 quality and higher;
2.7.3.b. Policy loans; and
2.7.3.c. Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.
2.8. “Other security” means any security acceptable to the commissioner other than security meeting the definition of primary security.
2.9. “Valuation manual” shall have the meaning ascribed in W. Va. Code §33-7-9(a)(11) and as adopted by 114CSR98. The “valuation manual” includes all amendments adopted by the National Association of Insurance Commissioners that are effective for the financial statement date on which credit for reinsurance is claimed.
2.10. “VM-20” means the requirements for principle-based reserves for life products, including all relevant definitions, from the valuation manual.
W. Va. Code R. § 114-102-3 Actuarial Method
3.1. Actuarial Method.
3.1.1. The actuarial method to establish the required level of primary security for each reinsurance treaty subject to this rule shall be VM-20, applied on a treaty-by-treaty basis, including all relevant definitions, from the valuation manual as then in effect, applied as follows:
3.1.1.a. For covered policies described in subsection 2.3.1 of this rule, the actuarial method is the greater of the deterministic reserve or the net premium reserve (NPR) regardless of whether the criteria for exemption testing can be met. However, if the covered policies do not meet the requirements of the stochastic reserve exclusion test in the valuation manual, then the actuarial method is the greatest of the deterministic reserve, the stochastic reserve or the NPR. In addition, if such covered policies are reinsured in a reinsurance treaty that also contains covered policies described in subsection 2.3.2 of this rule, the ceding insurer may elect to instead use subdivision 3.1.1.b of this rule as the actuarial method for the entire reinsurance agreement. Whether this subdivision or subdivision 3.1.1.b of this rule is used, the actuarial method must comply with any requirements or restrictions that the valuation manual imposes when aggregating these policy types for purposes of principle-based reserve calculations.
3.1.1.b. For covered policies described in subsection 2.3.2 of this rule, the actuarial method is the greatest of the deterministic reserve, the stochastic reserve or the NPR regardless of whether the criteria for exemption testing can be met.
3.1.1.c. Except as provided in subdivision 3.1.1.d of this rule, the actuarial method is to be applied on a gross basis to all risks with respect to the covered policies as originally issued or assumed by the ceding insurer.
3.1.1.d. If the reinsurance treaty cedes less than one hundred percent (100%) of the risk with respect to the covered policies, then the required level of primary security may be reduced as follows:
3.1.1.d.1. If a reinsurance treaty cedes only a quota share of some or all of the risks pertaining to the covered policies, the required level of primary security, as well as any adjustment under paragraph 3.1.1.d.3 of this rule, may be reduced to a pro rata portion in accordance with the percentage of the risk ceded;
3.1.1.d.2. If the reinsurance treaty in a non-exempt arrangement cedes only the risks pertaining to a secondary guarantee, the required level of primary security may be reduced by an amount determined by applying the actuarial method on a gross basis to all risks, other than risks related to the secondary guarantee, pertaining to the covered policies, except that for covered policies for which the ceding insurer did not elect to apply the provisions of VM-20 to establish statutory reserves, the required level of primary security may be reduced by the statutory reserve retained by the ceding insurer on those covered policies, where the retained reserve of those covered policies should be reflective of any reduction pursuant to the cession of mortality risk on a yearly renewable term basis in an exempt arrangement;
3.1.1.d.3. If a portion of the covered policy risk is ceded to another reinsurer on a yearly renewable term basis in an exempt arrangement, the required level of primary security may be reduced by the amount resulting by applying the actuarial method including the reinsurance section of VM-20 to the portion of the covered policy risks ceded in the exempt arrangement, except that for covered policies issued prior to January 1, 2017, this adjustment is not to exceed [cx/ (2 * number of reinsurance premiums per year)] where cx is calculated using the same mortality table used in calculating the NPR; and
3.1.1.d.4. For any other treaty ceding a portion of risk to a different reinsurer, including but not limited to stop loss, excess of loss and other non-proportional reinsurance treaties, there will be no reduction in the required level of primary security.
3.1.1.e. It is possible for any combination of paragraphs 3.1.1.d.1, 3.1.1.d.2, 3.1.1.d.3 and 3.1.1.d.4 of this rule to apply. Such adjustments to the required level of primary security will be done in the sequence that accurately reflects the portion of the risk ceded via the treaty. The ceding insurer should document the rationale and steps taken to accomplish the adjustments to the required level of primary security due to the cession of less than one hundred percent (100%) of the risk. The adjustments for other reinsurance will be made only with respect to reinsurance treaties entered into directly by the ceding insurer. The ceding insurer will make no adjustment as a result of a retrocession treaty entered into by the assuming insurers.
3.1.1.f. In no event will the required level of primary security resulting from application of the actuarial method exceed the amount of statutory reserves ceded.
3.1.1.g. If the ceding insurer cedes risks with respect to covered policies, including any riders, in more than one reinsurance treaty subject to this rule, in no event will the aggregate required level of primary security for those reinsurance treaties be less than the required level of primary security calculated using the actuarial method as if all risks ceded in those treaties were ceded in a single treaty subject to this rule;
3.1.1.h. If a reinsurance treaty subject to this rule cedes risk on both covered and non-covered policies, credit for the ceded reserves shall be determined as follows:
3.1.1.h.1. The actuarial method shall be used to determine the required level of primary security for the covered policies, and section 4 of this rule shall be used to determine the reinsurance credit for the covered policy reserves; and
3.1.1.h.2. Credit for the non-covered policy reserves shall be granted only to the extent that security, in addition to the security held to satisfy the requirements of paragraph 3.1.1.h.1 of this rule, is held by or on behalf of the ceding insurer in accordance with W. Va. Code §33-4-15a(b) and (c). Any primary security used to meet the requirements of this paragraph may not be used to satisfy the required level of primary security for the covered policies.
3.2. Valuation Used for Purposes of Calculations.
3.2.1. For the purposes of both calculating the required level of primary security pursuant to the actuarial method and determining the amount of primary security and other security, as applicable, held by or on behalf of the ceding insurer, the following shall apply:
3.2.1.a. For assets, including any such assets held in trust, that would be admitted under the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual if they were held by the ceding insurer, the valuations are to be determined according to statutory accounting procedures as if such assets were held in the ceding insurer’s general account and without taking into consideration the effect of any prescribed or permitted practices; and
3.2.1.b. For all other assets, the valuations are to be those that were assigned to the assets for the purpose of determining the amount of reserve credit taken. In addition, the asset spread tables and asset default cost tables required by VM-20 shall be included in the actuarial method if adopted by the National Association of Insurance Commissioners’ Life Actuarial (A) Task Force no later than the December 31 on or immediately preceding the valuation date for which the required level of primary security is being calculated. The tables of asset spreads and asset default costs shall be incorporated into the actuarial method in the manner specified in VM-20.
W. Va. Code R. § 114-102-4 Requirements Applicable to Covered Policies to Obtain Credit for Reinsurance; Opportunity for Remediation
4.1. Subject to the provisions of section 4.2 of this rule and the exemptions described in section 6 of this rule, credit for reinsurance shall be allowed with respect to ceded liabilities pertaining to covered policies pursuant to W. Va. Code §33-4-15a(b) and (c) if, and only if, in addition to all other requirements imposed by law or rule, the following requirements are met on a treaty-by-treaty basis:
4.1.1. The ceding insurer’s statutory policy reserves with respect to the covered policies are established in full and in accordance with the applicable requirements of W. Va. Code §33-7-9 and related rules and actuarial guidelines, and credit claimed for any reinsurance treaty subject to this rule, does not exceed the proportionate share of those reserves ceded under the contract;
4.1.2. The ceding insurer determines the required level of primary security with respect to each reinsurance treaty subject to this rule and provides support for its calculation as determined to be acceptable to the commissioner;
4.1.3. Funds consisting of primary security, in an amount at least equal to the required level of primary security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty within the meaning of W. Va. Code §33-4-15a(c), on a funds withheld, trust, or modified coinsurance basis;
4.1.4. Funds consisting of other security, in an amount at least equal to any portion of the statutory reserves as to which primary security is not held pursuant to subsection 4.1.3 of this rule, are held by or on behalf of the ceding insurer as security under the reinsurance treaty within the meaning of W. Va. Code §33-4-15a(c);
4.1.5. Any trust used to satisfy the requirements of this section shall comply with all of the conditions and qualifications of W. Va. Code St. R. §114-40-10, except that:
4.1.5.a. Funds consisting of primary security or other security held in trust, shall for the purposes identified in section 3.2 of this rule, be valued according to the valuation rules set forth in section 3.2 of this rule, as applicable;
4.1.5.b. There are no affiliate investment limitations with respect to any security held in such trust if such security is not needed to satisfy the requirements of subsection 4.1.3 of this rule;
4.1.5.c. The reinsurance treaty must prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the primary security within the trust (when aggregated with primary security outside the trust that is held by or on behalf of the ceding insurer in the manner required by subsection 4.1.3 of this rule) below one hundred and two percent (102%) of the level required by subsection 4.1.3 of this rule at the time of the withdrawal or substitution; and
4.1.5.d. The determination of reserve credit under W. Va. Code St. R. §114-40-10.4.c shall be determined according to the valuation rules set forth in section 3.2 of this rule, as applicable; and
4.1.6. The reinsurance treaty has been approved by the commissioner.
4.2. Requirements at Inception Date and on an On-going Basis; Remediation
4.2.1. The requirements of section 4.1 of this rule must be satisfied as of the date that risks under covered policies are ceded, if such date is on or after the effective date of this rule, and on an ongoing basis thereafter. Under no circumstances shall a ceding insurer take or consent to any action or series of actions that would result in a deficiency under subsections 4.1.3 or 4.1.4 of this rule with respect to any reinsurance treaty under which covered policies have been ceded, and in the event that a ceding insurer becomes aware at any time that such a deficiency exists, it shall use its best efforts to arrange for the deficiency to be eliminated as expeditiously as possible.
4.2.2. Prior to the due date of each quarterly or annual statement, each life insurance company that has ceded reinsurance within the scope of this rule, as set forth in section 1.1 of this rule, shall perform an analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance treaty under which covered policies have been ceded, whether as of the end of the immediately preceding calendar quarter (the valuation date) the requirements of subsections 4.1.3 and 4.1.4 of this rule were satisfied. The ceding insurer shall establish a liability equal to the excess of the credit for reinsurance taken over the amount of primary security actually held pursuant to subsection 4.1.3 of this rule, unless either:
4.2.2.a. The requirements of subsections 4.1.3 and 4.1.4 of this rule were fully satisfied as of the valuation date as to such reinsurance treaty; or
4.2.2.b. Any deficiency has been eliminated before the due date of the quarterly or annual statement to which the valuation date relates through the addition of primary security and/or other security, as the case may be, in such amount and in such form as would have caused the requirements of subsections 4.1.3 and 4.1.4 of this rule to be fully satisfied as of the valuation date.
4.2.3. Nothing in subsection 4.2.2 of this rule shall be construed to allow a ceding company to maintain any deficiency under subsection 4.1.3 or 4.1.4 of this rule for any period of time longer than is reasonably necessary to eliminate it.
W. Va. Code R. § 114-102-5 Prohibition Against Avoidance
No insurer that has covered policies as to which this rule applies, as set forth in section 1.1 of this rule, shall take any action or series of actions, or enter into any transaction or arrangement or series of transactions or arrangements if the purpose of such action, transaction or arrangement or series thereof is to avoid the requirements of this rule, or to circumvent its purpose and intent, as set forth in section 1.1 of this rule.
W. Va. Code R. § 114-102-6 Exemptions
6.1. This rule does not apply to the following situations:
6.1.1. Reinsurance of:
6.1.1.a. Policies that satisfy the criteria for exemption set forth in W. Va. Code St. R. §114-68-5.6 or W. Va. Code St. R. §114-68-5.7; and which are issued before the later of:
6.1.1.a.1. The effective date of this rule; and
6.1.1.a.2. The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policies’ statutory reserves, but in no event later than January 1, 2020;
6.1.1.b. Portions of policies that satisfy the criteria for exemption set forth in W. Va. Code St. R. §114-68-5.5 and which are issued before the later of:
6.1.1.b.1. The effective date of this rule, and
6.1.1.b.2. The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policies’ statutory reserves, but in no event later than January 1, 2020;
6.1.1.c. Any universal life policy that meets all of the following requirements:
6.1.1.c.1. Secondary guarantee period, if any, is five years or less;
6.1.1.c.2. Specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the Commissioners Standard Ordinary (CSO) valuation tables and valuation interest rate applicable to the issue year of the policy; and
6.1.1.c.3. The initial surrender charge is not less than one hundred percent (100%) of the first year annualized specified premium for the secondary guarantee period;
6.1.1.d. Credit life insurance;
6.1.1.e. Any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts; or
6.1.1.f. Any group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.
6.1.2. Reinsurance ceded to an assuming insurer that meets the applicable requirements of W. Va. Code §33-4-15a(b)(2)(D); or
6.1.3. Reinsurance ceded to an assuming insurer that meets the applicable requirements of W. Va. Code §33-4-15a(b)(2)(A), (B) or (C), and that, in addition:
6.1.3.a. Prepares statutory financial statements in compliance with the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual, without any departures from National Association of Insurance Commissioners’ statutory accounting practices and procedures pertaining to the admissibility or valuation of assets or liabilities that increase the assuming insurer’s reported surplus and are material enough that they need to be disclosed in the financial statement of the assuming insurer pursuant to Statement of Statutory Accounting Principles No. 1 (SSAP 1); and
6.1.3.b. Is not in a company action level event, regulatory action level event, authorized control level event, or mandatory control level event as those terms are defined in W. Va. Code §33-40-1 et seq. when its risk-based capital is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the National Association of Insurance Commissioners from time to time, without deviation; or
6.1.4. Reinsurance ceded to an assuming insurer that meets the applicable requirements of W. Va. Code §33-4-15a(b)(2)(A), (B) or (C), and that, in addition:
6.1.4.a. Is not an affiliate, as that term is defined in W. Va. Code §33-27-2(a), of:
6.1.4.a.1. The insurer ceding the business to the assuming insurer; or
6.1.4.a.2. Any insurer that directly or indirectly ceded the business to that ceding insurer;
6.1.4.b. Prepares statutory financial statements in compliance with the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual;
6.1.4.c. Is both:
6.1.4.c.1. Licensed or accredited in at least ten states (including its state of domicile); and
6.1.4.c.2. Not licensed in any state as a captive, special purpose vehicle, special purpose financial captive, special purpose life reinsurance company, limited purpose subsidiary, or any other similar licensing regime; and
6.1.4.d. Is not, or would not be, below five hundred percent (500%) of the authorized control level risk-based capital, as that term is defined in W. Va. Code §33-40-1 et seq., when its risk-based capital is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the National Association of Insurance Commissioners from time to time, without deviation, and without recognition of any departures from National Association of Insurance Commissioners’ statutory accounting practices and procedures pertaining to the admission or valuation of assets or liabilities that increase the assuming insurer’s reported surplus; or
6.1.5. Reinsurance ceded to an assuming insurer that meets the requirements of W. Va. Code §33-4-15a(e)(2)(D); or
6.1.6. Reinsurance not otherwise exempt under subsections 6.1.1, 6.1.2, 6.1.3, 6.1.4 and 6.1.5 of this rule if the commissioner, after consulting with the National Association of Insurance Commissioners’ Financial Analysis Working Group (FAWG) or other group of regulators designated by the National Association of Insurance Commissioners, as applicable, determines under all the facts and circumstances that all of the following apply:
6.1.6.a. The risks are clearly outside of the intent and purpose of this rule, as described in section 1.1 of this rule;
6.1.6.b. The risks are included within the scope of this rule only as a technicality; and
6.1.6.c. The application of this rule to those risks is not necessary to provide appropriate protection to policyholders. The commissioner shall publicly disclose any decision made pursuant to this subsection to exempt a reinsurance treaty from this rule, as well as the general basis therefor, including a summary description of the treaty.
Series 103 Bail Bondsmen in Criminal Cases
W. Va. Code R. § 114-103-1 General
W. Va. Code R. § 114-103-2 Definitions
W. Va. Code R. § 114-103-3 License Required and Qualifications for Licensure
W. Va. Code R. § 114-103-4 License Renewal
W. Va. Code R. § 114-103-5 Responsibilities and Prohibited Activities
W. Va. Code R. § 114-103-6 Qualifications of Sureties on Bail
W. Va. Code R. § 114-103-7 Receipts for Collateral
W. Va. Code R. § 114-103-8 Financial Responsibility of Professional Bondsmen
W. Va. Code R. § 114-103-9 Cash Securities Held in Trust
W. Va. Code R. § 114-103-10 Discontinuance of Business; Cancellation of License; Death, Incapacitation or Incompetence of Bail Bondsman
W. Va. Code R. § 114-103-11 License Suspension and Revocation
W. Va. Code R. § 114-103-12 Notice of Bankruptcy or Receivership
W. Va. Code R. § 114-103-13 Examinations
W. Va. Code R. § 114-103-14 Records
W. Va. Code R. § 114-103-15 Reporting
W. Va. Code R. § 114-103-16 Penalties for Violations
TITLE 114
LEGISLATIVE RULE
INSURANCE COMMISSIONER
SERIES 103
BAIL BONDSMEN IN CRIMINAL CASES
W. Va. Code R. § 114-103-1 General
1.1. Scope. -- The purpose and intent of this rule is to provide for the qualifications a person must have when applying to be a bail bondsman, and to set the terms and conditions upon which the bonding business may be conducted in West Virginia.
1.2. Authority. -- W. Va. Code §§33-2-10 and 51-10-8.
1.3. Filing Date. -- March 27, 2023.
1.4. Effective Date. -- April 1, 2024.
1.5. Sunset Provision. -- This rule shall terminate and have no further force or effect upon August 1, 2034.
W. Va. Code R. § 114-103-2 Definitions
2.1. “Agent,” “clerk” or “representative” of a bail bondsman means a person employed by a licensed bail bondsman for the purpose of assisting the bondsman in presenting a defendant in court or, if a power of attorney has been duly executed, issuing bonds on behalf of the bondsman. An agent, clerk or representative of a bail bondsman who is engaged in the bonding business must be licensed by the Commissioner as provided by this rule.
2.2. “Bond” means an appearance bond for a specified monetary amount which is executed by the defendant and a licensed bondsman pursuant to the provisions of this rule and which is issued to a court as security for the subsequent court appearance of the defendant upon release from custody pending the appearance.
2.3. “Bonding business” means the business of becoming surety for compensation upon bonds in criminal cases in the State of West Virginia.
2.4. “Bondsman” or “bail bondsman” means any person who is engaged in bonding business and is approved and licensed under the provisions of this rule as a professional bondsman, as defined by subsection 2.9 of this rule, or surety bondsman, as defined by subsection 2.11 of this rule.
2.5. “Cash” means a personal or business check, a money order, or cashier’s check.
2.6. “Commissioner” means the Insurance Commissioner of West Virginia.
2.7. “Insurer” means any domestic, foreign or alien insurance company, including a surety company, which has been qualified generally to transact surety business in the State of West Virginia.
2.8. “Person” means an individual.
2.9. “Professional bondsman” means any person who has been approved and licensed by the Commissioner, and who pledges cash, an irrevocable letter of credit, a bond issued by an insurance company licensed and in good standing in this State, or real estate with the Commissioner as security for bail bonds written in connection with a judicial proceeding, and charges, receives or is promised money or other things of value in exchange for his or her services.
2.10. “Securities” or “approved securities” means cash, an irrevocable letter of credit, a bond issued by an insurance company licensed and in good standing in this State, a qualified power of attorney issued by an insurer pursuant to a producer underwriting agreement, or real estate located in this State that is unencumbered in, at least, the amount of minimum financial responsibility required as set forth in this rule.
2.11. “Surety bondsman” means a person who:
2.11.1. Has been approved and licensed by the Commissioner as an insurance producer with a property and casualty line of authority and appointed by an insurer to execute or countersign bail bonds for the insurer through a qualified power of attorney in connection with judicial proceedings and charges, receives or is promised money or other things of value in exchange for his or her services; or
2.11.2. Posts approved security by providing the Commissioner with a qualified power of attorney issued by an insurer pursuant to a producer underwriting agreement and being approved and licensed by the Commissioner as an insurance producer with a limited lines surety line of authority and appointed by an insurer to execute or countersign bail bonds for the insurer in connection with judicial proceedings and charges, receives or is promised money or other things of value in exchange for his or her services.
W. Va. Code R. § 114-103-3 License Required and Qualifications for Licensure
3.1. On or after July 1, 2022, a person may not engage in the bonding business or act in the capacity of a bail bondsman, or perform any of the functions, duties or powers prescribed for bail bondsmen, unless that person is qualified and licensed by the Commissioner as provided in this rule.
3.1.1. None of the provisions or terms of this rule shall prohibit any individual or individuals from pledging real or other property as security for a bail bond for himself, herself, or another in judicial proceedings who does not charge or receive, or is not promised, a fee or other thing of value in exchange for his or her services, provided such person shall not be permitted to make in excess of ten bonds per year.
3.2. A person seeking a license under this rule shall apply on a form, as located at www.wvinsurance.gov, and in a manner prescribed by the Commissioner and shall comply with the provisions of W. Va. Code §33-12-37 regarding criminal history record checks.
3.2.1. The application shall provide the following information:
3.2.1.a. The person’s home and business address, home and business phone number, email address, and current occupation;
3.2.1.b. That the applicant is at least 21 years of age;
3.2.1.c. That the applicant is a citizen of the United States;
3.2.1.d. If the applicant has been authorized to post criminal bonds in this State previously, or any other state or jurisdiction, a statement as to whether the applicant has ever had a bond forfeited and the name, address and phone number of a person to contact concerning the same;
3.2.1.e. Whether the applicant is in default in payment of any forfeited bail bond or recognizance in any court in any jurisdiction, the amount of bail bond or recognizance on any default, the date of forfeiture, the name of the court, and style of the case in which the forfeiture was declared;
3.2.1.f. That the applicant has knowledge, training or experience of sufficient duration and extent to prove the competence necessary to fulfill the responsibility of a bondsman;
3.2.1.g. That the applicant holds a valid and current driver’s license or identification card;
3.2.1.h. That the applicant has not been previously convicted of, or pled guilty or no contest to, any felony crime;
3.2.1.i. The charge, date, court and disposition of any offense, felony or misdemeanor, other than a minor traffic offense, for which the applicant has ever been convicted;
3.2.1.j. An affidavit from the applicant that he or she has read and understands, and will in all respects abide by, the provisions of this rule and W. Va. Code §51-10-1 et seq.; and
3.2.1.k. A list showing the name, age and residence of each person employed by the bondsman as an agent, clerk, or representative in the bonding business. This list must be updated with the Commissioner within 10 working days every time a person employed by the bondsman as a bondsman, agent, clerk or representative begins or leaves employment.
3.2.2. If the applicant is applying for licensure as a surety bondsman, in addition to the information required pursuant to subdivision 3.2.1 of this rule, the applicant shall also provide:
3.2.2.a. The applicant’s National Producer Number;
3.2.2.b. Notice of appointment from each insurer that the applicant is authorized by power of attorney to execute or countersign bail bonds for; and
3.2.2.c. A qualifying power of attorney from an insurer that is in good standing with the Commissioner to conduct business in this State and is authorized to post criminal appearance bonds.
3.2.3. If the applicant is applying for licensure as a professional bondsman, in addition to the information required pursuant to subdivision 3.2.1 of this rule, the applicant shall also provide:
3.2.3.a. A deposit of cash or approved securities with the Commissioner of an amount to be determined by the Commissioner in accordance with subsections 8.1 and 8.2 of this rule, but shall in no circumstance be less than $10,000;
3.2.3.b. An applicant for a professional bondsman license may make the required deposit by cash, irrevocable letter of credit, or by purchasing a bond through an insurance company licensed and in good standing in this State. All bonds and irrevocable letters of credit must be on a form approved by the Commissioner and must permit the Commissioner to draw down the entire amount, if necessary, to secure the bondsman’s obligations.
3.2.3.c. In lieu of cash, bond or irrevocable letter of credit, if an applicant for a professional bondsman license uses real estate as security for the bonding authority, the applicant shall have an attorney admitted to practice in this State prepare a Title Certificate for Bond on an approved form, as located at www.wvinsurance.gov, that he or she has examined the title to the real estate and that record title to said real estate is in the name of the applicant subject to the limitations stated within such certificate.
3.2.3.c.1. The applicant shall submit the following signed declaration with the Title Certificate for Bond: “In the event this application is granted, the applicant will not sell, convey, mortgage or otherwise encumber any of the real estate or other property listed on the Title Certificate for Bond, except the posting of criminal appearance bonds, without first obtaining written approval of the Insurance Commissioner.”
3.2.3.c.2. If licensure is approved, the bondsman shall deliver to, and have recorded in, the Office of the Clerk of the County Commission in the county wherein the real estate is located a Notice of Bond Encumbrance on an approved form, as located at www.wvinsurance.gov. The recording fee shall be payable by the licensee.
3.2.3.c.3. A pledge of real estate by a professional bondsman as an approved security shall not be permitted after July 1, 2024. However, a professional bondsman who is licensed by the Commissioner as of July 1, 2024, and has pledged real estate as security to conduct bonding business may continue to use real estate as collateral to operate as a bondsman until his or her license is voluntarily surrendered or revoked by the Commissioner.
3.3. The Commissioner may require any documents reasonably necessary to verify the information in the application and may propound any reasonable interrogatories to an applicant for a license, or on any renewal thereof, relating to qualifications, residence, prospective place of business, and any other matters which, in the opinion of the Commissioner, are deemed necessary or expedient in order to protect the public and ascertain the qualifications of the applicant. The Commissioner may also conduct any reasonable inquiry or investigation relative to the determination of the fitness of the applicant to be licensed or to continue to be licensed including, but not limited to, requiring a criminal history record check as set forth in W. Va. Code §33-12-37. The Commissioner shall keep all documents, material or other information obtained pursuant to section 3 of this rule confidential and said information is not open to public inspection and exempt from disclosure pursuant to subpoena or Chapter 29B of the West Virginia Code. The Commissioner is authorized to use the documents, materials, or other information in furtherance of any regulatory or legal action brought as part of the Commissioner’s official duties.
3.4. The application fee for a bail bondsman license is $200, every two years, which shall be paid at the time of application and renewal. The application fee is nonrefundable. Failure to pay the fee at the time of application shall result in a denial of the license. The application fee for a bail bondsman license is in addition to any applicable licensure fee paid by an insurance producer, adjuster, insurer, or other business entity.
3.5. A person whose application is denied may reapply, but the Commissioner shall not consider more than one application submitted by the same person within a six-month period.
3.6. The Commissioner shall establish a process for issuing an official picture identification card to a licensed bail bondsman, which, when issued, must be carried by the bail bondsman at all times when working in the scope of the licensee’s employment or occupation as a bail bondsman. A bail bondsman whose license has been revoked, or is otherwise expired or terminated, shall return the picture identification card to the Commissioner within 10 working days. The Commissioner may coordinate with the Division of Motor Vehicles to issue the identification cards described herein if necessary.
3.7. A license issued to a bail bondsman authorizes the licensee to act in that capacity until the license is expired, suspended, or revoked.
3.8. A bail bondsman who employs an agent, clerk or representative may cancel the agent’s, clerk’s or representative’s authority to act for the bail bondsman. When a bail bondsman cancels an agent’s, clerk’s or representative’s authority, the bail bondsman must notify the Commissioner, in writing, within 10 working days.
3.9. If an individual holds a professional bondsman’s license and a surety bondsman’s license simultaneously, they are considered one license for the purpose of disciplinary actions involving suspension or revocation. However, separate application and renewal fees must be paid for each license.
3.10. Beginning July 1, 2024, the competency of a person applying to the Commissioner for a bail bondsman license shall be determined by examination. A person who is licensed as a bondsman by the Commissioner on or before June 30, 2024, is exempt from the examination requirement. The examination shall test the knowledge of the person concerning the duties and responsibilities of a person engaged in the bonding business and the applicable laws and rules of this state. The examination shall be a multiple-choice test with at least 25 questions, but no more than 50 questions. A person must answer at least 80% of the questions correctly to successfully pass the examination. Each examinee shall pay a $25 fee for each examination to the Commissioner who shall deposit said examination fee into the state treasury for the benefit of the state fund, general revenue.
3.10.1. Any applicant who held a West Virginia bail bondsman license prior to July 1, 2024, but who allowed his or her license to expire while in good standing with the Commissioner, is exempted from examination upon reapplication so long as the application is made within one year of the expiration date of the applicant’s license, and further provided that the applicant was not under investigation by the Commissioner for wrongdoing at the time his or her license expired.
3.10.2. Any bail bondsman whose license was suspended or revoked for violation of this rule shall be required to pass a competency test upon any application for re-licensure.
3.10.3. The Commissioner may, at his or her discretion, designate an independent testing service to prepare and administer the examination subject to the direction of, and approval by, the Commissioner. Any examination fees charged by the service shall be paid by the applicant. In addition to examination fees charged by the independent testing service, the independent testing service shall collect and remit to the Commissioner the $25 examination fee as required by subsection 3.10 of this rule.
3.11. A bail bondsman must notify the Commissioner of a change of legal name, residence address, business address, mailing address, e-mail address, or telephone number within 30 days after a change is made.
3.12. Any person who has been convicted of a felony is not qualified to be licensed as a bail bondsman and the Commissioner shall not license any such person. The Commissioner shall revoke or not renew the license of a bail bondsman who is convicted of a felony, after licensure, and shall not renew the license of a bail bondsman who was previously convicted of a felony, and who was issued a license prior to the enactment of this subsection.
W. Va. Code R. § 114-103-4 License Renewal
4.1. Bail bondsman licenses shall be renewed biennially (every two years) by the last day of the birth month of the bondsman, unless revoked or suspended prior thereto by the Commissioner. The expiration year will be established based upon the year of initial licensure.
4.2. The renewal fee for a bail bondsman license is $200. The renewal fee is nonrefundable.
4.3. The renewal application shall include an attestation that the applicant meets the qualifications as set forth in section 3 of this rule.
4.4. The Commissioner shall require a criminal history record check of the licensee at the time of renewal in accordance with W. Va. Code §33-12-37.
W. Va. Code R. § 114-103-5 Responsibilities and Prohibited Activities
5.1. The bonding fee required by a bail bondsman shall be at least 10 percent of the amount of the bond, but shall not, in the aggregate, exceed the amount of the bond. The bonding fee may be paid in full at the time of the issuance of the bond, or at least three percent paid at the issuance of the bond with the remaining percentage to be paid over a period not to exceed 12 months.
5.2. A bail bondsman, or any agent, clerk, or representative thereof shall not, either directly or indirectly, charge, accept, or receive any sum of money, or other thing of value, other than the authorized bonding fee from any person for whom he or she has posted or executed bond, for any other service whatsoever performed in connection with any indictment or charge upon which said person is bailed or held in the State of West Virginia.
5.3. A bail bondsman, or any agent, clerk or representative thereof, shall not, either directly or indirectly, give, donate, lend, contribute or promise to give, donate, loan, or contribute any money, property, entertainment, or other thing of value whatsoever to any attorney, police officer, sheriff, deputy sheriff, constable, jailer, probation officer, clerk, or other attaché of a criminal court, or public official of any character for procuring or assisting in procuring any person to employ said bail bondsman to execute as surety any bond for compensation in any criminal case in the State of West Virginia. It shall further be unlawful for any attorney, police officer, sheriff, deputy sheriff, constable, jailer, probation officer, clerk, bailiff, or other attaché of a criminal court, or public official of any character, to accept or receive from any bail bondsman, or any agent, clerk, or representative thereof, money, property, entertainment, or other thing of value whatsoever for procuring or assisting in procuring any person to employ any bondsman to execute as surety any bond for compensation in any criminal case in the State of West Virginia.
5.4. A bail bondsman, or any agent, clerk, or representative thereof, shall not settle, attempt to settle, procure, or attempt to procure the dismissal of any indictment, information, or charge against any person in custody or held upon bond in the State of West Virginia, with any court, prosecuting attorney or police officer.
5.5. A bail bondsman, or any agent, clerk, or representative thereof, shall not procure, assist in procuring or attempt to procure the retention or employment of any attorney to represent any person charged with a crime in any court in this State. A bail bondsman shall not accept from any attorney, either directly or indirectly, a loan, donation, contribution, or promise to give, loan, donate, or contribute any money, property, entertainment, or other thing of value whatsoever to, or to split or divide any fee or commission with, any attorney for causing or procuring or assisting in causing or procuring any person to employ such attorney in any criminal case in the State of West Virginia.
5.6. A bail bondsman shall not have or attempt to have a personal relationship, which includes but is not limited to any type of a sexual relationship, with any person for whom the bail bondsman has posted a bond for the period during which the bond is posted regardless of whether said personal relationship is consensual or not. A bail bondsman is prohibited from accepting or attempting to obtain any type of personal service, favor, or nonmonetary item in lieu of payment for bond. This subsection is not subject to waiver by anyone under any circumstances.
5.7. A bail bondsman is prohibited from initiating contact with persons for whom arrest warrants are pending for the purpose of soliciting business.
5.8. A bail bondsman, or any agent, clerk, or representative thereof, is prohibited from entering a police precinct, jail, prison, court or other place of detention for the purpose of obtaining employment as a bail bondsman, without having been previously contacted by a person detained, or by some relative, or other authorized person acting for or on behalf of the person detained. Whenever a bail bondsman, or any agent, clerk, or representative thereof, enters a place of detention, he or she shall immediately identify the purpose of the visit and the name of the person who has contacted him or her to request their services.
5.9. No single bond shall be taken or approved which obligates the bail bondsman in any amount exceeding one-half of the bondsman’s maximum amount of bonding authority.
5.10. A bail bondsman, or any agent, clerk or representative thereof, shall not impersonate a law enforcement officer or falsely represent that the bondsman is in any way connected with an agency of the federal, state or local government.
5.11. No police officer, sheriff, deputy sheriff, other law enforcement officer, judicial official, attorney, parole officer, probation officer, jailer, clerk, or other attaché of a criminal court may become surety on a bail bond for any person. In addition, no person covered by this subsection may act as an agent, clerk or representative for any bail bondsman or bail bonding business. No such person may have an interest, directly or indirectly, in the financial affairs of any firm or corporation whose principal business is acting as a bail bondsman. However, nothing in this subsection prohibits any such person from being surety upon the bond of his or her spouse, parent, brother, sister, child, grandchild, or dependent.
5.12. A bail bondsman shall not sign or countersign in blank bail bonds, nor shall he give a power of attorney to, or otherwise authorize, anyone to countersign his or her name to bonds unless the person so authorized is a licensed bondsman.
W. Va. Code R. § 114-103-6 Qualifications of Sureties on Bail
6.1. Each and every surety for the release of a person on bail shall be qualified as:
6.1.1. An insurer and represented by a surety bondsman; or
6.1.2. A professional bondsman.
6.2. The Commissioner shall not be liable for any of the incurred liabilities of a bondsman in excess of the surety.
W. Va. Code R. § 114-103-7 Receipts for Collateral
7.1. When collateral security is received by a bail bondsman, a written receipt shall be furnished.
7.2. Receipts shall provide a full description of the collateral received and must:
7.2.1. Be prenumbered and used and provided in consecutive numerical order;
7.2.2. Show the name and address of the bail bondsman;
7.2.3. Show the name and address of the person providing the collateral;
7.2.4. Show the amount and nature of the collateral and the date received;
7.2.5. Show the name of the person accepting collateral; and
7.2.6. Show the total amount of the bond for which the collateral is being accepted, the name of the defendant, the criminal action number of the criminal proceeding, and the jurisdiction in which the criminal action is pending.
7.3. When collateral security is received in the form of cash or check or other negotiable instrument, the bail bondsman shall deposit the cash or instrument within five banking days after receipt, in an established, separate noninterest-bearing trust account in any bank located in West Virginia. The trust account funds under this subsection shall not be commingled with other operating funds of the bondsman.
W. Va. Code R. § 114-103-8 Financial Responsibility of Professional Bondsmen
8.1. Each professional bondsman acting as surety on bail bonds in this State shall, unless real estate is used as security, maintain a deposit of approved securities with and satisfactory to the Commissioner of a value of at least one-tenth the amount of all bonds or undertakings written in this State on which he or she is absolutely or conditionally liable as of the first day of the current month. The amount of this deposit must be reconciled with the bondsman’s liabilities as of the first day of each month, but the value of said deposit shall in no event be less than $10,000. The Commissioner shall not be liable for any of the incurred liabilities of the professional bondsman in excess of the pledged security.
8.2. If a professional bondsman secures criminal bonds with real estate, the aggregate amount of the bonds written thereunder cannot exceed an amount equal to five times the unencumbered, current assessed value of the real estate listed (as determined by the county assessor). The Commissioner shall not be liable for any of the incurred liabilities of the professional bondsman in excess of the unencumbered, current assessed value of the real estate.
8.3. A professional bondsman may apply to the Commissioner to increase the limit of his or her aggregate authority in regard to the writing of bonds in this State above the limits set forth in subsections 8.1 and 8.2 of this rule without the need for maintaining additional security. The Commissioner will evaluate those requests on a case-by-case basis with consideration given to any special circumstances that apply, as well as the license history and financial responsibility of the bondsman making the request. A request may be granted on a temporary or permanent basis. Additionally, the Commissioner may, temporarily or permanently, decrease the limit of a professional bondsman’s aggregate authority to write bonds below the limits set forth in subsections 8.1 and 8.2 of this rule if the bondsman has shown financial irresponsibility in the conduct of bonding business in this State. A professional bondsman may request a hearing pursuant to W. Va. Code §§33-2-12 and 33-2-13 upon any decision of the Commissioner to deny a request to increase the bondsman’s aggregate authority or decrease the bondman’s aggregate authority in regard to the writing of bonds in this State.
8.4. If two or more bondsmen join in the writing of a single bond, the penalty of the bond shall be prorated between the several bondsmen, either equally or on the same proportionate basis as the bondsmen participated in the writing of the bond.
8.5. With the approved securities deposited with the Commissioner, the professional bondsman shall at the same time deliver to the Commissioner a power of attorney or assignment on an approved form, as located at www.wvinsurance.gov, executed and acknowledged by the professional bondsman authorizing the sale or transfer of said securities or any part thereof.
8.6. Any professional bondsman, whose security deposits with the Commissioner are, for any reason, reduced in value below the requirements of this rule shall, within 10 working days, deposit such additional securities as are necessary to comply with the provisions of this rule or reduce the excess bond liability. No professional bondsman shall sign, endorse, execute, or become surety on any additional bail bonds, or pledge or deposit any cash, check, or other security of any nature in lieu of a bail bond in this State until the professional bondsman has cured the deficiency. If a bondsman does not cure the deficiency within 10 working days, the license of the bondsman shall be suspended pending a hearing on the matter.
8.7. The Commissioner may deny the renewal of any license held by a professional bondsman if, at the time of the renewal application, the professional bondsman has not complied with or cured a deficiency.
8.8. The deposit provided for in subsection 8.1 of this rule shall constitute a reserve available to meet sums due on forfeiture of any bonds executed by the bondsman. The deposit shall be held in safekeeping by the Commissioner and shall only be used if a bondsman fails to pay an order and judgment of forfeiture after being properly notified, or shall be used if the license of a professional bondsman has been revoked.
8.9. A pro rata portion of the securities shall be returned to the bondsman when the Commissioner is satisfied that the deposit of securities is in excess of the amount required to be maintained with the Commissioner by said bondsman, and all the securities shall be returned if the Commissioner is satisfied that the bondsman has satisfied, or satisfactory arrangements have been made to satisfy, the obligations of the bondsman on all the bondsman’s bail bonds written in this State.
8.10. If a bondsman discontinues writing bonds due to death, permanent incapacitation, or some other circumstance that results in the bondsman returning the license issued, and the Commissioner is satisfied that no more bonds can be written against the bondsman’s security deposit, the Commissioner shall return the portion of the security deposit in excess of that required to secure the bondsman’s outstanding bond liability.
W. Va. Code R. § 114-103-9 Cash Securities Held in Trust
9.1. Cash securities deposited by a professional bondsman with the Commissioner shall be held in trust for the protection and benefit of the holder of bail bonds executed by or on behalf of the bondsman in this State. The account shall be a separate account in the State Treasury designated the “Bail Bondsmen Cash Security Fund” and shall be administered by the Commissioner as set forth in subsection 9.2 of this rule.
9.2. The Commissioner may expend any and all cash securities or utilize the proceeds thereof for the purpose of satisfying the liabilities of the professional bondsman who pledged the cash security on bail bonds given in this State on which the bondsman is liable, but shall only be used if the bondsman fails to pay an order and judgment of forfeiture after being properly notified. The Commissioner shall not expend cash security pledged by one bondsman for the liabilities of another bondsman. The Commissioner shall not be liable for any of the incurred liabilities of the professional bondsman in excess of the pledged cash security.
W. Va. Code R. § 114-103-10 Discontinuance of Business; Cancellation of License; Death, Incapacitation or Incompetence of Bail Bondsman
10.1. Any bail bondsman who discontinues writing bail bonds during the period for which the bail bondsman is licensed, shall inform the Commissioner, in writing, within 30 days after the discontinuance.
10.2. In the case of death, incapacitation, or incompetence of a licensed bail bondsman, the spouse or surviving spouse, next of kin, person or persons holding a power of attorney, guardian, executor or administrator of the bondsman may contract with another licensed bail bondsman to perform those duties to have the licensee’s outstanding bail bond obligations resolved. The contract must be filed with the Commissioner and every clerk of court where it can be determined the bondsman has pending outstanding bail bond obligations.
10.3. A bail bondsman may contract to transfer, convey, or assign the bondsman’s business to another licensed bail bondsman. The contract shall include a list of the transferring bondsman’s pending, outstanding bail bond obligations and shall be filed with the Commissioner. The contract shall allow for the transferring bondsman to transfer, convey, or assign assets to the purchasing bondsman that include, but are not limited to, any cash or approved securities, with the Commissioner as security for bail bonds. Notwithstanding the filing of the contract with the Commissioner, the transferor remains responsible for all outstanding bond obligations until relieved from an individual obligation or satisfaction of any final judgment of forfeiture entered thereon.
W. Va. Code R. § 114-103-11 License Suspension and Revocation
11.1. Any license issued pursuant to this rule may, after notice and hearing pursuant to W. Va. Code §§33-2-12 and 33-2-13, be suspended or revoked for good cause at any time by the Commissioner. Good cause includes, but is not limited to:
11.1.1. Any cause for which issuance of the license could have been denied;
11.1.2. Violation of any laws of this State, lawful rule, or order of the Commissioner;
11.1.3. Material misstatement, misrepresentation, or fraud in obtaining the license or on the license application or renewal application;
11.1.4. Misappropriation, conversion, or unlawful withholding of monies or property belonging to insurers, insureds, or others received in the conduct of business under the license;
11.1.5. Conviction of, or having entered a plea of guilty or no contest to, any felony crime that substantially relates to the occupation of a bail bondsman and poses a reasonable threat to public safety;
11.1.6. Fraudulent or dishonest practices or demonstrating financial irresponsibility in conducting business under the license;
11.1.7. When the licensee has, in the conduct of affairs under the license, demonstrated incompetency, or untrustworthiness, or conduct or practices rendering the licensee unfit to carry on bonding business or making continuance in the business detrimental to the public interest;
11.1.8. Misrepresentation of the terms of any actual or proposed bond;
11.1.9. Forging the name of another to a bond or application for bond;
11.1.10. Willful failure to return collateral security when the principal is entitled thereto;
11.1.11. Failing to notify the Commissioner of a change of legal name, residence address, business address, mailing address, e-mail address, or telephone number within 30 days after a change is made, or failing to respond to a properly mailed notification within a reasonable amount of time;
11.1.12. Failing to file a report as required by this rule or filing a materially untrue report;
11.1.13. Filing false affidavits;
11.1.14. Failing to pay any required fees or forfeited bonds to a court;
11.1.15. Failing to pay any required fee to the Commissioner;
11.1.16. Posting a bond for any defendant without first obtaining a written or oral agreement with the defendant or cosigner of the bond; or
11.1.17. Committing any of the prohibited acts set forth in section 5 of this rule.
11.2. If a bondsman’s authority to post bonds in this State is suspended or revoked for any reason, said bondsman remains responsible for any and all bonds which were outstanding at the time of the suspension or revocation.
11.3. In addition to any applicable denial, suspension or revocation of a license, any person violating any provision of subsection 11.1 of this rule may be subject to a civil penalty of not more than $100 per occurrence.
11.4. The Commissioner shall retain jurisdiction as to any person who cancels his or her bail bondsman’s license or allows the license to expire, or otherwise lapse, if the person while licensed as a bail bondsman allegedly violated any provisions of this rule.
W. Va. Code R. § 114-103-12 Notice of Bankruptcy or Receivership
Upon the filing for protection under the United States Bankruptcy Code or any state receivership law by any licensed bail bondsman or by any bail bond business in which the bail bondsman holds a position of management or ownership, the bail bondsman shall notify the Commissioner of the filing for protection within five working days after the filing. Failure to notify the Commissioner within five working days after the filing for bankruptcy protection shall cause the bail bondsman’s license to be immediately suspended pending further investigation and hearing. The Commissioner will notify all detention facilities and courts in this State of a bail bondsman’s suspension pursuant to this section within five working days thereof. Notification under this section may be made electronically. The Commissioner shall not be liable for any of the incurred liabilities of a bondsman who files for bankruptcy.
W. Va. Code R. § 114-103-13 Examinations
Whenever the Commissioner considers it prudent, the Commissioner may visit and examine or cause to be visited and examined by a competent person appointed by the Commissioner for that purpose, any licensed bail bondsman. The Commissioner or person making the examination shall have free access to all records of the licensed bail bondsman that relate to the licensee’s business and to the records kept by any of the licensee’s agents.
W. Va. Code R. § 114-103-14 Records
All records related to executing bail bonds, including bail bond reports, receipts, collateral security agreements, and memoranda of agreements shall be kept separate from records of any other business and must be maintained for not less than five years after the final entry has been made.
W. Va. Code R. § 114-103-15 Reporting
15.1. In order to evaluate a professional bondsman’s financial responsibility, upon request and as often as the Commissioner deems necessary, a professional bondsman shall electronically file with the Commissioner a written report showing:
15.1.1. Each individual bonded;
15.1.2. The date the bond was given;
15.1.3. The principal sum of the bond;
15.1.4. The county in which the bond was issued;
15.1.5. The court file or docket number for the principal’s court obligation; and
15.1.6. The fee charged for the bonding service in each instance.
15.2. The Commissioner may verify the information provided to him or her pursuant to subsection 15.1 of this rule with the clerk of the county court in which the bond was issued.
15.3. Each insurer that appoints surety bondsmen in this State shall electronically file with the Commissioner, a written report in a form, as located at www.wvinsurance.gov, adopted by the Commissioner regarding all bail bonds on which the insurer is liable as of the last day of each calendar quarter showing the total dollar amount for which the insurer is liable. The report shall be filed on or before the 15th day following the end of each calendar quarter.
15.4. Annual Report by Insurers.
15.4.1. Before July 1 of each year, every insurer shall furnish the Commissioner a list of all surety bondsmen appointed by the insurer to write bail bonds on the insurer’s behalf.
15.5. An insurer terminating the appointment of a surety bondsman shall file a written notice of the termination with the Commissioner with a statement that the insurer has given or mailed notice of the termination to the surety bondsman. The notice to the Commissioner shall state the reason(s) for the termination.
15.6. A bondsman shall report to the Commissioner any administrative action taken against the bondsman in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. This report shall include a copy of the final order, consent order, settlement agreement, or other relevant documents regarding the administrative action.
15.7. Within 10 days of the initial pretrial hearing date, a bondsman shall report to the Commissioner any criminal prosecution of the bondsman taken in any jurisdiction. The report shall include a copy of the initial criminal complaint filed, the order resulting from the pretrial hearing, and any other relevant legal document.
15.8. Any law enforcement agency, prosecuting attorney’s office, court clerk’s office or insurer that is aware that a licensed bail bondsman has been convicted of or has pleaded guilty or no contest to any crime, should immediately notify the Commissioner.
15.9. The Commissioner may request any additional information or data from a bondsman or insurer that he or she deems necessary to enforce the provisions of this rule.
15.10. Notwithstanding any other provision of this rule, any documents, materials or other information in the control or possession of the Commissioner and furnished by an insurer or an employee or agent thereof acting on behalf of the insurer, or obtained by the Commissioner in an investigation under this rule, shall be confidential by law and privileged, shall not be considered public records under Chapter 29B of the West Virginia Code, shall not be subject to subpoena, shall not be subject to discovery in any civil action other than a proceeding brought by the Commissioner, and is otherwise subject to the confidentiality and information sharing provisions set forth in W. Va. Code §33-2-19. The Commissioner is authorized to use the documents, materials, or other information in furtherance of any regulatory or legal action brought as part of the Commissioner’s official duties.
W. Va. Code R. § 114-103-16 Penalties for Violations
Except as otherwise provided in this rule, any person who violates any of the provisions of this rule shall be penalized in accordance with Chapter 51, Article 10, of the West Virginia Code.
Series 11 Advertisement Of Life Insurance And Annuities
W. Va. Code R. § 114-11-1 General
1.1. Scope. -- The purpose of this rule is to set forth minimum standards and guidelines to assure a full and truthful disclosure to the public of all material and relevant information in the advertising of life insurance policies and annuity contracts. This rule is based on the National Association of Insurance Commissioners’ “Advertisements Of Life Insurance and Annuities Model Regulation” (Model 570), as amended in 2000.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-11-6.
1.3. Filing Date. -- May 5, 2008.
1.4. Effective Date. -- August 1, 2008.
W. Va. Code R. § 114-11-2 Applicability
2.1. This rule applies to any life insurance or annuity advertisement intended for dissemination in this state. In variable contracts where disclosure requirements are established pursuant to federal regulation, this rule shall be interpreted so as to eliminate conflict with federal regulation.
2.2. All advertisements, regardless of by whom written, created, designed or presented, are the responsibility of the insurer, as well as the producer who created or presented the advertisement. Insurers shall establish and at all times maintain a system of control over the content, form and method of dissemination of all advertisements of its products. A system of control includes regular and routine notification, at least once a year, to insurance producers, brokers and others authorized by the insurer to disseminate advertisements of the requirements and procedures for company approval prior to the use of any advertisement that is not furnished by the insurer and of the most serious consequence of not obtaining the required prior approval.
W. Va. Code R. § 114-11-3 Definitions. 3.1
a. Advertisement means material designed to create public interest in life insurance or annuities or in an insurer, or in an insurance producer; or to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy including:
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Printed and published material, audio-visual material and descriptive literature of an insurer or insurance producer used in direct mail, newspapers, magazines, radio and television scripts, billboard and similar displays, and the Internet or any other mass communication media;
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Descriptive literature and sales aids of all kinds authored by the insurer, its insurance producers, or third parties, issued, distributed or used by the insurer or insurance producer, including, but not limited to, circulars, leaflets, booklets, web pages, depictions, illustrations and form letters;
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Material used for recruiting, training and educating an insurer’s insurance producers which is used to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy; and 4. Prepared sales talks, presentations and material for use by insurance producers.
b. “Advertisement” does not include:
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Communications or materials used within an insurer’s own organization and not intended for dissemination to the public;
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Communications with policyholders other than material urging policyholders to purchase, increase, modify, reinstate or retain a policy; and 3. A general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list that a policy or program has been written or arranged, as long as the announcement clearly indicates that it is preliminary to the issuance of a booklet explaining the proposed coverage.
3.2. “Determinable policy elements” means provisions that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but the values or amounts of which cannot be determined until some point after issue. These determinable policy elements include premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges, or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable policy elements only or from both determinable and guaranteed policy elements.
3.3. “Guaranteed policy elements” means premiums, benefits, values, credits or charges under a policy, or elements of formulas used to determine any of these that are guaranteed and determined at issue.
3.4. “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.
3.5. “Insurer” means any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyd’s, fraternal benefit society, and any other legal entity which is defined as an "insurer" in the insurance code of this state or issues life insurance or annuities in this state and is engaged in the advertisement of a policy.
3.6. “Nonguaranteed policy element” means premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.
3.7. “Policy” means any policy, plan, certificate, including a fraternal benefit certificate, contract, agreement, statement of coverage, rider or endorsement which provides for life insurance or annuity benefits.
W. Va. Code R. § 114-11-4 Form and Contents of Advertisements
4.1. Advertisements shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a policy must be sufficiently complete and clear so as to avoid deception. The Insurance Commissioner shall determine whether an advertisement has the capacity or tendency to mislead or deceive from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.
4.2. No advertisement shall use the terms “investment,” “investment plan,” “founder’s plan,” “charter plan,” “deposit,” “expansion plan,” “profit,” “profits,” “profit sharing,” “interest plan,” “savings,” “savings plan,” “private pension plan,” “retirement plan” or other similar terms in connection with a policy in a context or under such circumstances or conditions as to have the capacity or tendency to mislead a purchaser or prospective purchaser of such policy to believe that he or she will receive, or that it is possible that he or she will receive, something other than a policy or some benefit not available to other persons of the same class and equal expectation of life.
W. Va. Code R. § 114-11-5 Disclosure Requirements. 5.1 The information required to be disclosed by this rule may not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of the advertisement so as to be confusing or misleading
5.2. An advertisement may not omit material information or use words, phrases, statements, references or illustrations having the capacity, tendency or effect of misleading or deceiving prospective purchasers as to the nature or extent of any policy benefit payable, loss covered, premium payable, or state or federal tax consequences. The fact that (a) the policy is made available to a prospective insured for inspection prior to consummation of the sale, (b) an offer is made to refund the premium if the purchaser is not satisfied or (c) that the policy or contract includes a “free look” period that satisfies or exceeds regulatory requirements, does not remedy misleading statements.
5.3. If an advertisement uses the terms “non-medical,” “no medical examination required,” or similar terms where issue is not guaranteed, the advertisement shall include a disclosure of equal prominence and in juxtaposition thereto that issuance of the policy may depend upon the answers to health questions in the application.
5.4. An advertisement may not use as the name or title of a life insurance policy any phrase that does not include the words “life insurance” unless accompanied by other language clearly indicating the policy is for life insurance. An advertisement may not use as the name or title of an annuity contract any phrase that does not include the word “annuity” unless accompanied by other language clearly indicating the contract is an annuity. An annuity advertisement may not refer to an annuity as a “CD annuity,” or deceptively compare an annuity to a certificate of deposit.
5.5. An advertisement must prominently describe the type of policy advertised.
5.6. An advertisement of an insurance policy marketed by direct response techniques may not falsely state or imply that because there is no insurance producer or commission involved there will be a cost savings to prospective purchasers. Justification for any statement or implication of cost savings must be submitted and approved by the Insurance Commissioner prior to dissemination of the advertisement.
5.7. An advertisement for a life insurance policy containing graded or modified benefits must prominently display any limitation of benefits. The advertisement must disclose that the premium is level and coverage decreases or increases with age or duration. An advertisement of or for a life insurance policy under which the death benefit varies with the length of time the policy has been in force must accurately describe and clearly call attention to the amount of minimum death benefit under the policy.
5.8. An advertisement for the types of policies described in subsections 5.6 and 5.7 of this section may not use the words “inexpensive,” “low cost,” or other phrase or words of similar import when the policies being marketed are guaranteed issue.
5.9. Premiums a. An advertisement for a policy with non-level premiums shall prominently describe the premium changes.
b. An advertisement for a policy which reserves to the insurer the right to change the amount of the premium during the policy term must prominently describe this feature. Failure to do so is deemed to be deceptive and misleading and is prohibited.
c. An advertisement may not contain a statement or representation that premiums paid for a life insurance policy can be withdrawn under the terms of the policy. An advertisement may state that amounts paid into an advance premium fund, which are intended to pay premiums at a future time, may be withdrawn under the conditions of the prepayment agreement. An advertisement may also refer to withdrawal rights under any unconditional premium refund offer.
d. An advertisement that represents that a pure endowment benefit has a “profit” or “return” on the premium paid, rather than a policy benefit for which a specified premium is paid is deemed to be deceptive and misleading and is prohibited.
e. An advertisement may not falsely represent or imply in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits.
f. An advertisement may not use the term “vanish” or “vanishing premium” or a similar term that implies the policy becomes paid up to describe a plan using nonguaranteed elements to pay a portion of future premiums.
5.10. Analogies between a life insurance policy or annuity contract’s cash values and savings accounts or other investments and between premium payments and contributions to savings accounts or other investments must be complete and accurate. An advertisement may not emphasize the investment or tax features of a life insurance policy to such a degree that the advertisement would mislead the purchaser to believe the policy is anything other than life insurance.
5.11. An advertisement may not state or imply in any way that interest charged on a policy loan or the reduction of death benefits by the amount of outstanding policy loans is unfair, inequitable or in any manner an incorrect or improper practice.
5.12. Nonforfeiture values featured in any advertisement must be shown either for the entire amount of the basic life policy death benefit or for each $1,000 of initial death benefit.
5.13. The words “free,” “no cost,” “without cost,” “no additional cost,” “at no extra cost,” or words of similar import may not be used with respect to any benefit or service being made available with a policy unless true. If there is no charge to the insured, the identity of the payor shall be prominently disclosed. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the premium or use other appropriate language.
5.14. No insurance producer may use terms such as “financial planner,” “investment adviser,” “financial consultant” or “financial counseling” to imply that he or she is generally engaged in an advisory business in which compensation is unrelated to sales unless that actually is the case. This provision does not preclude persons who hold some form of formal recognized financial planning or consultant designation from using this designation even when they are only selling insurance. This provision also does not preclude an insurance producer from citing his or her membership in a recognized trade or professional association having such terms as part of its name, as long as the fact that the producer is authorized only to sell insurance products is disclosed. This provision does not permit persons to charge an additional fee for services that are customarily associated with the solicitation, negotiation or servicing of policies.
5.15. Nonguaranteed Elements a. An advertisement may not use or describe nonguaranteed elements in a manner that is misleading or has the capacity or tendency to mislead.
b. An advertisement may not state or imply that the payment or amount of nonguaranteed elements is guaranteed. Unless otherwise specified in 114 CSR 11C, if nonguaranteed elements are illustrated, they shall be based on the insurer’s current scale and the illustration shall contain a statement to the effect that they are not to be construed as guarantees or estimates of amounts to be paid in the future.
c. Unless otherwise specified in 114 CSR 11C, an advertisement that includes any illustrations or statements containing or based upon nonguaranteed elements shall set forth, with equal prominence comparable illustrations or statements containing or based upon the guaranteed policy elements.
d. An advertisement may not use or describe determinable policy elements in a manner that is misleading or has the capacity or tendency to mislead.
e. Advertisement may describe determinable policy elements as guaranteed but not determinable at issue. This description should include an explanation of how these elements operate, and their limitations, if any.
f. If an advertisement refers to any nonguaranteed policy element, it shall indicate that the insurer reserves the right to change any such element at any time and for any reason. However, if an insurer has agreed to limit this right in any way; such as, for example, if it has agreed to change these elements only at certain intervals or only if there is a change in the insurer’s current or anticipated experience, the advertisement may indicate any such limitation on the insurer’s right.
g. An advertisement may not refer to dividends as “tax-free” or use words of similar import, unless the tax treatment of dividends is fully explained and the nature of the dividend as a return of premium is indicated clearly.
h. An advertisement may not state or imply that illustrated dividends under either or both a participating policy or pure endowment will be or can be sufficient at any future time to assure without the future payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains the benefits or coverage provided at that time and the conditions required for that to occur.
An advertisement may not state that a purchaser of a policy will share in or receive a stated percentage or portion of the earnings on the general account assets of the company.
5.16. Testimonials, Appraisals, Analysis, or Endorsements by Third Parties a. Testimonials, appraisals or analysis used in advertisements must be genuine; represent the current opinion of the author; be applicable to the policy advertised, if any; and be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective insureds as to the nature or scope of the testimonial, appraisal, analysis or endorsement. In using testimonials, appraisals or analysis; the insurer or insurance producer makes as its own all the statements contained therein, and these statements are subject to all the provisions of this rule.
b. If the individual making a testimonial, appraisal, analysis or an endorsement has a financial interest in the insurer or related entity as a stockholder, director, officer, employee or otherwise, or receives any benefit directly or indirectly other than required union scale wages, that fact shall be prominently disclosed in the advertisement.
c. An advertisement may not state or imply that an insurer or a policy has been approved or endorsed by a group of individuals, society, association or other organization unless such is the fact and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial is owned, controlled or managed by the insurer, or receives any payment or other consideration from the insurer for making an endorsement or testimonial, that fact shall be disclosed in the advertisement.
d. When an endorsement refers to benefits received under a policy for a specific claim, the claim date, including claim number, date of loss and other pertinent information shall be retained by the insurer for inspection for a period of five (5) years after the discontinuance of its use or publication.
5.17. An advertisement may not contain statistical information relating to any insurer or policy unless it accurately reflects recent and relevant facts. The source of any statistics used in advertisement shall be identified.
5.18. Policies Sold to Students a. The envelope in which insurance solicitation material is contained may be addressed to the parents of students. The address may not include any combination of words which imply that the correspondence is from a school, college, university or other education or training institution nor may it imply that the institution has endorsed the material or supplied the insurer with information about the student unless such is a correct and truthful statement.
b. All advertisements including, but not limited to, informational flyers used in the solicitation of insurance shall be identified clearly as coming from an insurer or insurance producer, if such is the case, and these entities shall be clearly identified as such.
c. The return address on the envelope may not imply that the soliciting insurer or insurance producer is affiliated with a university, college, school or other educational or training institution, unless true.
5.19. Introductory, Initial or Special Offers and Enrollment Periods a. An advertisement of an individual policy or combination of policies may not state or imply that the policy or combination of policies is an introductory, initial or special offer, or that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group of individuals, unless that is the fact. An advertisement may not describe an enrollment period as “special” or “limited” or use similar words or phrases in describing it when the insurer uses successive enrollment periods as its usual method of marketing its policies.
b. An advertisement may not state or imply that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy advertised because of special advantages available in the policy.
c. An advertisement may not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the reduced initial premium. A reduced initial or first year premium may not be described as constituting free insurance for a period of time. When insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, all references to the reduced initial premium shall be followed by an asterisk or other appropriate symbol that refers the reader to that specific portion of the advertisement that contains the full rate schedule for the policy being advertised.
d. An enrollment period during which a particular insurance policy may be purchased on an individual basis may not be offered within this state unless there has been a lapse of not less than six (6) months between the close of the immediately preceding enrollment period for the same policy and the opening of the new enrollment period. The advertisement shall specify the date by which the applicant must mail the application, which shall be not less than ten (10) days and not more than forty (40) days from the date on which the enrollment period is advertised for the first time. This rule applies to all advertising media —i.e., mail, newspapers, radio, television, magazines and periodicals —by any one insurer or insurance producer. The phrase “any one insurer” includes all the affiliated companies of a group of insurance companies under common management or control. This rule does not apply to the use of a termination or cutoff date beyond which an individual application for a guaranteed issue policy will not be accepted by an insurer in those instances where the application has been sent to the applicant in response to his or her request. It is also inapplicable to solicitations of employees or members of a particular group or association that otherwise would be eligible under specified provisions of the insurance code for group, blanket or franchise insurance. In cases where an insurance product is marketed on a direct mail basis to prospective insureds by reason of some common relationship with a sponsoring organization, this rule shall be applied separately to each sponsoring organization.
5.20. An advertisement of a particular policy may not state or imply that prospective insureds shall be or become members of a special class, group, or quasi-group and as such enjoy special rates, dividends or underwriting privileges, unless that is the fact.
5.21. An advertisement may not make unfair or incomplete comparisons of policies, benefits, dividends or rates of other insurers. An advertisement may not disparage other insurers, insurance producers, policies, services or methods of marketing.
5.22. For individual deferred annuity products or deposit funds, the following shall apply:
a. Any illustrations or statements containing or based upon nonguaranteed interest rates shall likewise set forth with equal prominence comparable illustrations or statements containing or based upon the guaranteed accumulation interest rates. The nonguaranteed interest rate may not be greater than those currently being credited by the company unless the nonguaranteed rates have been publicly declared by the company with an effective date for new issues not more than three (3) months subsequent to the date of declaration.
b. If an advertisement states the net premium accumulation interest rate, whether guaranteed or not, it shall also disclose in close proximity thereto and with equal prominence, the actual relationship between the gross and the net premiums.
c. If the contract does not provide a cash surrender benefit prior to commencement of payment of annuity benefits, an illustration or statement concerning the contract shall prominently state that cash surrender benefits are not provided.
d. Any illustrations, depictions or statements containing or based on determinable policy elements shall likewise set forth with equal prominence comparable illustrations, depictions or statements containing or based on guaranteed policy elements.
5.23. An advertisement of a life insurance policy or annuity that illustrates nonguaranteed values shall only do so in accordance with current applicable state law relative to illustrating such values for life insurance policies and annuity contracts.
W. Va. Code R. § 114-11-6 Identity of Insurer
6.1. The name of the insurer shall be clearly identified in all advertisements about the insurer or its products, and if any specific individual policy is advertised it shall be identified either by form number or other appropriate description. If an application is a part of the advertisement, the name of the insurer shall be shown on the application. However, if an advertisement contains a listing of rates or features that is a composite of several different policies or contracts of different insurers, the advertisement shall so state, shall indicate, if applicable, that not all policies or contracts on which the composite is based may be available in all states, and shall provide a rating of the lowest rated insurer and reference the rating agency, but need not identify each insurer. If an advertisement identifies the issuing insurers, insurance issuer ratings need not be stated.
6.2. An advertisement may not use a trade name, an insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, a reinsurer of the insurer, service mark, slogan, symbol or other device or reference without disclosing the name of the insurer, if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the insurer or create the impression that a company other than the insurer would have any responsibility for the financial obligation under a policy.
6.3. An advertisement may not use any combination of words, symbols or physical materials that by their content, phraseology, shape, color or other characteristics are so similar to a combination of words, symbols or physical materials used by a governmental program or agency or otherwise appear to be of such a nature that they tend to mislead prospective insureds into believing that the solicitation is in some manner connected with a governmental program or agency.
W. Va. Code R. § 114-11-7 Jurisdictional Licensing and Status of Insurer
7.1. An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed may not imply licensing beyond those limits.
7.2. An advertisement may state that an insurer or insurance producer is licensed in a particular state or states, provided it does not exaggerate that fact or suggest or imply that competing insurers or insurance producers may not be so licensed.
7.3. An advertisement may not create the impression that the insurer, its financial condition or status, the payment of its claims or the merits, desirability, or advisability of its policy forms or kinds of plans of insurance are recommended or endorsed by any governmental entity. However, where a governmental entity has recommended or endorsed a policy form or plan, that fact may be stated if the entity authorizes its recommendation or endorsement to be used in an advertisement.
W. Va. Code R. § 114-11-8 Statements About the Insurer
An advertisement may not contain statements, pictures or illustrations which are false or misleading, in fact or by implication, with respect to the assets, liabilities, insurance in force, corporate structure, financial condition, age or relative position of the insurer in the insurance business. An advertisement may not contain a recommendation by any commercial rating system unless it clearly defines the scope and extent of the recommendation, including, but not limited to, the placement of insurer’s rating in the hierarchy of the rating system cited.
W. Va. Code R. § 114-11-9 Enforcement Procedures
9.1. Each insurer shall maintain at its home or principal office a complete file containing a specimen copy of every printed, published or prepared advertisement of its individual policies and specimen copies of typical printed, published or prepared advertisements of its blanket, franchise and group policies, hereafter disseminated in this state, with a notation indicating the manner and extent of distribution and the form number of any policy advertised. The file shall be subject to inspection by the department. All advertisements shall be maintained in the file for a period of five (5) years after discontinuance of its use or publication.
9.2. If the Insurance Commissioner determines that an advertisement has the capacity or tendency to mislead or deceive the public, the commissioner may require an insurer or insurance producer to submit all or any part of the advertising material for review or approval prior to use.
9.3. Each insurer subject to the provisions of these rules shall file with the Insurance Commissioner with its annual statement a certificate of compliance executed by an authorized officer of the insurer stating that to the best of his or her knowledge, information and belief the advertisements which were disseminated by or on behalf of the insurer in this state during the preceding statement year, or during the portion of the year when these rules were in effect, complied or were made to comply in all respects with the provisions of these rules and the insurance laws of this state as implemented and interpreted by this rule.
W. Va. Code R. § 114-11-10 Conflict With Other Laws or Regulations
This rule is not intended to conflict with or supersede any rule currently in force in this state governing specific aspects of the sale or replacement of life insurance including, but not limited to, laws or rules dealing with life insurance cost comparison indices, deceptive practices in the sale of life insurance, replacement of life insurance policies, illustration of life insurance policies, and annuity disclosure. No disclosure pursuant to or required under those rules shall be deemed to be an advertisement within the meaning of this rule.
W. Va. Code R. § 114-11-11 Violations
Any insurer failing to comply with the requirements of this rule shall be subject to the penalties prescribed in W. Va. Code §33-3-11.
114CSR11
114CSR11
Series 11A Life Insurance Disclosures
W. Va. Code R. § 114-11A-1 General
1.1. The purpose of this rule is to require insurers to deliver to purchasers of life insurance information that will improve the buyer’s ability to select the most appropriate plan of life insurance for the buyer’s needs and improve the buyer’s understanding of the basic features of the policy which has been purchased or is under consideration. This rule is based on the National Association of Insurance Commissioners’ “Life Insurance Disclosure Model Regulation” (Model 580), as amended in 2000.
1.2. This rule does not prohibit the use of additional material that is not a violation of this rule or any other West Virginia statute or rule.
1.3. Authority. -- W. Va. Code §§33-2-10 and 33-11-6.
1.4. Filing Date. -- May 5, 2008.
1.5. Effective Date. -- August 1, 2008.
W. Va. Code R. § 114-11A-2 Scope
2.1. Except for the exemptions specified in subsection 2.2 of this section, this rule applies to any solicitation, negotiation or procurement of life insurance occurring within this state. Subsection 4.2 of this rule applies only to an existing nonexempt policy held by a policyowner residing in this state. This rule applies to any issuer of life insurance contracts, including fraternal benefit societies.
2.2. This rule does not apply to:
a. Individual and group annuity contracts;
b. Credit life insurance;
c. Group life insurance;
d. Life insurance policies issued in connection with pension and welfare plans as defined by and which are subject to the federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Section 1001 et seq. as amended; or e. Variable life insurance under which the amount or duration of the life insurance varies according to the investment experience of a separate account.
W. Va. Code R. § 114-11A-3 Definitions
For the purposes of this rule, the following definitions shall apply:
3.1. “Buyer’s Guide” means the Life Insurance Buyer’s Guide adopted by the National Association of Insurance Commissioners (NAIC) or language approved by the West Virginia Insurance Commissioner and appended to this rule as Appendix A.
3.2. “Current scale of nonguaranteed elements” means a formula or other mechanism that produces values for an illustration as if there is no change in the basis of those values after the time of illustration.
3.3. “Generic name” means a short title that is descriptive of the premium and benefit patterns of a policy or a rider.
3.4. “Illustration” means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the three (3) types defined below:
a. “Basic illustration” means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements.
b. “Supplemental illustration” means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this rule, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.
c. “In force illustration” means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.
3.5. “Nonguaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits or charges, or formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.
3.6. “Policy data” means a display or schedule of numerical values, both guaranteed and nonguaranteed, for each policy year or a series of designated policy years for the following information: Illustrated annual, other periodic, and terminal dividends; premiums; death benefits; cash surrender values and endowment benefits.
3.7. “Policy summary” means a written statement describing the elements of the policy, including, but not limited to:
a. A prominently placed title reading: STATEMENT OF POLICY COST AND BENEFIT INFORMATION;
b. The name and address of the insurance producer or, if no producer is involved, a statement of the procedure for obtaining responses to inquiries regarding the Policy Summary;
c. The full name and home office or administrative office address of the company by which the life insurance policy is to be or has been written;
d. The generic name of the basic policy and each rider;
e. The following amounts, where applicable, for the first five (5) policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns, including at least one age from sixty (60) through sixty-five (65) and policy maturity:
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The annual premium for the basic policy;
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The annual premium for each optional rider;
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The amount payable upon death at the beginning of the policy year, regardless of the cause of death, other than suicide or other specifically enumerated exclusions, that is provided by the basic policy and each optional rider, with benefits provided under the basic policy and each rider shown separately;
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The total guaranteed cash surrender values at the end of the year, with values shown separately for the basic policy and each rider; and 5. Any endowment amounts payable under the policy that are not included under cash surrender values as provided in paragraph 4 of this subdivision;
f. The effective policy loan annual percentage interest rate, if applicable, specifying whether the rate is applied in advance or in arrears. If the policy loan interest rate is adjustable, the policy summary must also indicate that the annual percentage rate will be determined by the company in accordance with the provisions of the policy and the applicable law; and g. The date on which the policy summary was prepared.
W. Va. Code R. § 114-11A-4 Duties of Insurers
4.1. Requirements Applicable Generally a. The insurer shall provide a Buyer’s Guide to all prospective purchasers prior to accepting the applicant’s initial premium or premium deposit. However, if the policy for which application is made contains an unconditional refund provision of at least ten (10) calendar days, the Buyer’s Guide may be delivered with the policy or prior to delivery of the policy.
b. The insurer shall provide a policy summary to prospective purchasers where the insurer has identified the policy form as one that will not be marketed with an illustration. The policy summary shall show guarantees only and must consist of a separate document with all required information set out in a manner that does not minimize or render any portion of the summary obscure. Any amounts that remain level for two (2) or more years of the policy may be represented by a single number if it clearly indicates what amounts are applicable for each policy year. Amounts in paragraphs 1 through 5, subdivision e. subsection 3.7 shall be listed in total, not on a per thousand or per unit basis. If more than one insured is covered under one policy or rider and if death benefits do not differ within the class, death benefits shall be displayed separately for each insured or for each class of insureds. Zero amounts shall be displayed as a blank space. Delivery of the policy summary shall be consistent with the time for delivery of the Buyer’s Guide as specified in subdivision a of this subsection.
4.2. Requirements Applicable to Existing Policies.
a. Upon request by the policyowner, the insurer shall furnish either policy data or an “in force illustration” as defined in subdivision c, subsection 3.4 of this rule as follows:
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For policies that the insurer identified not to be used with an illustration, the insurer shall furnish policy data, limited to guaranteed values, if it has chosen not to furnish an in force illustration meeting the requirements of the rule;
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If the policy was identified to be used with an illustration, the insurer shall provide an in force illustration;
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Unless otherwise requested, the policy data shall be provided by the insurer for twenty (20) consecutive years beginning with the previous policy anniversary. The statement of policy data shall include nonguaranteed elements according to the current scale, the amount of outstanding policy loans and the current policy loan interest rate. Policy values shown shall be based on the current application of nonguaranteed elements in effect at the time of the request. The insurer may charge a reasonable fee, not to exceed ten dollars ($10.00), for the preparation of the statement.
b. If a life insurance company changes its method of determining scales of nonguaranteed elements on existing policies, it must, no later than when the first payment is made on the new basis, advise each affected policyowner residing in this state of the change and of its effect on affected policies. This requirement does not apply to policies for which the amount payable upon death under the basic policy on the date when advice would otherwise be required does not exceed five thousand dollars ($5,000).
c. If the insurer makes a material revision in the terms and conditions under which it limits its right to change any nonguaranteed factor, it must, no later than the first policy anniversary following the revision, advise each affected policyowner residing in this state.
W. Va. Code R. § 114-11A-5 General Rules
5.1. Each insurer must maintain, at its home office or principal office, one copy of each document authorized and used by the insurer pursuant to this rule. Unless otherwise provided by this rule, each such copy must be maintained for a period of three (3) years after the date of its last authorized use.
5.2. An insurance producer must inform a prospective purchaser, prior to commencing a life insurance sales presentation, that he or she is acting as a life insurance producer and of the full name of the insurance company which the individual insurance producer is representing. In sales situations in which an insurance producer is not involved, the insurer shall identify its full name.
5.3. No insurance producer may use terms such as “financial planner,” “investment adviser,” “financial consultant” or “financial counseling” to imply that he or she is generally engaged in an advisory business in which compensation is unrelated to sales unless that actually is the case. This provision does not preclude persons who hold some form of formal recognized financial planning or consultant designation from using this designation even when they are only selling insurance. This provision also does not preclude an insurance producer from citing his or her membership in a recognized trade or professional association having such terms as part of its name, as long as the fact that the producer is authorized only to sell insurance products is disclosed. This provision does not permit persons to charge an additional fee for services that are customarily associated with the solicitation, negotiation or servicing of policies.
5.4. Any reference to nonguaranteed elements shall include a statement that the item is not guaranteed and is based on the company’s current scale of nonguaranteed elements (use appropriate special term such as “current dividend” or “current rate” scale). If a nonguaranteed element would be reduced by the existence of a policy loan, a statement to that effect must be included in any reference to nonguaranteed elements. A presentation or depiction of a policy that includes nonguaranteed elements over a period of years is governed by 114 CSR 11C.
W. Va. Code R. § 114-11A-6 Failure to Comply
An insurer who fails to provide or deliver a Buyer’s Guide, an in force illustration, a policy summary or policy data as required by section 4 of this rule is guilty of an omission that misrepresents the benefits, advantages, conditions or terms of an insurance policy.
APPENDIX A
LIFE INSURANCE BUYER’S GUIDE
The face page of the Buyer’s Guide shall read as follows:
Life Insurance Buyer’s Guide This guide can help you when you shop for life insurance. It discusses how to:
• Find a Policy That Meets Your Needs and Fits Your Budget • Decide How Much Insurance You Need • Make Informed Decisions When You Buy a Policy Prepared by the National Association of Insurance Commissioners The National Association of Insurance Commissioners is an association of state insurance regulatory officials. This association helps the various insurance departments to coordinate insurance laws for the benefit of all consumers.
This guide does not endorse any company or policy.
Reprinted by . . .
Important Things to Consider 1. Review your own insurance needs and circumstances. Choose the kind of policy that has benefits that most closely fit your needs. Ask an agent or company to help you.
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Be sure that you can handle premium payments. Can you afford the initial premium? If the premium increases later and you still need insurance, can you still afford it?
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Don’t sign an insurance application until you review it carefully to be sure all the answers are complete and accurate.
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Don’t buy life insurance unless you intend to stick with your plan. It may be very costly if you quit during the early years of the policy.
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Don’t drop one policy and buy another without a thorough study of the new policy and the one you have now. Replacing your insurance may be costly.
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Read your policy carefully. Ask your agent or company about anything that is not clear to you.
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Review your life insurance program with your agent or company every few years to keep up with changes in your income and your needs.
Buying Life Insurance When you buy life insurance, you want coverage that fits your needs.
First, decide how much you need — and for how long — and what you can afford to pay. Keep in mind the major reason you buy life insurance is to cover the financial effects of unexpected or untimely death. Life insurance can also be one of many ways you plan for the future.
Next, learn what kinds of policies will meet your needs and pick the one that best suits you.
Then, choose the combination of policy premium and benefits that emphasizes protection in case of early death, or benefits in case of long life, or a combination of both.
It makes good sense to ask a life insurance agent or company to help you. An agent can help you review your insurance needs and give you information about the available policies. If one kind of policy doesn’t seem to fit your needs, ask about others.
This guide provides only basic information. You can get more facts from a life insurance agent or company or from your public library.
What About the Policy You Have Now?
If you are thinking about dropping a life insurance policy, here are some things you should consider:
• If you decide to replace your policy, don’t cancel your old policy until you have received the new one. You then have a minimum period to review your new policy and decide if it is what you wanted.
• It may be costly to replace a policy. Much of what you paid in the early years of the policy you have now, paid for the company’s cost of selling and issuing the policy. You may pay this type of cost again if you buy a new policy.
• Ask your tax advisor if dropping your policy could affect your income taxes.
• If you are older or your health has changed, premiums for the new policy will often be higher. You will not be able to buy a new policy if you are not insurable.
• You may have valuable rights and benefits in the policy you now have that are not in the new one.
• If the policy you have now no longer meets your needs, you may not have to replace it. You might be able to change your policy or add to it to get the coverage or benefits you now want.
• At least in the beginning, a policy may pay no benefits for some causes of death covered in the policy you have now.
In all cases, if you are thinking of buying a new policy, check with the agent or company that issued you the one you have now. When you bought your old policy, you may have seen an illustration of the benefits of your policy. Before replacing your policy, ask your agent or company for an updated illustration. Check to see how the policy has performed and what you might expect in the future, based on the amounts the company is paying now.
How Much Do You Need?
Here are some questions to ask yourself:
• How much of the family income do I provide? If I were to die early, how would my survivors, especially my children, get by? Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?
• Do I have children for whom I’d like to set aside money to finish their education in the event of my death?
• How will my family pay final expenses and repay debts after my death?
• Do I have family members or organizations to whom I would like to leave money?
• Will there be estate taxes to pay after my death?
• How will inflation affect future needs?
As you figure out what you have to meet these needs, count the life insurance you have now, including any group insurance where you work or veteran’s insurance. Don’t forget Social Security and pension plan survivor’s benefits. Add other assets you have: savings, investments, real estate and personal property. Which assets would your family sell or cash in to pay expenses after your death?
What Is the Right Kind of Life Insurance?
All policies are not the same. Some give coverage for your lifetime and others cover you for a specific number of years. Some build up cash values and others do not. Some policies combine different kinds of insurance, and others let you change from one kind of insurance to another. Some policies may offer other benefits while you are still living. Your choice should be based on your needs and what you can afford.
There are two basic types of life insurance: term insurance and cash value insurance. Term insurance generally has lower premiums in the early years, but does not build up cash values that you can use in the future. You may combine cash value life insurance with term insurance for the period of your greatest need for life insurance to replace income.
Term Insurance covers you for a term of one or more years. It pays a death benefit only if you die in that term. Term insurance generally offers the largest insurance protection for your premium dollar. It generally does not build up cash value.
You can renew most term insurance policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premiums will be if you continue to renew the policy. Also ask if you will lose the right to renew the policy at some age. For a higher premium, some companies will give you the right to keep the policy in force for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical examination to continue coverage, and premiums may increase.
You may be able to trade many term insurance policies for a cash value policy during a conversion period — even if you are not in good health. Premiums for the new policy will be higher than you have been paying for the term insurance.
Cash Value Life Insurance is a type of insurance where the premiums charged are higher at the beginning than they would be for the same amount of term insurance. The part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways. You may borrow against a policy’s cash value by taking a policy loan. If you don’t pay back the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die, or from the cash value if you stop paying premiums and take out the remaining cash value. You can also use your cash value to keep insurance protection for a limited time or to buy a reduced amount without having to pay more premiums. You also can use the cash value to increase your income in retirement or to help pay for needs such as a child’s tuition without canceling the policy. However, to build up this cash value, you must pay higher premiums in the earlier years of the policy. Cash value life insurance may be one of several types; whole life, universal life and variable life are all types of cash value insurance.
Whole Life Insurance covers you for as long as you live if your premiums are paid. You generally pay the same amount in premiums for as long as you live. When you first take out the policy, premiums can be several times higher than you would pay initially for the same amount of term insurance. But they are smaller than the premiums you would eventually pay if you were to keep renewing a term policy until your later years.
Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher since the premium payments are made during a shorter period.
Universal Life Insurance is a kind of flexible policy that lets you vary your premium payments. You can also adjust the face amount of your coverage. Increases may require proof that you qualify for the new death benefit. The premiums you pay (less expense charges) go into a policy account that earns interest. Charges are deducted from the account. If your yearly premium payment plus the interest your account earns is less than the charges, your account value will become lower. If it keeps dropping, eventually your coverage will end. To prevent that, you may need to start making premium payments, or increase your premium payments, or lower your death benefits. Even if there is enough in your account to pay the premiums, continuing to pay premiums yourself means that you build up more cash value.
Variable Life Insurance is a kind of insurance where the death benefits and cash values depend on the investment performance of one or more separate accounts, which may be invested in mutual funds or other investments allowed under the policy. Be sure to get the prospectus from the company when buying this kind of policy and STUDY IT CAREFULLY. You will have higher death benefits and cash value if the underlying investments do well. Your benefits and cash value will be lower or may disappear if the investments you chose didn’t do as well as you expected. You may pay an extra premium for a guaranteed death benefit.
Life Insurance Illustrations You may be thinking of buying a policy where cash values, death benefits, dividends or premiums may vary based on events or situations the company does not guarantee (such as interest rates). If so, you may get an illustration from the agent or company that helps explain how the policy works. The illustration will show how the benefits that are not guaranteed will change as interest rates and other factors change. The illustration will show you what the company guarantees. It will also show you what could happen in the future. Remember that nobody knows what will happen in the future. You should be ready to adjust your financial plans if the cash value doesn’t increase as quickly as shown in the illustration. You will be asked to sign a statement that says you understand that some of the numbers in the illustration are not guaranteed.
Finding a Good Value in Life Insurance After you have decided which kind of life insurance is best for you, compare similar policies from different companies to find which one is likely to give you the best value for your money. A simple comparison of the premiums is not enough. There are other things to consider. For example:
• Do premiums or benefits vary from year to year?
• How much do the benefits build up in the policy?
• What part of the premiums or benefits is not guaranteed?
• What is the effect of interest on money paid and received at different times on the policy?
Remember that no one company offers the lowest cost at all ages for all kinds and amounts of insurance. You should also consider other factors:
• How quickly does the cash value grow? Some policies have low cash values in the early years that build quickly later on. Other policies have a more level cash value build-up. A year-by-year display of values and benefits can be very helpful. (The agent or company will give you a policy summary or an illustration that will show benefits and premiums for selected years.)
• Are there special policy features that particularly suit your needs?
• How are nonguaranteed values calculated? For example, interest rates are important in determining policy returns. In some companies increases reflect the average interest earnings on all of that company’s policies regardless of when issued. In others, the return for policies issued in a recent year, or a group of years, reflects the interest earnings on that group of policies; in this case, amounts paid are likely to change more rapidly when interest rates change.
114CSR11A
114CSR11A
Series 11B Suitability in Annuity Transactions
W. Va. Code R. § 114-11B-1 General
W. Va. Code R. § 114-11B-2 Scope
W. Va. Code R. § 114-11B-3 Exemptions
W. Va. Code R. § 114-11B-4 Definitions
W. Va. Code R. § 114-11B-5 Duties of Insurers and Producers
W. Va. Code R. § 114-11B-6 Producer Training
W. Va. Code R. § 114-11B-7 Compliance Mitigation; Penalties; Enforcement
W. Va. Code R. § 114-11B-8 Recordkeeping
Appendix A. Insurance Agent (Producer) Disclosure for Annuities.
Appendix B. Consumer Refusal to Provide Information.
Appendix C. Consumer Decision to Purchase an Annuity Not Based on a Recommendation.
TITLE 114
LEGISLATIVE RULE
OFFICES OF THE INSURANCE COMMISSIONER
SERIES 11B
SUITABILITY IN ANNUITY TRANSACTIONS
W. Va. Code R. § 114-11B-1 General
1.1. Purpose. -- The purpose of this rule is to require producers, as defined in this rule, to act in the best interest of the consumer when making a recommendation of an annuity and to require insurers to establish and maintain a system to supervise recommendations so that the insurance needs and financial objectives of consumers at the time of the transaction are effectively addressed. This rule is based on the National Association of Insurance Commissioners’ “Suitability in Annuity Transactions Model Regulation” (Model 275), as amended in the 1st quarter of 2020.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-11-6.
1.3. Filing Date. -- March 29, 2023.
1.4. Effective Date. -- June 8, 2023.
1.5. Sunset Provision. -- This rule shall terminate and have no further force or effect on August 1, 2028.
W. Va. Code R. § 114-11B-2 Scope
This rule applies to any sale or recommendation of an annuity.
W. Va. Code R. § 114-11B-3 Exemptions
Unless otherwise specifically included, this rule does not apply to transactions involving:
3.1. Direct response solicitations where there is no recommendation based on information collected from the consumer pursuant to this rule;
3.2. Contracts used to fund:
3.2.1. An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA), 29 U.S.C. Section 1001 et seq. as amended;
3.2.2. A plan described by Sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the Internal Revenue Code (IRC), as amended, if established or maintained by an employer;
3.2.3. A government or church plan defined in Section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the IRC; or
3.2.4. A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;
3.3. Settlements or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or
3.4. Formal prepaid funeral contracts.
W. Va. Code R. § 114-11B-4 Definitions
4.1. “Annuity” means an annuity that is an insurance product under state law which is individually solicited, whether the product is classified as an individual or group annuity.
4.2. “Cash compensation” means any discount, concession, fee, service fee, commission, sales charge, loan, override or cash benefit received by a producer in connection with the recommendation or sale of an annuity from an insurer, intermediary or directly from the consumer.
4.3. “Commissioner” means the Insurance Commissioner of West Virginia.
4.4. “Consumer profile information” means information that is reasonably appropriate to determine whether a recommendation addresses the consumer’s financial situation, insurance needs and financial objectives, including, at a minimum, the following:
4.4.1. Age;
4.4.2. Annual income;
4.4.3. Financial situation and needs, including debts and other obligations;
4.4.4. Financial experience;
4.4.5. Insurance needs;
4.4.6. Financial objectives;
4.4.7. Intended use of the annuity;
4.4.8. Financial time horizon;
4.4.9. Existing assets or financial products, including investment, annuity and insurance holdings;
4.4.10. Liquidity needs;
4.4.11. Liquid net worth;
4.4.12. Risk tolerance including, but not limited to, willingness to accept non-guaranteed elements in the annuity;
4.4.13. Financial resources used to fund the annuity; and
4.4.14. Tax status.
4.5. “Continuing education credit” or “CE credit” means one continuing education credit from a course of instruction on a Commissioner-approved subject, taught by a continuing education provider registered with and approved by the Commissioner in accordance with W. Va. Code §33-12-8 and W. Va. Code of State Rules §114-42-1 et seq.
4.6. “Continuing education provider” or “CE provider” means an individual or entity that is approved to offer continuing education courses pursuant to W. Va. Code §33-12-8 and W. Va. Code of State Rules §114-42-1 et seq.
4.7. “FINRA” means the Financial Industry Regulatory Authority or a succeeding agency.
4.8. “Insurer” means a company required to be licensed under the laws of this state to provide insurance products, including annuities.
4.9. “Intermediary” means an entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer’s annuities by producers.
4.10. “Material conflict of interest” means a financial interest of the producer in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation. “Material conflict of interest” does not include cash compensation or non-cash compensation.
4.11. “Non-cash compensation” means any form of compensation that is not cash compensation, including, but not limited to, health insurance, office rent, office support and retirement benefits.
4.12. “Non-guaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, dividends, non-interest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying non-guaranteed elements are used in its calculation.
4.13. “Producer” means a person or entity required to be licensed under the laws of this state to sell, solicit or negotiate insurance, including annuities. For purposes of this rule, “producer” includes an insurer where no producer is involved.
4.14. “Recommendation” means advice provided by a producer to an individual consumer that was intended to result or does result in a purchase, an exchange or a replacement of an annuity in accordance with that advice. “Recommendation” does not include general communication to the public, generalized customer services assistance or administrative support, general educational information and tools, prospectuses, or other product and sales material.
4.15. “Replacement” means a transaction in which a new annuity is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer whether or not a producer is involved, that by reason of the transaction, an existing annuity or other insurance policy has been or is to be any of the following:
4.15.1. Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated;
4.15.2. Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;
4.15.3. Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;
4.15.4. Reissued with any reduction in cash value; or
4.15.5. Used in a financed purchase.
4.16. “SEC” means the United States Securities and Exchange Commission.
W. Va. Code R. § 114-11B-5 Duties of Insurers and Producers
5.1. Best Interest Obligations. A producer, when making a recommendation of an annuity, shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the producer’s or the insurer’s financial interest ahead of the consumer’s interest. A producer has acted in the best interest of the consumer if they have satisfied the following obligations regarding care, disclosure, conflict of interest and documentation:
5.1.1. Care obligation.
5.1.1.a. The producer, in making a recommendation, shall exercise reasonable diligence, care and skill to:
5.1.1.a.1. Know the consumer’s financial situation, insurance needs and financial objectives;
5.1.1.a.2. Understand the available recommendation options after making a reasonable inquiry into options available to the producer;
5.1.1.a.3. Have a reasonable basis to believe the recommended option effectively addresses the consumer’s financial situation, insurance needs and financial objectives over the life of the product, as evaluated in light of the consumer profile information; and
5.1.1.a.4. Communicate the basis or bases of the recommendation.
5.1.1.b. The requirements under subdivision 5.1.1.a. of this rule include making reasonable efforts to obtain consumer profile information from the consumer prior to the recommendation of an annuity.
5.1.1.c. The requirements under subdivision 5.1.1.a. of this rule require a producer to consider the types of products the producer is authorized and licensed to recommend or sell that address the consumer’s financial situation, insurance needs and financial objectives. This does not require analysis or consideration of any products outside the authority and license of the producer or other possible alternative products or strategies available in the market at the time of the recommendation. Producers shall be held to standards appliable to producers with similar authority and licensure.
5.1.1.d. The requirements under subsection 5.1.1. of this rule do not create a fiduciary obligation or relationship and only create a regulatory obligation as established in this rule.
5.1.1.e. The consumer profile information, characteristics of the insurer, and product costs, rates, benefits and features are those factors generally relevant in making a determination whether an annuity effectively addresses the consumer’s financial situation, insurance needs and financial objectives, but the level of importance of each factor under the care obligation of this paragraph may vary depending on the facts and circumstances of a particular case. However, each factor may not be considered in isolation.
5.1.1.f. The requirements under subdivision 5.1.1.a. of this rule include having a reasonable basis to believe the consumer would benefit from certain features of the annuity, such as annuitization, death or living benefit or other insurance-related features.
5.1.1.g. The requirements under subdivision 5.1.1.a. of this rule apply to the particular annuity as a whole and the underlying subaccounts to which funds are allocated at the time of purchase or exchange of an annuity, and riders and similar product enhancements, if any.
5.1.1.h. The requirements under subdivision 5.1.1.a. of this rule do not mean the annuity with the lowest one-time or multiple occurrence compensation structure shall necessarily be recommended.
5.1.1.i. The requirements under subdivision 5.1.1.a. of this rule do not mean the producer has ongoing monitoring obligations under the care obligation, although such an obligation may be separately owed under the terms of a fiduciary, consulting, investment advising or financial planning agreement between the consumer and the producer.
5.1.1.j. In the case of an exchange or replacement of an annuity, the producer shall consider the whole transaction, which includes taking into consideration whether:
5.1.1.j.1. The consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits such as death, living or other contractual benefits, or be subject to increased fees, investment advisory fees or charges for riders and similar product enhancements;
5.1.1.j.2. The replacing product would substantially benefit the consumer in comparison to the replaced product over the life of the product; and
5.1.1.j.3. The consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding sixty months.
5.1.1.k. Nothing in this rule should be construed to require a producer to obtain any license other than a producer license with the appropriate line of authority to sell, solicit or negotiate insurance in this state including, but not limited to, any securities license, in order to fulfill the duties and obligations contained in this rule; provided the producer does not give advice or provide services that are otherwise subject to securities laws or engage in any other activity requiring other professional licenses.
5.1.2. Disclosure obligation.
5.1.2.a. Prior to the recommendation or sale of an annuity, the producer shall prominently disclose to the consumer on a form substantially similar to Appendix A of this rule and approved by the Commissioner:
5.1.2.a.1. A description of the scope and terms of the relationship with the consumer and the role of the producer in the transaction;
5.1.2.a.2. An affirmative statement on whether the producer is licensed and authorized to sell the following products:
5.1.2.a.2.A. Fixed annuities;
5.1.2.a.2.B. Fixed indexed annuities;
5.1.2.a.2.C. Variable annuities;
5.1.2.a.2.D. Life insurance;
5.1.2.a.2.E. Mutual funds;
5.1.2.a.2.F. Stocks and bonds; and
5.1.2.a.2.G. Certificates of deposit;
5.1.2.a.3. An affirmative statement describing the insurers for which the producer is authorized, contracted (or appointed), or otherwise able to sell insurance products for, using the following descriptions:
5.1.2.a.3.A. From one insurer;
5.1.2.a.3.B. From two or more insurers; or
5.1.2.a.3.C. From two or more insurers, although primarily contracted with one insurer.
5.1.2.a.4. A description of the sources and types of cash compensation and non-cash compensation to be received by the producer, including whether the producer is to be compensated for the sale of a recommended annuity by commission as part of premium or other remuneration received from the insurer, intermediary or other producer or by fee as a result of a contract for advice or consulting services; and
5.1.2.a.5. A notice of the consumer’s right to request additional information regarding cash compensation described in subdivision 5.1.2.b. of this rule.
5.1.2.b. Upon request of the consumer or the consumer’s designated representative, the producer shall disclose:
5.1.2.b.1. A reasonable estimate of the amount of cash compensation to be received by the producer, which may be stated as a range of amounts or percentages; and
5.1.2.b.2. Whether the cash compensation is a one-time or multiple occurrence amount, and if a multiple occurrence amount, the frequency and amount of the occurrence, which may be stated as a range of amounts or percentages; and
5.1.2.c. Prior to or at the time of the recommendation or sales of an annuity, the producer shall have a reasonable basis to believe the consumer has been informed of various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders or annuitizes the annuity, mortality and expense fees, investment advisory fees, potential charges for and features of riders or other options of the annuity, limitations on interest returns, potential changes in non-guaranteed elements of the annuity, insurance and investment components and market risk. The requirements of this section are intended to supplement and not replace the disclosure requirements found in W. Va. Code of State Rules §114-11E-1 et seq.
5.1.3. Conflict of interest obligation.
5.1.3.a. A producer shall identify and avoid or reasonably manage and disclose material conflicts of interest, including material conflicts of interest related to an ownership interest.
5.1.4. Documentation obligation.
5.1.4.a. A producer shall at the time of recommendation or sale:
5.1.4.a.1. Make a written record of any recommendation and the basis for the recommendation subject to this rule;
5.1.4.a.2. Obtain a consumer signed statement on a form substantially similar to Appendix B of this rule and approved by the Commissioner documenting:
5.1.4.a.2.A. A customer’s refusal to provide the consumer profile information, if any; and
5.1.4.a.2.B. A customer’s understanding of the ramifications of not providing his or her consumer profile information or providing insufficient consumer profile information; and
5.1.4.a.3. Obtain a consumer signed statement on a form substantially similar to Appendix C of this rule and approved by the Commissioner acknowledging the annuity transaction is not recommended if a consumer decides to enter into an annuity transaction that is not based on the producer’s recommendation.
5.1.5. Application of the best interest obligation. Any requirement applicable to a producer under section 5.1. of this rule shall apply to every producer who has exercised material control or influence in the making of a recommendation and has received direct compensation as a result of the recommendation or sale, regardless of whether the producer has had any direct contact with the consumer. Activities such as providing or delivering marketing or educational materials, product wholesaling or other back-office product support, and general supervision of a producer do not, in and of themselves, constitute material control or influence.
5.2. Transactions not based on a recommendation.
5.2.1. Except as provided under subsection 5.2.2. of this rule, a producer shall have no obligation to a consumer under subsection 5.1.1. of this rule related to any annuity transaction if:
5.2.1.a. No recommendation is made;
5.2.1.b. A recommendation was made and was later found to have been prepared based on materially inaccurate information provided by the consumer;
5.2.1.c. A consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended; or
5.2.1.d. A consumer decides to enter into an annuity transaction that is not based on a recommendation of the producer.
5.2.2. An insurer’s issuance of an annuity subject to subsection 5.2.1. of this rule shall be reasonable under all the circumstances actually known to the insurer at the time the annuity is issued.
5.3. Supervision system.
5.3.1. Except as permitted under section 5.2. of this rule, an insurer may not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity would effectively address the particular consumer’s financial situation, insurance needs and financial objectives based on the consumer’s consumer profile information.
5.3.2. An insurer shall establish and maintain a supervision system that is reasonably designed to achieve the insurer’s and its producers’ compliance with this rule, including at a minimum, but not limited to, the following:
5.3.2.a. The insurer shall establish and maintain reasonable procedures to inform its producers of the requirements of this rule and shall incorporate the requirements of this rule into relevant producer training manuals;
5.3.2.b. The insurer shall establish and maintain standards for producer product training and shall establish and maintain reasonable procedures to require its producers to comply with the requirements of section 6 of this rule;
5.3.2.c. The insurer shall provide product-specific training and training materials which explain all material features of its annuity products to its producers;
5.3.2.d. The insurer shall establish and maintain procedures for the review of each recommendation prior to issuance of an annuity that are designed to ensure there is a reasonable basis to determine that the recommended annuity would effectively address the particular consumer’s financial situation, insurance needs and financial objectives. Such review procedures may apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other means including, but not limited to, physical review. Such an electronic or other system may be designed to require additional review only of those transactions identified for additional review by the selection criteria;
5.3.2.e. The insurer shall establish and maintain reasonable procedures to detect recommendations that are not in compliance with sections 5.1., 5.2., 5.4. and 5.5. of this rule. This may include, but is not limited to, confirmation of the consumer’s consumer profile information, systematic customer surveys, producer and consumer interviews, confirmation letters, producer statements or attestations and programs of internal monitoring. Nothing is this subdivision prevents an insurer from complying with this subdivision by applying sampling procedures, or by confirming consumer profile information or other required information under section 5 of this rule after issuance or delivery of the annuity;
5.3.2.f. The insurer shall establish and maintain reasonable procedures to assess, prior to or upon issuance or delivery of an annuity, whether a producer has provided to the consumer the information required to be provided under section 5 of this rule;
5.3.2.g. The insurer shall establish and maintain reasonable procedures to identify and address suspicious consumer refusals to provide consumer profile information;
5.3.2.h. The insurer shall establish and maintain reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses and non-cash compensation that are based on the sales of specific annuities within a limited period of time. The requirements of this subdivision are not intended to prohibit the receipt of health insurance, office rent, office support, retirement benefits or other employee benefits by employees as long as those benefits are not based upon the volume of sales of a specific annuity within a limited period of time; and
5.3.2.i. The insurer shall annually provide a written report to senior management, including to the senior manager responsible for audit functions, which details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any.
5.3.3. Nothing in section 5.3. of this rule restricts an insurer from contracting for performance of a function (including maintenance of procedures) required under section 5.3. of this rule.
5.3.3.a. An insurer is responsible for taking appropriate corrective action and may be subject to sanctions and penalties pursuant to section 7 of this rule regardless of whether the insurer contracts for performance of a function and regardless of the insurer’s compliance with subdivision 5.3.3.b. of this rule.
5.3.3.b. An insurer’s supervision system under section 5.3. of this rule shall include supervision of contractual performance under said section. This includes, but is not limited to, the following:
5.3.3.b.1. Monitoring and, as appropriate, conducting audits to assure that the contracted function is properly performed; and
5.3.3.b.2. Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed.
5.3.4. An insurer is not required to include in its system of supervision:
5.3.4.a. A producer’s recommendations to consumers of products other than the annuities offered by the insurer; or
5.3.4.b. Consideration of or comparison to options available to the producer or compensation relating to those options other than annuities or other products offered by the insurer.
5.4. Prohibited Practices.
5.4.1. Neither a producer nor an insurer shall dissuade, or attempt to dissuade, a consumer from:
5.4.1.a. Truthfully responding to an insurer’s request for confirmation of the consumer profile information;
5.4.1.b. Filing a complaint; or
5.4.1.c. Cooperating with the investigation of a complaint.
5.5. Safe Harbor.
5.5.1. Recommendations and sales of annuities made in compliance with comparable standards shall satisfy the requirements of this rule. This subsection applies to all recommendations and sales of annuities made with financial professionals in compliance with business rules, controls and procedures that satisfy a comparable standard even if such standard would not otherwise apply to the product or recommendation at issue. However, nothing in this subsection limits the Commissioner’s ability to investigate and enforce the provisions of this rule.
5.5.2. Nothing in subsection 5.5.1. of this rule shall limit the insurer’s obligation to comply with subsection 5.3.1. of this rule, although the insurer may base its analysis on information received from either the financial professional or the entity supervising the financial professional.
5.5.3. For subsection 5.5.1. of this rule to apply, an insurer shall:
5.5.3.a. Monitor the relevant conduct of the financial professional seeking to rely on subsection 5.5.1. of this rule or the entity responsible for supervising the financial professional, such as the financial professional’s broker-dealer or an investment adviser registered under federal or state securities laws using information collected in the normal course of an insurer’s business; and
5.5.3.b. Provide to the entity responsible for supervising the financial professional seeking to rely on subsection 5.5.1. of this rule, such as the financial professional’s broker-dealer or investment adviser registered under federal or state securities laws, information and reports that are reasonably appropriate to assist such entity to maintain its supervision system.
5.5.4. For purposes of section 5.5. of this rule, “financial professional” means a producer that is regulated and acting as:
5.5.4.a. A broker-dealer registered under federal or state securities laws or a registered representative of a broker-dealer;
5.5.4.b. An investment adviser registered under federal or state securities laws or an investment adviser representative associated with the federal or state registered investment adviser; or
5.5.4.c. A plan fiduciary under Section 3(21) of the Employee Retirement Income Security Act of 1974 (ERISA) or fiduciary under Section 4975(e)(3) of the Internal Revenue Code (IRC) or any amendments or successor statutes thereto.
5.5.5. For purposes of section 5.5. of this rule, “comparable standards” means:
5.5.5.a. With respect to broker-dealers and registered representatives of broker-dealers, applicable SEC and FINRA rules pertaining to best interest obligations and supervision of annuity recommendations and sales including, but not limited to, Regulation Best Interest and any amendments or successor regulations thereto;
5.5.5.b. With respect to investment advisers registered under federal or state securities laws or investment adviser representatives, the fiduciary duties and all other requirements imposed on such investment advisers or investment adviser representatives by contract or under the Investment Advisers Act of 1940 or applicable state securities law, including, but not limited to, the Form ADV and interpretations; and
5.5.5.c. With respect to plan fiduciaries or fiduciaries, the duties, obligations, prohibitions and all other requirements attendant to such status under ERISA or the IRC and any amendments or successor statutes thereto.
W. Va. Code R. § 114-11B-6 Producer Training
6.1. A producer shall not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer’s standards for product training. A producer may rely on insurer-provided product-specific training standards and materials to comply with this section.
6.2. Training requirements.
6.2.1. A producer who engages in the sale of annuity products shall complete a one-time training course providing four CE credits and provided by a CE provider.
6.2.2. Producers who hold a life insurance line of authority on the effective date of this rule and who desire to sell annuities shall complete the requirements of subsection 6.2.1. of this rule within six months after the effective date of this rule. Individuals who obtain a life insurance line of authority on or after the effective date of this rule may not engage in the sale of annuities until the annuity training course required under subsection 6.2.1. of this rule has been completed.
6.2.3. The minimum length of the training required under subsection 6.2.1. of this rule shall be sufficient to qualify for at least four CE credits but may be longer.
6.2.4. The training required under subsection 6.2.1. of this rule shall include information on the following topics:
6.2.4.a. The types of annuities and various classifications of annuities;
6.2.4.b. Identification of the parties to an annuity;
6.2.4.c. How product specific annuity contract features affect consumers;
6.2.4.d. The application of income taxation of qualified and non-qualified annuities;
6.2.4.e. The primary uses of annuities; and
6.2.4.f. Appropriate standard of conduct, sales practices, replacement and disclosure requirements.
6.2.5. Continuing education providers of courses intended to comply with this section shall cover all topics listed in the prescribed outline as set forth in subsection 6.2.4. of this rule and shall not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer’s products. Additional topics may be offered in conjunction with and in addition to the required outline.
6.2.6. A producer who has completed an annuity training course approved by the Commissioner prior to the effective date of this rule shall, within six months after the effective date of this rule, complete either:
6.2.6.a. A new four CE credit training course provided by a CE provider after the effective date of this rule; or
6.2.6.b. An additional one-time one CE credit training course provided by a CE provider on appropriate sales practices, replacement and disclosure requirements under this rule.
6.2.7. Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with the Board of Insurance Agent Education in the manner set forth in W. Va. Code §33-12-8.
6.2.8. The training required by this section may be approved for continuing education credit by the Board of Insurance Agent Education in the manner as set forth in W. Va. Code §33-12-8.
6.2.9. The satisfaction of the training requirements of another state that are substantially similar to the provisions of this section shall be deemed to satisfy the training requirements of this section in this state.
6.2.10. The satisfaction of the components of the training requirements of any course or courses with components substantially similar to the provisions of this section shall be deemed to satisfy the training requirements of this section in this state.
6.2.11. An insurer subject to this rule shall verify that each producer appointed to sell its annuity products is compliant with this section before the producer is permitted to sell such products, shall maintain records supporting the verification as long as appointed by the company and for five years thereafter, and shall make the records available to the Commissioner upon request. An insurer may satisfy its verification responsibility under this subsection by obtaining certificates of completion of the training course or obtaining reports provided by Commissioner-sponsored database systems or vendors or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers.
W. Va. Code R. § 114-11B-7 Compliance Mitigation; Penalties; Enforcement
7.1. An insurer is responsible for compliance with this rule. If a violation occurs, either because of the action or inaction of the insurer or its producer, the Commissioner may order:
7.1.1. An insurer to take reasonably appropriate corrective action for any consumer harmed by a failure to comply with this rule by the insurer, an entity contracted to perform the insurer’s supervisory duties or the producer;
7.1.2. A general agency, independent agency or the producer to take reasonably appropriate corrective action for any consumer harmed by the producer’s violation of this rule; and
7.1.3. Appropriate penalties and sanctions under Chapter 33 of the West Virginia Code or legislative rules promulgated pursuant to said Chapter.
7.2. The Commissioner may reduce or eliminate any penalty permitted by section 7.1. of this rule if corrective action for the consumer is taken promptly after a violation is discovered or the violation was not part of a pattern or practice.
7.3. The authority to enforce compliance with this rule is vested exclusively with the Commissioner.
W. Va. Code R. § 114-11B-8 Recordkeeping
8.1. Insurers, insurance agencies and producers shall maintain or be able to make available to the Commissioner records of the information collected from the consumer, disclosures made to the consumer, including summaries of oral disclosures, and other information used in making the recommendations that were the basis for insurance transactions for ten years after the transaction was completed.
8.2. An insurer is permitted, but is not required, to maintain documentation on behalf of a producer.
8.3. Records required to be maintained by this rule may be maintained in paper, photographic, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.
APPENDIX A
INSURANCE AGENT (PRODUCER) DISCLOSURE FOR ANNUITIES
Do Not Sign Unless You Have Read and Understand the Information in this Form Date:
INSURANCE AGENT (PRODUCER) INFORMATION (“Me”, “I”, “My”)
First Name: Last Name: _ Business\Agency Name: Website: _ Business Mailing Address:
Business Telephone Number:
Email Address:
National Producer Number in West Virginia:
CUSTOMER INFORMATION (“You”, “Your”)
First Name: Last Name:
What Types of Products Can I Sell You?
I am licensed to sell annuities to You in accordance with state law. If I recommend that You buy an annuity, it means I believe that it effectively meets Your financial situation, insurance needs, and financial objectives. Other financial products, such as life insurance or stocks, bonds and mutual funds, also may meet Your needs.
I offer the following products:
Fixed or Fixed Indexed Annuities Variable Annuities Life Insurance I need a separate license to provide advice about or to sell non-insurance financial products. I have checked below any non- insurance financial products that I am licensed and authorized to provide advice about or to sell.
Mutual Funds Stocks/Bonds Certificates of Deposits Whose Annuities Can I Sell to You?
I am authorized to sell: 🗌 Annuities from Only One (1) Insurer 🗌 Annuities from Two or More Insurers 🗌 Annuities from Two or More Insurers although I primarily sell annuities from:
How I’m Paid for My Work:
It’s important for You to understand how I’m paid for my work. Depending on the particular annuity You purchase, I may be paid a commission. If You have questions about how I’m paid, please ask Me.
Depending on the particular annuity You buy, I will or may be paid cash compensation as follows:
Commission, which is usually paid by the insurance company or other sources. If other sources, describe: .
Other (Describe): ______________________________________________________________________________ .
If You have questions about the above compensation I will be paid for this transaction, please ask me.
I may also receive other indirect compensation resulting from this transaction (sometimes called “non-cash” compensation), such as health or retirement benefits, office rent and support, or other incentives from the insurance company or other sources.
By signing below, You acknowledge that You have read and understand the information provided to You in this document.
Customer Signature Agent (Producer) Signature
APPENDIX B
CONSUMER REFUSAL TO PROVIDE INFORMATION
Do Not Sign Unless You Have Read and Understand the Information in this Form Why are You being given this form?
You’re buying a financial product – an annuity.
To recommend a product that effectively meets Your needs, objectives and situation, the agent or company needs information about You, Your financial situation, insurance needs and financial objectives.
If You sign this form, it means You have not given the agent or company some or all the information needed to decide if the annuity effectively meets Your needs, objectives and situation. You may lose protections under the Insurance Code of West Virginia and applicable rules if You sign this form or provide inaccurate information.
Statement of Purchaser: 🗌 I REFUSE to provide this information at this time. 🗌 I have chosen to provide LIMITED information at this time.
Customer Signature
APPENDIX C
Consumer Decision to Purchase an Annuity NOT Based on a Recommendation Do Not Sign This Form Unless You Have Read and Understand It Why are You being given this form? You are buying a financial product – an annuity.
To recommend a product that effectively meets Your needs, objectives and situation, the agent or company has the responsibility to learn about You, Your financial situation, insurance needs and financial objectives.
If You sign this form, it means You know that You’re buying an annuity that was not recommended.
Statement of Purchaser:
I understand that I am buying an annuity, but the agent or company did not recommend that I buy it. If I buy it without a recommendation, I understand I may lose protections under the Insurance Code of West Virginia and applicable rules.
Customer Signature Agent (Producer) Signature
Series 11C Life Insurance Illustrations
W. Va. Code R. § 114-11C-1 General
1.1. Scope. -- The purpose of this rule is to provide standards for life insurance policy illustrations that will protect consumers and foster consumer education. The rule provides illustration formats, prescribes standards to be followed when illustrations are used, and specifies the disclosures that are required in connection with illustrations. The goals of this rule are to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed. This rule is based on the National Association of Insurance Commissioners’ “Life Insurance Illustrations Model Regulation” (Model 582), as amended in 2000.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-11-6.
1.3. Filing Date. -- May 5, 2008.
1.4. Effective Date. -- August 1, 2008.
W. Va. Code R. § 114-11C-2 Applicability and Scope
This rule applies to all group and individual life insurance policies and certificates except:
2.1. Variable life insurance;
2.2. Individual and group annuity contracts;
2.3. Credit life insurance; or
2.4. Life insurance policies with no illustrated death benefits on any individual exceeding ten thousand dollars ($10,000).
W. Va. Code R. § 114-11C-3 Definitions
For the purposes of this rule:
3.1. “Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.
3.2. “Contract premium” means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.
3.3. “Currently payable scale” means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next ninety-five (95) days.
3.4. “Disciplined current scale” means a scale of non-guaranteed elements limiting current illustrations that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the Board’s standards:
a. Are consistent with all provisions of this rule;
b. Limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;
c. Do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and d. Do not permit assumed expenses to be less than minimum assumed expenses.
3.5. “Generic name” means a short title descriptive of the policy being illustrated such as "whole life," "term life" or "flexible premium adjustable life."
3.6. “Guaranteed elements” and “non-guaranteed elements”
a. “Guaranteed elements” means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue.
b. “Non-guaranteed elements” means the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.
3.7. “Illustrated scale” means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:
a. The disciplined current scale; or b. The currently payable scale.
3.8. “Illustration” means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years. There are three (3) types defined below:
a. “Basic illustration” means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements.
b. ‘Supplemental illustration” means an illustration furnished in addition to a basic illustration that meets the requirements of this rule, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.
c. “In force illustration” means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.
3.9. “Illustration actuary” means an actuary meeting the criteria standards of Section 10 of this rule who certifies that illustrations satisfy the standards of practice promulgated by the Actuarial Standards Board.
3.10. “Lapse-supported illustration” means an illustration of a policy form failing the test of self-supporting as defined in this rule, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five (5) years and 100 percent policy persistency thereafter. 3.11.
a. “Minimum assumed expenses” means the minimum expenses that may be used in calculating the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following:
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Fully allocated expenses;
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Marginal expenses; and 3. A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the Insurance Commissioner.
b. Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used.
3.12. “Non-term group life” means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group in which:
a. Every plan of coverage was selected by the employer or other group representative;
b. Some portion of the premium is paid by the group or through payroll deduction; and c. Group underwriting or simplified underwriting is used.
3.13. “Policy owner” means the owner named in the policy or the certificate holder in the case of a group policy.
3.14. “Premium outlay” means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket.
3.15. “Self-supporting illustration” means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owners election.
W. Va. Code R. § 114-11C-4 Policies to Be Illustrated
4.1. Each insurer marketing policies to which this rule applies shall notify the Insurance Commissioner whether a policy form is to be marketed with or without an illustration. The insurer shall identify in writing all policy forms being actively marketed on the effective date of this rule, and whether an illustration will be used with them. The identification of policy forms filed after the effective date of this rule shall be made at the time of filing. An insurer may change any previous identification by notice to the Insurance Commissioner.
4.2. The insurer may not use an illustration for any policy form identified as one to be marketed without an illustration prior to the first policy anniversary.
4.3. The insurer shall prepare and deliver to the Insurance Commissioner a basic illustration in accordance with this rule for each policy form identified by the insurer as one to be marketed with an illustration, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.
4.4. The insurer shall furnish potential enrollees of non-term group life subject to this rule with a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and non-guaranteed basis appropriate to the group and the coverage. This quotation is not an illustration for purposes of this rule, but all information provided must be consistent with the illustrated scale. The insurer shall provide a basic illustration at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any non-term group life enrollee who requests it.
W. Va. Code R. § 114-11C-5 General Rules and Prohibitions
5.1. An illustration used in the sale of a life insurance policy shall satisfy the requirements of this rule, be clearly labeled "life insurance illustration" and contain the following basic information:
a. Name of insurer;
b. Name and business address of producer or insurer's authorized representative, if any;
c. Name, age and sex of proposed insured, except where a composite illustration is permitted under subsection 4.3 of this rule;
d. Underwriting or rating classification upon which the illustration is based;
e. Generic name of policy, the company product name, if different, and form number;
f. Initial death benefit; and g. Dividend option election or application of non-guaranteed elements, if applicable.
5.2. When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives shall not:
a. Represent the policy as anything other than a life insurance policy;
b. Use or describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;
c. State or imply that the payment or amount of non-guaranteed elements is guaranteed;
d. Use an illustration that does not comply with this rule;
e. Use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;
f. Provide an applicant with an incomplete illustration;
g. Represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact;
h. Use the term "vanish" or "vanishing premium," or a similar term that implies the policy becomes paid up, to describe a plan for using non-guaranteed elements to pay a portion of future premiums;
i. Except for policies that can never develop nonforfeiture values, use an illustration that is "lapse-supported"; or j. Use an illustration that is not "self-supporting."
5.3. An interest rate used to determine the illustrated non-guaranteed elements is shown may not be greater than the earned interest rate underlying the disciplined current scale.
W. Va. Code R. § 114-11C-6 Standards for Basic Illustrations
6.1. Format. A basic illustration shall conform with the following requirements:
a. The illustration shall be labeled with the date on which it was prepared.
b. Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration shall be labeled "page 4 of 7 pages").
c. The assumed dates of payment receipt and benefit pay-out within a policy year shall be clearly identified.
d. If the age of the proposed insured is shown as a component of the tabular detail, it shall be issue age plus the numbers of years the policy is assumed to have been in force.
e. The assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premium outlay.
f. Guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed.
g. Any non-guaranteed elements cannot be based on a scale more favorable to the policy owner than the insurer’s illustrated scale at any duration and must be clearly labeled as non-guaranteed.
h. The guaranteed elements, if any, shall be shown before corresponding non-guaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., "see page one for guaranteed elements.")
i. The account or accumulation value of a policy, if shown, shall be identified by the name the value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender.
j. The value available upon surrender shall be identified by the name it is given in the policy being illustrated and shall be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans and policy loan interest, as applicable.
k. Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form.
l. Any illustration of non-guaranteed elements shall be accompanied by a statement indicating that:
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The benefits and values are not guaranteed;
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The assumptions on which they are based are subject to change by the insurer; and 3. Actual results may be more or less favorable.
m. If the illustration shows that the premium payer may have the option to allow policy charges to be paid using non-guaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display shall not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up.
n. The illustration may reflect the applicant’s plans to use dividends or policy values, guaranteed or non-guaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose and the impact of those plans on future policy benefits and values.
6.2. Narrative Summary. A basic illustration shall include the following:
a. A brief description of the policy being illustrated, including a statement that it is a life insurance policy;
b. A brief description of the premium outlay or contract premium, as applicable, for the policy. If the policy does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code;
c. A brief description of any policy features, riders or options, guaranteed or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy;
d. Identification and a brief definition of column headings and key terms used in the illustration; and e. A statement containing in substance the following: "This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown."
6.3. Numeric Summary.
a. Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. If policy provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium. The summary shall be shown for at least policy years five (5), ten (10) and twenty (20) and at age 70, if applicable, on the three bases shown below. The summary of multiple life policies shall show policy years five (5), ten (10), twenty (20) and thirty (30).
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Policy guarantees;
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Insurer's illustrated scale;
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Insurer's illustrated scale used but with the non-guaranteed elements reduced as follows:
A. Dividends at fifty percent (50%) of the dividends contained in the illustrated scale used;
B. Non-guaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and C. All non-guaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.
b. In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases shall be identified for each of the three (3) bases described in subdivision a of this subsection.
6.4. Statements. Statements substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery, as required in this rule:
a. A statement to be signed and dated by the applicant or policy owner reading as follows: “I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed;” or b. A statement to be signed and dated by the insurance producer or other authorized representative of the insurer reading as follows: “I certify that this illustration has been presented to the applicant and that I have explained that any non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration.”
6.5. Tabular Detail.
a. A basic illustration shall include the following for at least each policy year from one (1) to ten (10) and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration, and except for term insurance beyond the 20th year, for any year in which the premium outlay and contract premium, if applicable, is to change:
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The premium outlay and mode the applicant plans to pay and the contract premium, as applicable;
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The corresponding guaranteed death benefit, as provided in the policy; and 3. The corresponding guaranteed value available upon surrender, as provided in the policy.
b. The guaranteed death benefit and value available upon surrender shall correspond to the contract premium, if any.
c. Non-guaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, non-guaranteed elements may be shown if the insurer’s current practice is to pay terminal dividends. If any non-guaranteed elements are shown, they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a non-guaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column.
W. Va. Code R. § 114-11C-7 Standards for Supplemental Illustrations
7.1. A supplemental illustration may be provided so long as:
a. It is appended to, accompanied by or preceded by a basic illustration that complies with this rule;
b. The non-guaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration;
c. It contains the same statement required of a basic illustration that non-guaranteed elements are not guaranteed; and d. The contract premium, if any, underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration shall be equal to the premium outlay shown in the basic illustration.
7.2. The supplemental illustration shall include a notice referring to the basic illustration for guaranteed elements and other important information.
W. Va. Code R. § 114-11C-8 Delivery of Illustration and Record Retention. 8.1
a. If a basic illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with this rule, shall be submitted by the producer to the insurer at the time of policy application. A copy also shall be provided to the applicant.
b. If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued shall be sent with the policy. The revised illustration shall conform to the requirements of this rule, shall be labeled "Revised Illustration" and shall be signed and dated by the applicant or policy owner and producer or other authorized representative of the insurer no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner. 8.2.
a. The producer or representative shall certify in writing on a form provided by the insurer if no illustration is used by an insurance producer or other authorized representative in the sale of a life insurance policy or if the policy was applied for other than as illustrated. On the same form, the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and that an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application.
b. If the policy is issued, a basic illustration conforming to the policy as issued shall be sent with the policy and signed by the insurance producer no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.
8.3. If the insurer sends the basic illustration or revised illustration to the applicant or policy owner by mail, it shall include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page and return the signed copy to the insurer. The insurer’s obligation under this subsection is satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. An insurer has made a diligent effort if it includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page.
8.4. A copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, shall be retained by the insurer until three (3) years after the policy is no longer in force. A copy need not be retained if no policy is issued.
W. Va. Code R. § 114-11C-9 Annual Report; Notice to Policy Owners
9.1. In the case of a policy designated as one for which illustrations will be used, the insurer shall provide each policy owner with an annual report on the status of the policy containing at least the following information:
a. For universal life policies:
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The beginning and end date of the current report period;
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The policy value at the end of the previous report period and at the end of the current report period;
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The total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders);
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The current death benefit at the end of the current report period on each life covered by the policy;
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The net cash surrender value of the policy at the end of the current report period;
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The amount of outstanding loans, if any, at the end of the current report period; and A. If applicable, a notice for fixed premium policies assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy’s net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period; or B. If applicable, a notice for flexible premium policies assuming guaranteed interest, mortality and expense loads, that the policy’s net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made.
b. For all other policies, where applicable:
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Current death benefit;
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Annual contract premium;
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Current cash surrender value;
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Current dividend;
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Application of current dividend; and 6. Amount of outstanding loan.
c. An insurer writing life insurance policies that do not build nonforfeiture values is required to provide an annual report only for those years when a change has been made to nonguaranteed policy elements by the insurer.
9.2. If the annual report does not include an in force illustration, it shall contain the following notice displayed prominently:
"IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling [insurer's phone number], writing to [insurer's name] at [insurer's address] or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department."
The insurer may vary the sequential order of the methods for obtaining an in force illustration.
9.3. Upon the request of the policy owner, the insurer shall furnish an in force illustration of current and future benefits and values based on the insurer’s present illustrated scale. This illustration shall comply with the requirements of subsections 5.1, 5.2, 6.1 and 6.5 of this rule. No signature or other acknowledgment of receipt is required.
9.4. The annual report shall contain a prominently displayed notice and explanation of any adverse change made by the insurer since the last annual report in non-guaranteed elements that could affect the policy.
W. Va. Code R. § 114-11C-10 Annual Certifications
10.1. The board of directors of each insurer shall appoint one or more illustration actuaries.
10.2. The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this rule.
10.3. The illustration actuary shall:
a. Be a member in good standing of the American Academy of Actuaries;
b. Be familiar with the standard of practice regarding life insurance policy illustrations;
c. Not have been found by the Insurance Commissioner, following appropriate notice and hearing to have:
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Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as an illustration actuary;
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Been convicted of an offense involving fraudulent or dishonest practices;
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Demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary; or 4. Resigned or been removed as an illustration actuary within the past five (5) years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards;
d. Not fail to notify the Insurance Commissioner of any action taken by a commissioner of another state similar to that under Paragraph 3 above;
e. Disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five (5) years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If nonguaranteed elements illustrated for new policies are not consistent with those illustrated for similar in force policies, this must be disclosed in the annual certification. If nonguaranteed elements illustrated for both new and in force policies are not consistent with the nonguaranteed elements actually being paid, charged or credited to the same or similar forms, this must be disclosed in the annual certification; and f. Disclose in the annual certification the method used to allocate overhead expenses for all illustrations:
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Fully allocated expenses;
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Marginal expenses; or 3. A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the Insurance Commissioner. 10.4.
a. The illustration actuary shall file a certification with the board and with the Insurance Commissioner:
- Annually for all policy forms for which illustrations are used; and 2. Before a new policy form is illustrated.
b. If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the Insurance Commissioner promptly.
10.5. If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the Insurance Commissioner promptly of his or her inability to certify.
10.6. A responsible officer of the insurer, other than the illustration actuary, shall certify annually:
a. That the illustration formats meet the requirements of this rule and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary; and b. That the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in subdivision e, subsection 10.3 of this section.
10.7. The insurer shall provide annual certifications to the Insurance Commissioner each year by a date determined by the insurer.
10.8. The insurer shall promptly notify the Insurance Commissioner if it changes the illustration actuary responsible for all or a portion of the company’s policy forms and disclose the reason for the change.
W. Va. Code R. § 114-11C-11 Failure to comply
A violation of paragraphs 5.2 or 5.3, section 5 of this rule by an insurer constitutes a statement or omission which misrepresents the benefits, advantages, conditions or terms of a life insurance policy.
114CSR11C
114CSR11C
Series 11D Variable Life Insurance
W. Va. Code R. § 114-11D-1 General
1.1. Scope. -- The purpose of this rule is to ensure that a policyholder is provided with a thorough disclosure concerning the operation of his or her variable life insurance policy and with current, reliable information concerning the status of his or her variable life insurance coverage. This rule is based on the National Association of Insurance Commissioner’s “Variable Life Insurance Model Regulation,” (Model 270), as amended in 1983.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-13A-4.
1.3. Filing Date. -- April 14, 2010.
1.4. Effective Date. -- July 16, 2010.
W. Va. Code R. § 114-11D-2 Definitions
2.1. "Affiliate" of an insurer means a person, directly or indirectly, controlling, controlled by, or under common control with the insurer; a person who regularly furnishes investment advice to the insurer with respect to its separate accounts for which a specific fee or commission is charged; or any director, officer, partner or employee of the insurer, controlling or controlled person, or person providing investment advice or any member of the immediate family of such person.
2.2. "Assumed investment rate" means the rate of investment return that would be required to be credited to a variable life insurance policy, after deduction of charges for taxes, investment expenses and mortality and expense guarantees to maintain the variable death benefit equal at all times to the amount of death benefit, other than incidental insurance benefits, which would be payable under the plan of insurance if the death benefit did not vary according to the investment experience of the separate account.
2.3. "Benefit base" means the amount to which the net investment return is applied.
2.4. “Commissioner” means the West Virginia insurance commissioner.
2.5. "Control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing more than ten percent (10%) of the voting securities of any other person. This presumption may be rebutted by a showing made to the satisfaction of the Commissioner that control does not exist in fact. The Commissioner may determine, after furnishing to all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
2.6. "Flexible premium policy " means any variable life insurance policy other than a scheduled premium policy under which both the amount and timing of premium payments are fixed by the insurer.
2.7. "General account" means all assets of the insurer other than assets in separate accounts established pursuant W. Va. Code §33-13A-1 or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer, whether or not for variable life insurance.
2.8. "Incidental insurance benefit" means all insurance benefits in a variable life insurance policy, other than the variable death benefit and the minimum death benefit, including but not limited to, accidental death and dismemberment benefits, disability benefits, guaranteed insurability options, family income or term riders.
2.9. "Minimum death benefit" means the amount of the guaranteed death benefit, other than incidental insurance benefits, payable under a variable life insurance policy regardless of the investment performance of the separate account.
2.10. "Net investment return" means the rate of investment return in a separate account to be applied to the benefit base.
2.11. "Person" means an individual, corporation, partnership, association, trust or fund.
2.12. "Policy processing day" means the day on which charges authorized in the policy are deducted from the policy's cash value.
2.13. "Producer" means a person, corporation, partnership or other legal entity that is licensed by this state as a life insurance producer.
2.14. "Scheduled premium policy" means a variable life insurance policy under which both the amount and timing of premium payments are fixed by the insurer.
2.15. "Separate account" means a separate account established pursuant to W. Va. Code §33-13A-1 or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.
2.16. "Variable death benefit" means the amount of the death benefit, other than incidental insurance benefits, payable under a variable life insurance policy dependent on the investment performance of the separate account, which the insurer would have to pay in the absence of any minimum death benefit.
2.17. "Variable life insurance policy" means an individual policy that provides for life insurance the amount or duration of which varies according to the investment experience of any separate account or accounts established and maintained by the insurer as to the policy, pursuant to W. Va. Code §33-13A-1 or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.
W. Va. Code R. § 114-11D-3 Qualification of Insurer to Issue Variable Life Insurance
3.1. The requirements of this section are applicable to all insurers either seeking authority to issue variable life insurance in this state or having authority to issue variable life insurance in this state.
3.2. Licensing and Approval to do Business in This State. An insurer may not deliver or issue for delivery in this state any variable life insurance policies unless:
3.2.a. The insurer is licensed or organized to do a life insurance business in this state;
3.2.b. The insurer has obtained the written approval of the Commissioner for the issuance of variable life insurance policies in this state. The Commissioner shall grant written approval only after the Commissioner has found that:
3.2.b.1. The plan of operation for the issuance of variable life insurance policies is sound;
3.2.b.2. The general character, reputation and experience of the management and those persons or firms proposed to supply consulting, investment, administrative or custodial services to the insurer are such as to reasonably assure competent operation of the variable life insurance business of the insurer in this state; and
3.2.b.3. The present and foreseeable future financial condition of the insurer and its method of operation in connection with the issuance of such policies is not likely to render its operation hazardous to the public or its policyholders in this state. The Commissioner shall consider, among other things:
3.2.b.3.A. The history of operation and financial condition of the insurer;
3.2.b.3.B. The qualifications, fitness, character, responsibility, reputation and experience of the officers and directors and other management of the insurer and those persons or firms proposed to supply consulting, investment, administrative or custodial services to the insurer;
3.2.b.3.C. The applicable law and regulations under which the insurer is authorized in its state of domicile to issue variable life insurance policies. The state of entry of an alien insurer shall be deemed its state of domicile for this purpose; and
3.2.b.3.D. If the insurer is a subsidiary of, or is affiliated by common management or ownership with another company, its relationship to such other company and the degree to which the requesting insurer, as well as the other company, meets these standards.
3.3. Filing for Approval to do Business in This State. The Commissioner may, at his or her discretion, require that an insurer, before it delivers or issues for delivery any variable life insurance policy in this state, file with the Commissioner the following information for the consideration of the Commissioner in making the determination required by subdivision b, subsection 3.2 of this section:
3.3.a. Copies of and a general description of the variable life insurance policies it intends to issue;
3.3.b. A general description of the methods of operation of the variable life insurance business of the insurer, including methods of distribution of policies and the names of those persons or firms proposed to supply consulting, investment, administrative, custodial or distribution services to the insurer;
3.3.c. With respect to any separate account maintained by an insurer for a variable life insurance policy, a statement of the investment policy the issuer intends to follow for the investment of the assets held in the separate account and a statement of procedures for changing the investment policy. The statement of investment policy shall include a description of the investment objectives intended for the separate account;
3.3.d. A description of any investment advisory services contemplated as required by subsection 6.9 of this rule;
3.3.e. A copy of the statutes and regulations of the state of domicile of the insurer under which it is authorized to issue variable life insurance policies;
3.3.f. Biographical data with respect to officers and directors of the insurer on the National Association of Insurance Commissioners Uniform Biographical Data Form; and
3.3.g. A statement of the insurer's actuary describing the mortality and expense risks which the insurer will bear under the policy.
3.4. Standards of Suitability. Every insurer seeking approval to enter into the variable life insurance business in this state shall establish and maintain a written statement specifying the standards of suitability to be used by the insurer. The standards of suitability shall specify that no recommendation shall be made to an applicant to purchase a variable life insurance policy and that no variable life insurance policy shall be issued in the absence of reasonable grounds to believe that the purchase of the policy is suitable for the applicant on the basis of information furnished after reasonable inquiry of the applicant concerning the applicant's insurance and investment objectives, financial situation and needs, and any other information known to the insurer or the producer making the recommendation.
3.5. Use of Sales Materials. An insurer authorized to transact variable life insurance business in this state may not use any sales material, advertising material or descriptive literature or other materials of any kind in connection with its variable life insurance business in this state which is false, misleading, deceptive or inaccurate. Variable life insurance sales material, advertising material and descriptive literature shall be subject to the additional requirements of W. Va. Code of St. R. §114 CSR 11.
3.6. Requirements Applicable to Contractual Services. Any material contract between an insurer and suppliers of consulting, investment, administrative, sales, marketing, custodial or other services with respect to variable life insurance operations shall be in writing and provide that the supplier of such services shall furnish the Commissioner with any information or reports in connection with the services which the Commissioner may request in order to ascertain whether the variable life insurance operations of the insurer are being conducted in a manner consistent with this rule and any other applicable law or rules.
3.7. Reports to the Commissioner.
3.7.a. An insurer authorized to transact the business of variable life insurance in this state shall submit to the Commissioner, in addition to any other materials that may be required by this rule or any other applicable laws or rules:
3.7.a.1. An annual statement of the business of its separate account or accounts in such forms as may be prescribed by the National Association of Insurance Commissioners; and
3.7.a.2. Prior to the use in this state any information furnished to applicants as provided for in section 7 of this rule; and
3.7.a.3. Prior to the use in this state the form of any of the reports to policyholders as provided for in section 9 of this rule; and
3.7.a.4. Such additional information concerning its variable life insurance operations or its separate accounts as the Commissioner shall deem necessary.
3.7.b. Any material submitted to the Commissioner under this section shall be disapproved if it is found to be false, misleading, deceptive or inaccurate in any material respect and, if previously distributed, the Commissioner shall require the distribution of amended material.
3.8. Authority of Commissioner to Disapprove. Any material required to be filed with and approved by the Commissioner is subject to disapproval if at any time it is found by him or her not to comply with the standards established in this rule.
W. Va. Code R. § 114-11D-4 Insurance Policy Requirements
4.1. Policy Qualification. The Commissioner may not approve any variable life insurance form filed pursuant to this rule unless it conforms to the requirements of this section.
4.2. Filing of Variable Life Insurance Policies. All variable life insurance policies, and all riders, endorsements, applications and other documents that are to be attached to be made a part of the policy and which relate to the variable nature of the policy, shall be filed with the Commissioner and approved by him or her prior to delivery or issuance for delivery in this state.
4.2.a. The procedures and requirements for filing and approval shall be, to the extent appropriate and not inconsistent with this rule, the same as those otherwise applicable to other life insurance policies.
4.2.b. The Commissioner may approve variable life insurance policies and related forms with provisions the Commissioner deems to be not less favorable to the policyholder and the beneficiary than those required by this rule.
4.3. Mandatory Policy Benefit and Design Requirements. Variable life insurance policies delivered or issued for delivery in this state shall comply with the following minimum requirements.
4.3.a. Mortality and expense risks shall be borne by the insurer. The mortality and expense charges shall be subject to the maximums stated in the contract.
4.3.b. For scheduled premium policies, a minimum death benefit shall be provided in an amount at least equal to the initial face amount of the policy so long as premiums are duly paid (subject to the provisions of subsection 4.5 of this section);
4.3.c. The policy shall reflect the investment experience of one or more separate accounts established and maintained by the insurer. The insurer shall demonstrate that the reflection of investment experience in the variable life insurance policy is actuarially sound.
4.3.d. Each variable life insurance policy shall be credited with the full amount of the net investment return applied to the benefit base.
4.3.e. Any changes in variable death benefits of a variable life insurance policy shall be determined at least annually.
4.3.f. The cash value of each variable life insurance policy shall be determined at least monthly. The method of computation of cash values and other nonforfeiture benefits, as described either in the policy or in a statement filed with the commissioner of the state in which the policy is delivered, or issued for delivery, shall be in accordance with actuarial procedures that recognize the variable nature of the policy. The method of computation shall be such that, if the net investment return credited to the policy at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the policy, then the resulting cash values to the minimum values required by W. Va. Code §33-13-30 for a general account policy with such premiums and benefits. The assumed investment rate may not exceed the maximum interest rate permitted under the standard nonforfeiture law of this state found in W.Va. Code §33-13-30. If the policy does not contain an assumed investment rate this demonstration shall be based on the maximum interest rate permitted under the Standard Nonforfeiture Law. The method of computation may disregard incidental minimum guarantees as to the dollar amounts payable. Incidental minimum guarantees include, for example, but are not limited to, a guarantee that the amount payable at death or maturity shall be at least equal to the amount that otherwise would have been payable if the net investment return credited to the policy at all times from the date of issue had been equal to the assumed investment rate.
4.3.g. The computation of values required for each variable life insurance policy may be based upon such reasonable and necessary approximations as are acceptable to the Commissioner.
4.4. Mandatory Policy Provisions. Every variable life insurance policy filed for approval in this state shall contain at least the following:
4.4.a. The cover page or pages corresponding to the cover page of each policy shall contain:
4.4.a.1. A prominent statement in either contrasting color or in bold-faced type that the amount or duration of death benefit may be variable or fixed under specified conditions;
4.4.a.2. A prominent statement in either contrasting color or in bold-faced type that cash values may increase or decrease in accordance with the experience of the separate account subject to any specified minimum guarantees;
4.4.a.3. A statement describing any minimum death benefit required pursuant to subdivision b, subsection 4.3 of this section;
4.4.a.4. The method, or a reference to the policy provision which describes the method, for determining the amount of insurance payable at death;
4.4.a.5. Every variable life insurance policy, certificate or contract issued to a person in this state shall have the notice prominently printed on the first page of the policy, certificate or contract stating in substance that the insured person or person obtaining the policy shall have the right to return the policy, certificate or contract within ten days of its receipt and to have the premium refunded if, after examination of the policy, certificate or contract, the person obtaining the insurance is not satisfied for any reason; and 4.4.b.
4.4.b.1. For scheduled premium policies, a provision for a grace period of not less than thirty-one (31) days from the premium due date which shall provide that when the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium, as if the premium were paid on or before the due date.
4.4.b.2. For flexible premium policies, a provision for a grace period beginning on the policy processing day when the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay such charges in accordance with the terms of the policy. The grace period shall end on a date not less than sixty-one (61) days after the mailing date of the Report to Policyholders required by subdivision c, subsection 9.1 of this rule.
4.4.b.3. The death benefit payable during the grace period will equal the death benefit in effect immediately prior to such period less any overdue charges. If the policy processing days occur monthly, the insurer may require the payment of not more than three (3) times the charges that were due on the policy processing day on which the amounts available under the policy were insufficient to pay all charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day.
4.4.c. For scheduled premium policies, a provision that the policy will be reinstated at any time within three (3) years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:
4.4.c.1. All overdue premiums with interest at a rate not exceeding six percent (6%) per annum compounded annually and any indebtedness in effect at the end of the grace period following the date of default with interest at a rate not exceeding six percent (6%) per annum compounded annually; or
4.4.c.2. One hundred ten percent (110%) of the increase in cash value resulting from reinstatement plus all overdue premiums for incidental insurance benefits with interest at a rate not exceeding six percent (6%) per annum compounded annually.
4.4.d. A full description of the benefit base and of the method of calculation and application of any factors used to adjust variable benefits under the policy;
4.4.e. A provision designating the separate account to be used and stating that:
4.4.e.1. The assets of the separate account shall be available to cover the liabilities of the general account of the insurer only to the extent that the assets of the separate account exceed the liabilities of the separate account arising under the variable life insurance policies supported by the separate account.
4.4.e.2. The assets of the separate account shall be valued at least as often as any policy benefits vary but at least monthly.
4.4.f. A provision specifying what documents constitute the entire insurance contract under state law;
4.4.g. A designation of the officers who are empowered to make an agreement or representation on behalf of the insurer and an indication that statements by the insured, or on his or her behalf, shall be considered as representations and not warranties;
4.4.h. An identification of the owner of the insurance contract;
4.4.i. A provision setting forth conditions or requirements as to the designation, or change of designation, of a beneficiary and a provision for disbursement of benefits in the absence of a beneficiary designation;
4.4.j. A statement of any conditions or requirements concerning the assignment of the policy;
4.4.k. A description of any adjustments in policy values to be made in the event of misstatement of age or sex of the insured;
4.4.l. A provision that the policy shall be incontestable by the insurer after it has been in force for two (2) years during the lifetime of the insured. However, any increase in the amount of the policy's death benefits subsequent to the policy issue date, which occurred upon a new application or request of the owner and was subject to satisfactory proof of the insured's insurability, shall be incontestable after the increase has been in force, during the lifetime of the insured, for two (2) years from the date of issue of increase;
4.4.m. A provision stating that the investment policy of the separate account may not be changed without the approval of the insurance commissioner of the state of domicile of the insurer, and that the approval process is on file with the Commissioner;
4.4.n. A provision that payment of variable death benefits in excess of any minimum death benefits, cash values, policy loans or partial withdrawals (except when used to pay premiums) or partial surrenders may be deferred:
4.4.n.1. For up to six (6) months from the date of request, if the payments are based on policy values which do not depend on the investment performance of the separate account; or
4.4.n.2. Otherwise, for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists which may make such payment impractical;
4.4.o. If settlement options are provided, at least one option shall be provided on a fixed basis only;
4.4.p. A description of the basis for computing the cash value and the surrender value under the policy shall be included;
4.4.q. Premiums or charges for incidental insurance benefits shall be stated separately;
4.4.r. Any other policy provision required by this rule;
4.4.s. Such other items as are currently required for fixed benefit life insurance policies and are not inconsistent with this rule; and
4.4.t. A provision for nonforfeiture insurance benefits. The insurer may establish a reasonable minimum cash value below which any nonforfeiture insurance options will not be available.
4.5. Policy Loan Provisions. Every variable life insurance policy, other than term insurance policies and pure endowment policies delivered or issued for delivery in this state shall contain provisions which are not less favorable to the policyholder than a provision for policy loans after the policy has been in force for two (2) full years which provides the following:
4.5.a. At least seventy-five percent (75%) of the policy's cash surrender value may be borrowed.
4.5.b. The amount borrowed shall bear interest at a rate not to exceed that permitted by state insurance law.
4.5.c. Any indebtedness shall be deducted from the proceeds payable on death.
4.5.d. Any indebtedness shall be deducted from the cash surrender value upon surrender or in determining any nonforfeiture benefit.
4.5.e. For scheduled premium policies, whenever the indebtedness exceeds the cash surrender value, the insurer shall give notice of any intent to cancel the policy if the excess indebtedness is not repaid within thirty-one (31) days after the date of mailing of notice. For flexible premium policies, whenever the total charges authorized by the policy that are necessary to keep the policy in force until the next following policy processing day exceed the amounts available under the policy to pay the charges, a report must be sent to the policyholder containing the information specified by subdivision c, subsection 9.1 of this rule.
4.5.f. The policy may provide that if, at any time, so long as premiums are duly paid, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, the policyholder may increase the variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding one hundred ten percent (110 %) of the corresponding increase in cash value and by furnishing such evidence of insurability as the insurer may request.
4.5.g. The policy may specify a reasonable minimum amount that may be borrowed at any time but the minimum may not apply to any automatic premium loan provision.
4.5.h. No policy loan provision is required if the policy is under extended insurance nonforfeiture option.
4.5.i. The policy loan provisions shall be constructed so that variable life insurance policyholders who have not exercised such provisions are not disadvantaged by the exercise thereof.
4.5.j. Amounts paid to the policyholders upon the exercise of any policy loan provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment except that a stock insurer may provide the amounts for policy loans from the general account.
4.6. Other Policy Provisions. The following provision may in substance be included in a variable life insurance policy or related form delivered or issued for delivery in this state:
4.6.a. An exclusion for suicide within two (2) years of the issue date of the policy; provided, however, that to the extent of the increased death benefits only, the policy may provide an exclusion for suicide within two (2) years of any increase in death benefits which result from an application of the owner subsequent to the policy issue date;
4.6.b. Incidental insurance benefits may be offered on a fixed or variable basis;
4.6.c. Policies issued on a participating basis shall offer to pay dividend amounts in cash. In addition, such policies may offer the following dividend options:
4.6.c.1. The amount of the dividend may be credited against premium payments;
4.6.c.2. The amount of the dividend may be applied to provide amounts of additional fixed or variable benefit life insurance;
4.6.c.3. The amount of the dividend may be deposited in the general account at a specified minimum rate of interest;
4.6.c.4. The amount of the dividend may be applied to provide paid-up amounts of fixed benefit one-year term insurance;
4.6.c.5. The amount of the dividend may be deposited as a variable deposit in a separate account.
4.6.d. A provision allowing the policyholder to elect in writing in the application for the policy or thereafter an automatic premium loan on a basis not less favorable than that required of policy loans under subsection 4.5 of this section, except that a restriction that no more than two (2) consecutive premiums can be paid under this provision may be imposed;
4.6.e. A provision allowing the policyholder to make partial withdrawals; and
4.6.f. Any other policy provision approved by the Commissioner.
W. Va. Code R. § 114-11D-5 Reserve Liabilities For Variable Life Insurance
5.1. Reserve Liabilities Under Standard Valuation Law. Reserve liabilities for variable life insurance policies shall be established under W. Va. Code §33-7-9 in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.
5.2. Reserve Liabilities for the Guaranteed Minimum Death Benefit. Reserve liabilities for the guaranteed minimum death benefit shall be the reserve needed to provide for the contingency of death occurring when the guaranteed minimum death benefit exceeds the death benefit that would be paid in the absence of the guarantee, and shall be maintained in the general account of the insurer and may not be less than the greater of the following minimum reserves:
5.2.a. The aggregate total of the term costs, if any, covering a period of one full year from the valuation date or, if less, covering the period provided for in the guarantee not otherwise provided for by the reserves held in the separate account, on each variable life insurance contract, assuming an immediate one-third depreciation in the current value of the assets in the separate account followed by a net investment return equal to the assumed investment rate; or
5.2.b. The aggregate total of the "attained age level" reserves on each variable life insurance contract. The "attained age level" reserve on each variable life insurance contract may not be less than zero and shall equal the "residue," as described in paragraph 1of this subdivision, of the prior year's "attained age level" reserve on the contract, with any such "residue," increased or decreased by a payment computed on an attained age basis as described in paragraph 2 of this subdivision.
5.2.b.1. The "residue" of the prior year's "attained age level" reserve on each variable life insurance contract may not be less than zero and shall be determined by adding interest at the valuation interest rate to the prior year's reserve, deducting the tabular claims based on the "excess," if any, of the guaranteed minimum death benefit over the death benefit that would be payable in the absence of a guarantee, and dividing the net result by the tabular probability of survival. The "excess" referred to in the preceding sentence shall be based on the actual level of death benefits that would have been in effect during the preceding year in the absence of the guarantee, taking appropriate account of the reserve assumptions regarding the distribution of death claim payments over the year.
5.2.b.2. The payment referred to in this paragraph shall be computed so that the present value of a level payment of that amount each year over the future period for which charges for this risk will be collected under the contract, is equal to (A) minus (B) minus (C), where (A) is the present value of the future guaranteed minimum death benefits, (B) is the present value of the future death benefits that would be payable in the absence of such guarantee, and (C) is any "residue," as described in paragraph 1 of this subdivision, of the prior year's "attained age level" reserve on such variable life insurance contract. If no future charges for this risk will be collected under the contract, the payment shall equal (A) minus (B) minus (C). The amounts of the future death benefits referred to in (B) shall be computed assuming a net investment return of the separate account which may differ from the assumed investment rate or the valuation interest but in no event may exceed the maximum interest rate permitted for the valuation of life contracts.
5.2.c. The valuation interest rate and mortality table used in computing the two minimum reserves described in subdivision a and b of this subsection shall conform to permissible standards for the valuation of life insurance contracts. In determining such minimum reserves, the company may employ suitable approximations and estimates, including but not limited to groupings and averages.
5.3. Incidental Insurance Benefit. Reserve liabilities for all fixed incidental insurance benefits and any guarantees associated with variable incidental insurance benefits shall be maintained in the general account and reserve liabilities for all variable aspects of the variable incidental insurance benefits shall be maintained in a separate account, in amounts determined in accordance with the actuarial procedures appropriate to the benefit.
W. Va. Code R. § 114-11D-6 Separate Accounts
6.1. The requirements of this section apply to the establishment and administration of variable life insurance separate accounts by a domestic insurer.
6.2. Establishment and Administration of Separate Accounts. A domestic insurer issuing variable life insurance shall establish one or more separate accounts pursuant to W. Va. Code §33-13A-1.
6.2.a. The insurer may not without prior written approval of the Commissioner employ in any material connection with the handling of separate account assets any person who:
6.2.a.1. Within the last ten (10) years has been convicted of any felony or a misdemeanor arising out of such person's conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities or involving violation of Sections 1341, 1342 or 1343 of Title 18, United States Code; or
6.2.a.2. Within the last ten (10) years has been found by any state regulatory authority to have violated or has acknowledged violation of any provision of any state insurance law involving fraud, deceit or knowing misrepresentation; or
6.2.a.3. Within the last ten (10) years has been found by federal or state regulatory authorities to have violated or has acknowledged violation of any provision of federal or state securities laws involving fraud, deceit or knowing misrepresentation. 6.2.b All persons with access to the cash, securities, or other assets of the separate account shall be under bond in the amount of not less than $25,000.
6.2.c. The assets of separate accounts shall be valued at least as often as variable benefits are determined but in any event at least monthly.
6.3. Amounts in the Separate Account. The insurer shall maintain in each separate account assets with a value at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance policies or the benefit base for these policies.
6.4. Investments by the Separate Account.
6.4.a. No sale, exchange, or other transfer of assets may be made by an insurer or any of its affiliates between any of its separate accounts or between any other investment account and one or more of its separate accounts unless:
6.4.a.1. In case of transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the policies with respect to the separate account to which the transfer is made; and
6.4.a.2. The transfer, whether into or from a separate account, is made by a transfer of cash; but other assets may be transferred if approved by the Commissioner in advance.
6.4.b. The separate account shall have sufficient net investment income and readily marketable assets to meet anticipated withdrawals under policies funded by the account.
6.5. Limitations on Ownership.
6.5.a. A separate account may not purchase or otherwise acquire the securities of an issuer, other than securities issued or guaranteed as to principal and interest by the United States, if immediately after the purchase or acquisition the value of the investment, together with prior investments of the account in the security valued as required by these rules, would exceed ten percent (10%) of the value of the assets of the separate account. The Commissioner may waive this limitation in writing if the Commissioner believes the waiver will not render the operation of the separate account hazardous to the public or the policyholders in this state.
6.5.b. No separate account shall purchase or otherwise acquire the voting securities of any issuer if as a result of the acquisition the insurer and its separate accounts in the aggregate, will own more than ten percent (10%) of the total issued and outstanding voting securities of the issuer. The Commissioner may waive this limitation in writing if he or she believes the waiver will not render the operation of the separate account hazardous to the public or the policyholders in this state or jeopardize the independent operation of the issuer of these securities.
6.5.c. The percentage limitation specified in subdivision a of this subsection may not be construed to preclude the investment of the assets of separate accounts in shares of investment companies registered pursuant to the Investment Company Act of 1940 or other pools of investment assets if the investments and investment policies of such investment companies or asset pools comply substantially with the provisions of subsection 6.4 of this section and other applicable portions of this rule.
6.6. Valuation of Separate Account Assets. Investments of the separate account shall be valued at their market value on the date of valuation, or at amortized cost if it approximates market value.
6.7. Separate Account Investment Policy. The investment policy of a separate account operated by a domestic insurer filed under subdivision c, subsection 3.3 of this rule may not be changed without first filing the change with the Commissioner.
6.7.a. Any change filed pursuant to this section shall be effective sixty (60) days after the date it was filed with the Commissioner, unless the Commissioner notifies the insurer before the end of the sixty-day period of his or her disapproval of the proposed change. At any time the Commissioner may, after notice and public hearing, disapprove any change that has become effective pursuant to this section.
6.7.b. The Commissioner may disapprove the change if he or she determines that the change would be detrimental to the interests of the policyholders participating in the separate accounts.
6.8. Charges Against Separate Account. The insurer shall disclose in writing, prior to or contemporaneously with delivery of the policy, all charges that may be made against the separate account, including, but not limited to, the following:
6.8.a. Taxes or reserves for taxes attributable to investment gains and income of the separate account;
6.8.b. Actual cost of reasonable brokerage fees and similar direct acquisition and sale costs incurred in the purchase or sale of separate account assets;
6.8.c. Actuarially determined costs of insurance (tabular costs) and the release of separate account liabilities;
6.8.d. Charges for administrative expenses and investment management expenses, including internal costs attributable to the investment management of assets of the separate account;
6.8.e. A charge, at a rate specified in the policy, for mortality and expense guarantees;
6.8.f. Any amounts in excess of those required to be held in the separate accounts; and
6.8.g. Charges for incidental insurance benefits.
6.9. Standards of Conduct. Every insurer seeking approval to enter into the variable life insurance business in this state shall adopt by formal action of its board of directors a written statement specifying the standards of conduct of the insurer, its officers, directors, employees and affiliates with respect to the purchase or sale of investments of separate accounts. The standards of conduct shall be binding on the insurer and those to whom it refers. A code or codes of ethics meeting the requirements of Section 17j under the Investment Company Act of 1940 and its applicable rules and regulations shall satisfy the provisions of this section.
6.10. Conflicts of Interest. Rules under any provision of the insurance laws of this state or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest shall also apply to members of any separate account's committee or other similar body.
6.11. Investment Advisory Services to a Separate Account.
6.11.a. An insurer may not enter into a contract under which any person undertakes, for a fee, to regularly furnish investment advice to such insurer with respect to its separate accounts maintained for variable life insurance policies unless:
6.11.a.1. The person providing advice is registered as an investment adviser under the Investment Advice Act of 1940; or
6.11.a.2. The person providing advice is an investment manager under the Employee Retirement Income Security Act of 1974 with respect to the assets of each employee benefit plan allocated to the separate account; or
6.11.a.3. The insurer has filed with the Commissioner and continues to file annually the following information and statements concerning the proposed advisor:
6.11.a.3.A. The name and form of organization, state of organization, and its principal place of business;
6.11.a.3.B. The names and addresses of its partners, officers, directors and persons performing similar functions or, if the investment advisory is an individual, of the individual;
6.11.a.3.C. A written standard of conduct complying in substance with the requirements of subsection 6.7 of this section which has been adopted by the investment advisor and is applicable to the investment advisor, its officers, directors, and affiliates;
6.11.a.3.D. A statement provided by the proposed advisor as to whether the advisor or any person associated therewith:
6.11.a.3.D.1. Has been convicted within ten (10) years of a felony or misdemeanor arising out of the person's conduct as an employee, salesman, officer or director of an insurance company, a banker, an insurance producer, a securities broker or an investment advisor involving embezzlement, fraudulent conversion or misappropriation of funds or securities, or involving the violation of Sections 1341, 1342, or 1343 of Title 18 of United States Code;
6.11.a.3.D.2. Has been permanently or temporarily enjoined by an order, judgment or decree of a court of competent jurisdiction from acting as an investment advisor, underwriter, broker or dealer, or as an affiliated person or as an employee of an investment company, bank or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity;
6.11.a.3.D.3. Has been found by federal or state regulatory authorities to have willfully violated or have acknowledged willful violation of any provision of federal or state securities laws or state insurance laws or of any rule or regulation under these laws; or
6.11.a.3.D.4. Has been censured, denied an investment advisor registration, had a registration as an investment advisor revoked or suspended, or been barred or suspended from being associated with an investment advisor by order of federal or state regulatory authorities; and
6.11.a.4. The investment advisory contract shall be in writing and provide that it may be terminated by the insurer without penalty to the insurer or the separate account upon no more than sixty (60) days' written notice to the investment advisor.
6.11.b. The Commissioner may, after notice and opportunity for hearing, by order require the investment advisory contract to be terminated if the Commissioner deems continued operation under the contract to be hazardous to the public or the insurer's policyholders.
W. Va. Code R. § 114-11D-7 Information Furnished to Applicants
7.1. An insurer delivering or issuing for delivery in this state a variable life insurance policy shall deliver the following to the applicant for the policy, and obtain a written acknowledgment of receipt from the applicant coincident with or prior to the execution of the application. The requirements of this section shall be deemed to have been satisfied to the extent that a disclosure containing information required by this section is delivered, either in the form of a prospectus included in the requirements of the Securities Act of 1933 and which was declared effective by the Securities and Exchange Commission; or all information and reports required by the Employee Retirement Income Security Act of 1974 if the policies are exempted from the registration requirements of the Securities Act of 1933 pursuant to Section 3(a)(2) thereof.
7.1.a. A summary explanation, in non-technical terms, of the principal features of the policy, including a description of the manner in which the variable benefits will reflect the investment experience of the separate account and the factors that affect the variation. The explanation shall include notices of the provision required by paragraph 5, subdivision a, subsection 4.4 and subdivision f, subsection 4.4 of this rule;
7.1.b. A statement of the investment policy of the separate account, including:
7.1.b.1. A description of the investment objectives intended for the separate account and the principal types of investments intended to be made; and
7.1.b.2. Any restrictions or limitations on the manner in which the operations of the separate account are intended to be conducted;
7.1.c. A statement of the net investment return of the separate account for each of the last ten (10) years or such lesser period as the separate account has been in existence;
7.1.d. A statement of the charges levied against the separate account during the previous year;
7.1.e. A summary of the method to be used in valuing assets held by the separate account;
7.1.f. A summary of the federal income tax aspects of the policy applicable to the insured, the policyholder and the beneficiary; and
7.1.g. Illustrations of benefits payable under the variable life insurance contract. The illustrations shall be prepared by the insurer and may not include projections of past investment experience into the future or attempted predictions of future investments experience, provided that nothing contained herein prohibits use of hypothetical assumed rates of return to illustrate possible levels of benefits if it is made clear that the assumed rates are hypothetical only.
W. Va. Code R. § 114-11D-8 Applications
8.1. The application for a variable life insurance policy shall contain:
8.1.a. A prominent statement that the death benefit may be variable or fixed under specified conditions;
8.1.b. A prominent statement that cash values may increase or decrease in accordance with the experience of the separate account (subject to any specified minimum guarantees); and
8.1.c. Questions designed to elicit information that enables the insurer to determine the suitability of variable life insurance for the applicant.
W. Va. Code R. § 114-11D-9 Annual Report to Policyholders and Certificate Holders
9.1. An insurer delivering or issuing for delivery in this state a variable life insurance policy shall mail to each variable life insurance policyholder at his or her last known address the following reports:
9.1.a. Within thirty (30) days after each anniversary of the policy, a statement or statements of the cash surrender value, death benefit, any partial withdrawal or policy loan, any interest charge, any optional payments allowed pursuant to subsection 4.5 of this rule under the policy computed as of the policy anniversary date. However, the statement may be furnished within thirty (30) days after a specified date in each policy year so long as the information contained therein is computed as of a date not more than sixty (60) days prior to the mailing of the notice. This statement shall state that, in accordance with the investment experience of the separate account, the cash values and the variable death benefit may increase or decrease, and shall prominently identify any value described therein which may be recomputed prior to the next statement required by this section. If the policy guarantees that the variable death benefit on the next policy anniversary date will not be less than the variable death benefit specified in the statement, the statement shall be modified to so indicate. For flexible premium policies, the report shall contain a reconciliation of the change since the previous report in cash value and cash surrender value, if different, because of payments made (less deductions for expense charges), withdrawals, investment experience, insurance charges and any other charges made against the cash value. In addition, the report shall show the projected cash value and cash surrender value, if different, as of one year from the end of the period covered by the report assuming that planned periodic premiums, if any, are paid as scheduled; guaranteed costs of insurance are deducted; and the net return is equal to the guaranteed rate or, in the absence of a guaranteed rate, is not greater than zero. If the projected value is less than zero, a warning message shall be included that states that the policy may be in danger of terminating without value in the next twelve (12) months unless additional premium is paid.
9.1.b. An annual statement or statements that include:
9.1.b.1. A summary of the financial statement of the separate account based on the last annual statement filed with the Commissioner;
9.1.b.2. The net investment return of the separate account for the last year and, for each year after the first, a comparison of the investment rate of the separate account during the last year with the investment rate during prior years, up to a total of not less than five (5) years when available;
9.1.b.3. A list of investments held by the separate account as of a date not earlier than the end of the last year for which an annual statement was filed with the Commissioner;
9.1.b.4. Any charges levied against the separate account during the previous year; and
9.1.b.5. A statement of any change, since the last report, in the investment objective and orientation of the separate account, in any investment restriction or material quantitative or qualitative investment requirement applicable to the separate account or in the investment advisor of the separate account.
9.1.c. For flexible premium policies, a report shall be sent to the policyholder if the amounts available under the policy on any policy processing day to pay the charges authorized by the policy are less than the amount necessary to keep the policy in force until the next following policy processing day. The report shall indicate the minimum payment required under the terms of the policy to keep it in force and the length of the grace period for payment of the amount.
W. Va. Code R. § 114-11D-10 Foreign Companies
If the law or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public that is substantially similar to that provided by these rules, the Commissioner to the extent deemed appropriate by the Commissioner in his or her discretion, may consider compliance with such law or regulation as compliance with these rules.
114CSR11D
114CSR11D
Series 11E Annuity Disclosure
W. Va. Code R. § 114-11E-1 General
W. Va. Code R. § 114-11E-2 Applicability
W. Va. Code R. § 114-11E-3 Definitions
W. Va. Code R. § 114-11E-4 Standards for the Disclosure Document and Buyer's Guide
W. Va. Code R. § 114-11E-5 Standards for Annuity Illustrations
W. Va. Code R. § 114-11E-6 Report to Contract Owners
W. Va. Code R. § 114-11E-7 Penalties
TITLE 114 LEGISLATIVE RULE INSURANCE COMMISSIONER
SERIES 11E ANNUITY DISCLOSURE ### §114-11E-1. General.
1.1. Scope. -- The purpose of this rule is to provide standards for the disclosure of certain minimum information about annuity contracts to protect consumers and foster consumer education.
The rule specifies the minimum information which must be disclosed, and the method for disclosing it, and the use and content of illustrations, if used, in connection with the sale of annuity contracts.
The goal of this rule is to ensure that purchasers of annuity contracts understand certain basic features of annuity contracts. This rule is based on the National Association of Insurance Commissioners' "Annuity Disclosure Model Regulation" (Model 245), as amended in 2011.
1.2. Authority. -- W. Va. Code §33-2-10.
1.3. Filing Date. -- April 24, 2015
1.4. Effective Date. -- July 23, 2015 ### §114-11E-2. Applicability.
2.1. This rule applies to all group and individual annuity contracts and certificates except:
2.1.a. Immediate and deferred annuities that do not contain non-guaranteed elements; 2.1.b.
2.1.b.1. Annuities used to fund:
2.1.b.1.A. An employee pension plan which is covered by the Employee Retirement Income Security Act ("ERISA");
2.1.b.1.B. A plan described by Sections 401(a), 401(k) or 403(b) of the Internal Revenue Code, where the plan, for purposes of ERISA, is established or maintained by an employer;
2.1.b.1.C. A governmental or church plan defined in Section 414 or a deferred compensation plan of a state or local government or a tax exempt organization under
Section 457 of the Internal Revenue Code; or
2.1.b.1.D. A non-qualified deferred compensation arrangement established or maintained by an employer or plan sponsor;
2.1.b.2. Notwithstanding paragraph 2.1.b.1, this rule shall apply to annuities used to fund a plan or arrangement that is funded solely by contributions an employee elects to make whether on a pre-tax or after-tax basis, and where the insurance company has been notified that plan participants may choose from among two (2) or more fixed annuity providers and there is a direct solicitation of an individual employee by a producer for the purchase of an annuity contract. As used in this subsection, direct solicitation may not include any meeting held by a producer solely for the
purpose of educating or enrolling employees in the plan or arrangement;
2.1.c. Structured settlement annuities;
2.1.d. Charitable gift annuities;
2.1.e. Funding agreements;
2.1.f. Non-registered variable annuities issued exclusively to an accredited investor or qualified purchaser as those terms are defined by the Securities Act of 1933 (15 U.S.C. Section 77a et seq.), the Investement Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), or the regulations promulgated under either of those acts, and offered for sale and sold in a transaction that is exempt from registration under the Securities Act of 1933 (15 U.S.C. Section 77a et seq.); and
2.1.g. Transactions involving variable annuities and other registered products in compliance with Securities and Exchange Commission (SEC) rules and Financial Industry Regulatory Authority (FINRA) rules relating to disclosures and illustrations;
2.1.g.1. Notwithstanding subdivision 2.1.g, the delivery of the Buyer's Guide is required in sales of variable annuities, and when appropriate, in sales of other registered products.
2.1.g.2. Nothing in this subsection shall limit the Commissioner's ability to enforce the provisions of this rule or to require additional disclosure.
W. Va. Code R. § 114-11E-3 Definitions
3.1. "Buyer's Guide" means: 3.1.a For sales of fixed or fixed indexed annuities, either the "2013 Buyer's Guide for Deferred Annuities" or the "2013 Buyer's Guide for Deferred Annuities-Fixed," as adopted by and available from the National Association of Insurance Commissioners ("NAIC."); or
3.1.b. For sales of variable annuities, either the "2013 Buyer's Guide for Deferred Annuities" or the "2013 Buyers Guide for Deferred Annuities - Variable," as adopted by and available from the NAIC.
3.2. "Charitable gift annuity" means a transfer of cash or other property by a donor to a charitable organization in return for an annuity payable over one or two lives, under which the actuarial value of the annuity is less than the value of the cash or other property transferred and the difference in value constitutes a charitable deduction for federal tax purposes, but does not include a charitable remainder trust or a charitable lead trust or other similar arrangement where the charitable organization does not issue an annuity and incur a financial obligation to guarantee annuity payments.
3.3. "Contract owner" means the owner named in the annuity contract or certificate holder in the case of a group annuity contract.
3.4. "Determinable elements" means elements that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable elements only, or from both determinable and guaranteed elements.
3.5. "Funding agreement" means an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies.
3.36. "Generic name" means a short title descriptive of the annuity contract being applied for or illustrated such as "single premium deferred annuity."
3.7. "Guaranteed elements" means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these, that are guaranteed or have determinable elements at issue. An element is considered guaranteed if all of the underlying elements that go into its calculation are guaranteed.
3.8. "Illustration" means a personalized presentation or depiction prepared for and provided to an individual consumer that includes non-guaranteed elements of an annuity contract over a period of years.
3.9. "Market Value Adjustment" or "MVA" feature is a positive or negative adjustment that may be applied to the account value and/or cash value of the annuity upon withdrawal, surrender, contract annuitization or death benefit payment based on either the movement of an external index or on the company's current guaranteed interest rate being offered on new premiums or new rates for renewal periods, if that withdrawal, surrender, contract annuitization or death benefit payment occurs at a time other than on a specified guaranteed benefit date.
3.10. "Non-guaranteed elements" means the premiums, credited interest rates (including any bonus), benefits, values, dividends, non-interest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying non-guaranteed elements are used in its calculation.
3.11. "Structured settlement annuity" means a "qualified funding asset" as defined in section 130(d) of the Internal Revenue Code or an annuity that would be a qualified funding asset under
section 130(d) but for the fact that it is not owned by an assignee under a qualified assignment. ### §114-11E-4. Standards for the Disclosure Document and Buyer's Guide. 4.1.
4.1.a. Where the application for an annuity contract is taken in a face-to-face meeting, the applicant shall at or before the time of application be given both the disclosure document described in subsection 4.2 and the Buyer's Guide, if any.
4.1.b. Where the application for an annuity contract is taken by means other than in a face-to-face meeting, the applicant shall be sent both the disclosure document and the Buyer's Guide no later than five (5) business days after the completed application is received by the insurer.
4.1.b.1. With respect to an application received as a result of a direct solicitation through the mail:
4.1.b.1.A. Providing a Buyer's Guide in a mailing inviting prospective applicants to apply for an annuity contract shall be deemed to satisfy the requirement that the Buyer's Guide be provided no later than five (5) business days after receipt of the application.
4.1.b.1.B. Providing a disclosure document in a mailing inviting a prospective applicant to apply for an annuity contract shall be deemed to satisfy the requirement that the disclosure document be provided no later than five (5) business days after receipt of the application.
4.1.b.2. With respect to an application received via the Internet:
4.1.b.2.A. Taking reasonable steps to make the Buyer's Guide available for viewing and printing on the insurer's website shall be deemed to satisfy the requirement that the Buyer's Guide be provided no later than five (5) business day of receipt of the application.
4.1.b.2.B. Taking reasonable steps to make the disclosure document available for viewing and printing on the insurer's website shall be deemed to satisfy the requirement that the disclosure document be provided no later than five (5) business days after receipt of the application.
4.1.b.3. A solicitation for an annuity contract provided in other than a face-toface meeting shall include a statement that the proposed applicant may contact the Commissioner for a free annuity Buyer's Guide. In lieu of the foregoing statement, an insurer may include a statement that the prospective applicant may contact the insurer for a free annuity Buyer's Guide.
4.1.c. Where the Buyer's Guide and disclosure document are not provided at or before the time of application, a free look period of no less than fifteen (15) days shall be provided for the applicant to return the annuity contract without penalty. This free look shall run concurrently with any other free look provided under state law or rule.
4.2. At a minimum, the following information shall be included in the disclosure document required to be provided under this rule:
4.2.a. The generic name of the contract, the company product name, if different, and form number, and the fact that it is an annuity;
4.2.b. The insurer's legal name, physical address, website address and telephone number;
4.2.c. A description of the contract and its benefits, emphasizing its long-term nature, including examples where appropriate:
4.2.c.1. The guaranteed and non-guaranteed elements of the contract, and their limitations, if any, including for fixed indexed annuities, the elements used to determine the index-based interest, such as the participation rates, caps or spread, and an explanation of how they operate;
4.2.c.2. An explanation of the initial crediting rate, or for fixed indexed annuities, an explanation of how the index-based interest is determined, specifying any bonus or introductory portion, the duration of the rate and the fact that rates may change from time to time and are not guaranteed;
4.2.c.3. Periodic income options both on a guaranteed and non-guaranteed
basis;
4.2.c.4. Any value reductions caused by withdrawals from or surrender of the contract;
4.2.c.5. How values in the contract can be accessed;
4.2.c.6. The death benefit, if available and how it will be calculated;
4.2.c.7. A summary of the federal tax status of the contract and any penalties applicable on withdrawal of values from the contract; and
4.2.c.8. Impact of any rider, including, but not limited to, a guaranteed living benefit or long-term care rider;
4.2.d. Specific dollar amount or percentage charges and fees shall be listed with an explanation of how they apply; and
4.2.e. Information about the current guaranteed rate or indexed crediting rate formula, if applicable, for new contracts that contains a clear notice that the rate is subject to change.
4.3. Insurers shall define terms used in the disclosure document in language that facilitates the understanding by a typical person within the segment of the public to which the disclosure document is directed. ### §114-11E-5. Standards for Annuity Illustrations.
5.1. An insurer or producer may elect to provide a consumer an illustration at any time, provided that the illustration is in compliance with this section and:
5.1.a. Clearly labeled as an illustration;
5.1.b. Includes a statement referring consumers to the disclosure document and Buyer's Guide provided to them at the time of purchase for additional information about their annuity; and
5.1.c. Is prepared by the insurer or third party using software that is authorized by the insurer prior to its use, provided that the insurer maintains a system of control over the use of illustrations.
5.2. An illustration furnished an applicant for a group annuity contract or contracts issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.
5.3. The illustration shall not be provided unless accompanied by the disclosure document referenced in section 4.
5.4. When using an illustration, the illustration shall not:
5.4.a. Describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;
5.4.b. State or imply that the payment or amount of non-guaranteed elements is guaranteed; or
5.4.c. Be incomplete.
5.5. Costs and fees of any type shall be individually noted and explained.
5.6. An illustration shall conform to the following requirements:
5.6.a. The illustration shall be labeled with the date on which it was prepared;
5.6.b. Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the disclosure document (e.g., the fourth page of a seven-page disclosure document shall be labeled "page 4 of 7 pages");
5.6.c. The assumed dates of premium receipt and benefit payout within a contract year shall be clearly identified;
5.6.d. If the age of the proposed insured is shown as a component of the tabular detail, it shall be issue age plus the numbers of years the contract is assumed to have been in force;
5.6.e. The assumed premium on which the illustrated benefits and values are based shall be clearly identified, including rider premium for any benefits being illustrated;
5.6.f. Any charges for riders or other contract features assessed against the account value or the crediting rate shall be recognized in the illustrated values and shall be accompanied by a statement indicating the nature of the rider benefits or the contract features, and whether or not they are included in the illustration;
5.6.g. Guaranteed death benefits and values available upon surrender, if any, for the illustrated contract premium shall be shown and clearly labeled guaranteed;
5.6.h. The non-guaranteed elements underlying the non-guaranteed illustrated values shall be no more favorable than current non-guaranteed elements and shall not include any assumed future improvement of such elements. Additionally, non-guaranteed elements used in calculating non-guaranteed illustrated values at any future duration shall reflect any planned changes, including any planned changes that may occur after expiration of an initial guaranteed or bonus period;
5.6.i. In determining the non-guaranteed illustrated values for a fixed indexed annuity, the index-based interest rate and account value shall be calculated for three different scenarios: one to reflect historical performance of the index for the most recent ten calendar years; one to reflect the historical performance of the index for the continuous period of ten calendar years out of the last twenty calendar years that would result in the least index value growth (the "low scenario"); one to reflect the historical performance of the index for the continuous period of ten calendar years out of the last twenty calendar years that would result in the most index value growth (the "high scenario"). The following requirements apply:
5.6.i.1. The most recent ten calendar years and the last twenty calendar years are defined to end on the prior December 31, except for illustrations prepared during the first three months of the year, for which the end date of the calendar year period may be the December 31 prior to the last full calendar year;
5.6.i.2. If any index utilized in determination of an account value has not been in existence for at least ten calendar years, indexed returns for that index shall not be illustrated. If the fixed indexed annuity provides an option to allocate account value to more than one indexed or fixed declared rate account, and one or more of those indexes has not been in existence for at least ten calendar years, the allocation to such indexed account(s) shall be assumed to be zero;
5.6.i.3. If any index utilized in determination of an account value has been in existence for at least ten calendar years but less than twenty calendar years, the ten calendar year periods that define the low and high scenarios shall be chosen from the exact number of years the index has been in existence;
5.6.i.4. The non-guaranteed element(s), such as caps, spreads, participation rates or other interest crediting adjustments, used in calculating the non-guaranteed index-based interest rate shall be no more favorable than the corresponding current element(s);
5.6.i.5. If a fixed indexed annuity provides an option to allocate the account value to more than one indexed or fixed declared rate account:
5.6.i.5.A. The allocation used in the illustration shall be the same for all three scenarios; and
5.6.i.5.B. The ten calendar year periods resulting in the least and greatest index growth periods shall be determined independently for each indexed account option.
5.6.i.6. The geometric mean annual effective rate of the account value growth over the ten calendar year period shall be shown for each scenario;
5.6.i.7. If the most recent ten calendar year historical period experience of the index is shorter than the number of years needed to fulfill the requirement of subsection 5.8, the most recent ten calendar year historical period experience of the index shall be used for each subsequent ten calendar year period beyond the initial period for the purpose of calculating the account value for the remaining years of the illustration;
5.6.i.8. The low and high scenarios:
5.6.i.8.A. Need not show surrender values (if different than account values);
5.6.i.8.B. Shall not extend beyond ten calendar years (and therefore are not subject to the requirements of subsection 5.8 beyond subsection 5.8.a.1; and
5.6.i.8.C. May be shown on a separate page. A graphical presentation shall also be included comparing the movement of the account value over the ten calendar year period for the low scenario, the high scenario and the most recent ten calendar year scenario; and
5.6.i.9. The low and high scenarios should reflect the irregular nature of the index performance and should trigger every type of adjustment to the index-based interest rate under the contract. The effect of the adjustments should be clear; for example, additional columns showing how the adjustment applied may be included. If an adjustment to the index-based interest rate is not triggered in the illustration (because no historical values of the index in the required illustration range would have triggered it), the illustration shall so state;
5.6.j. The guaranteed elements, if any, shall be shown before corresponding nonguaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., "see page 1 for guaranteed elements");
5.6.k. The account or accumulation value of a contract, if shown, shall be identified by the name this value is given in the contract being illustrated and shown in close proximity to the corresponding value available upon surrender;
5.6.1. The value available upon surrender shall be identified by the name this value is given in the contract being illustrated and shall be the amount available to the contract owner in a lump sum after deduction of surrender charges, bonus forfeitures, contract loans, contract loan interest and application of any market value adjustment, as applicable;
5.6.m. Illustrations may show contract benefits and values in graphic or chart form in addition to the tabular form;
5.6.n. Any illustration of non-guaranteed elements shall be accompanied by a statement indicating that:
5.6.n.1. The benefits and values are not guaranteed;
5.6.n.2. The assumptions on which they are based are subject to change by the insurer; and
5.6.n.3. Actual results may be higher or lower;
5.6.0. Illustrations based on non-guaranteed credited interest and non-guaranteed annuity income rates shall contain equally prominent comparisons to guaranteed credited interest and guaranteed annuity income rates, including any guaranteed and non-guaranteed participation rates, caps or spreads for fixed indexed annuities;
5.6.p. The annuity income rate illustrated shall not be greater than the current annuity income rate unless the contract guarantees are in fact more favorable;
5.6.q. Illustrations shall be concise and easy to read;
5.6.r. Key terms shall be defined and then used consistently throughout the illustration;
5.6.s. Illustrations shall not depict values beyond the maximum annuitization age or date;
5.6.t. Annuitization benefits shall be based on contract values that reflect surrender charges or any other adjustments, if applicable; and
5.6.u. Illustrations shall show both annuity income rates per $ 1,000.00 and the dollar amounts of the periodic income payable.
5.7. An annuity illustration shall include a narrative summary that includes the following unless provided at the same time in a disclosure document:
5.7.a. A brief description of any contract features, riders or options, guaranteed and/or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the contract;
5.7.b. A brief description of any other optional benefits or features that are selected, but not shown in the illustration and the impact they have on the benefits and values of the contract;
5.7.c. Identification and a brief definition of column headings and key terms used in the illustration;
5.7.d. A statement containing in substance the following: #### 5.7.d.1. For other than fixed indexed annuities:
"This illustration assumes the annuity's current non-guaranteed elements will not change. It is likely that they will change and actual values will be higher or lower than those in this illustration but will not be less than the minimum guarantees."
"The values in this illustration are not guarantees or even estimates of the amounts you can expect from your annuity. Please review the entire Disclosure Document and Buyer's Guide provided with your Annuity Contract for more detailed information." #### 5.7.d.2. For fixed indexed annuities:
"This illustration assumes the index will repeat historical performance and that the annuity's current non-guaranteed elements, such as caps, spreads, participation rates or other interest crediting adjustments, will not change. It is likely that the index will not repeat historical performance, the non-guaranteed elements will change, and actual values will be higher or lower than those in this illustration but will not be less than the minimum guarantees."
"The values in this illustration are not guarantees or even estimates of the amounts you can expect from your annuity. Please review the entire Disclosure Document and Buyer's Guide provided with your Annuity Contract for more detailed information;" and
5.7.e. Additional explanations as follows:
5.7.e.1. Minimum guarantees shall be clearly explained;
5.7.e.2. The effect on contract values of contract surrender prior to maturity shall be explained;
5.7.e.3. Any conditions on the payment of bonuses shall be explained;
5.7.e.4. For annuities sold as an IRA, qualified plan or in another arrangement subject to the required minimum distribution (RMD) requirements of the Internal Revenue Code, the effect of RMDs on the contract values shall be explained;
5.7.e.5. For annuities with recurring surrender charge schedules, a clear and concise explanation of what circumstances will cause the surrender charge to recur; and
5.7.e.6. A brief description of the types of annuity income options available shall be explained, including:
5.7.e.6.A. The earliest or only maturity date for annuitization (as the term is defined in the contract);
5.7.e.6.B. For contracts with an optional maturity date, the periodic income amount for at least one of the annuity income options available based on the guaranteed rates in the contract, at the later of age seventy or ten years after issue, but in no case later than the maximum annuitization age or date in the contract;
5.7.e.6.C. For contracts with a fixed maturity date, the periodic income amount for at least one of the annuity income options available, based on the guaranteed rates in the contract at the fixed maturity date; and
5.7.e.6.D. The periodic income amount based on the currently available periodic income rates for the annuity income option in subparagraph 5.7.e.6.B or subparagraph 5.7.e.6.C, if desired.
5.8. Following the narrative summary, an illustration shall include a numeric summary which shall include at minimum, numeric values at the following durations: 5.8.a.
5.8.a.1. First ten contract years; or
5.8.a.2. Surrender charge period if longer than ten years, including any renewal surrender charge period(s);
5.8.b. Every tenth contract year up to the later of thirty years or age seventy; and 5.8.c.
5.8.c.1. Required annuitization age; or
5.8.c.2. Required annuitization date.
5.9. If the annuity contains a market value adjustment, hereafter MVA, the following provisions apply to the illustration:
5.9.a. The MVA shall be referred to as such throughout the illustration;
5.9.b. The narrative shall include an explanation, in simple terms, of the potential effect of the MVA on the value available upon surrender;
5.9.c. The narrative shall include an explanation, in simple terms, of the potential effect of the MVA on the death benefit;
5.9.d. A statement, containing in substance the following, shall be included:
When you make a withdrawal, the amount you receive may be increased or decreased by a Market Value Adjustment (MVA). If interest rates on which the MVA is based go up after you buy your annuity, the MVA likely will decrease the amount you receive. If interest rates go down, the MVA will likely increase the amount you receive.
5.9.e. Illustrations shall describe both the upside and the downside aspects of the contract features relating to the MVA;
5.9.f. The illustrative effect of the MVA shall be shown under at least one positive and one negative scenario. This demonstration shall appear on a separate page and be clearly labeled that it is information demonstrating the potential impact of a MVA;
5.9.g. Actual MVA floors and ceilings as listed in the contract shall be illustrated; and
5.9.h. If the MVA has significant characteristics not addressed by subdivisions a through g of this subsection, the effect of such characteristics shall be shown in the illustration.
5.10. A narrative summary for a fixed indexed annuity illustration also shall include the following unless provided at the same time in a disclosure document:
5.10.a. An explanation, in simple terms, of the elements used to determine the indexbased interest, including but not limited to, the following elements:
5.10.a.1. The Index(es) which will be used to determine the index-based interest;
5.10.a.2. The Indexing Method -- such as point-to-point, daily averaging, monthly averaging;
5.10.a.3. The Index Term -- the period over which indexed-based interest is calculated;
5.10.a.4. The Participation Rate, if applicable;
5.10.a.5. The Cap, if applicable; and
5.10.a.6. The Spread, if applicable;
5.10.b. The narrative shall include an explanation, in simple terms, of how indexbased interest is credited in the indexed annuity;
5.10.c. The narrative shall include a brief description of the frequency with which the company can re-set the elements used to determine the index-based credits, including the participation rate, the cap, and the spread, if applicable; and
5.10.d. If the product allows the contract holder to make allocations to declared-rate segment, then the narrative shall include a brief description of:
5.10.d.1. Any options to make allocations to a declared-rate segment, both for new premiums and for transfers from the indexed-based segments; and
5.10.d.2. Differences in guarantees applicable to the declared-rate segment and the indexed-based segments.
5.11. A numeric summary for a fixed indexed annuity illustration shall include, at a minimum, the following elements:
5.11.a. The assumed growth rate of the index in accordance with subdivision 5.6.i;
5.11.b. The assumed values for the participation rate, cap and spread, if applicable; and
5.11.c. The assumed allocation between indexed-based segments and declared-rate segment, if applicable, in accordance with subdivision 5.6.i.
5.12. If the contract is issued other than as applied for, a revised illustration conforming to the contract as issued shall be sent with the contract, except that non-substantive changes, including, but not limited to, changes in the amount of expected initial or additional premiums and any changes in amounts of exchanges pursuant to Section 1035 of the Internal Revenue Code, rollovers or transfers, which do not alter the key benefits and features of the annuity as applied for will not require a revised illustration unless requested by the applicant. ### §114-11E-6. Report to Contract Owners.
6.1. For annuities in the payout period that include non-guaranteed elements, and for deferred annuities in the accumulation period, the insurer shall provide each contract owner with a report, at least annually, on the status of the contract that contains at least the following information:
6.1.a. The beginning and end date of the current report period;
6.1.b. The accumulation and cash surrender value, if any, at the end of the previous report period and at the end of the current report period;
6.1.c. The total amounts, if any, that have been credited, charged to the contract value or paid during the current report period; and
6.1.d. The amount of outstanding loans, if any, as of the end of the current report period. ### §114-11E-7. Penalties.
7.1. In addition to any other penalties provided by the laws of this state, an insurer or producer that violates a requirement of this rule shall be guilty of a violation of W. Va. Code §33-11- 1 et. seq. Annuity Illustration Example [The following illustration is an example only and does not reflect specific characteristics of any actual product for sale by any company]
ABC Life Insurance Company Company Product Name Flexible Premium Fixed Deferred Annuity with a Market Value Adjustment (MVA)
An Illustration Prepared for John Doe by John Agent on mm/dd/yyyy (Contact us at Policyownerservice@ABCLife.com or 555-555-5555)
Sex: Male Age at Issue: 54 Initial Premium Payment: $100,000.00 Planned Annual Premium Payments: None Annuitant: John Doe Oldest Age at Which Annuity Payments Can Begin: 95 Tax Status: Nonqualified Withdrawals: None Illustrated Initial Interest Guarantee Period 5 Years Initial Guaranteed Interest Crediting Rates First Year (reflects first year only interest bonus credit of 0.75%): 4.15% Remainder of Initial Interest Guarantee Period:
Market Value Adjustment Period: 5 Years Minimum Guaranteed Interest Rate after Initial Interest Guarantee Period *: 3% *After the Initial Interest Guarantee Period, a new interest rate will be declared annually. This rate cannot be lower than the Minimum Guaranteed Interest Rate. ### Annuity Income Options and Illustrated Monthly Income Values This annuity is designed to pay an income that is guaranteed to last as long as the Annuitant lives. When annuity income payments are to begin, the income payment amounts will be determined by applying an annuity income rate to the annuity Account Value.
Annuity income options include the following:
· Periodic payments for Annuitant's life · Periodic payments for Annuitant's life with payments guaranteed for a certain number of years · Periodic payments for Annuitant's life with payments continuing for the life of a survivor annuitant Illustrated Annuity Income Option:
Monthly payments for annuitant's life with payments guaranteed for 10year period Assumed Age When Payments Start:
Account Value Monthly Annuity Income Rate/$1,000 of Account Value* Monthly Annuity Income Based on Rates Guaranteed in the Contract $164,798 $5.00 $823.99 Based on Rates Currently Offered by the Company $171,976 $6.50 $1,117.84 *If, at the time of annuitization, the annuity income rates currently offered by the company are higher than the annuity income rates guaranteed in the contract, the current rates will apply.
Values Based on Guaranteed Rates Values Based on Assumption that Initial Guaranteed Rates Continue Contract Year/Age Premium Payment Interest Crediting Rate Account Value Case Surrender Value Before MVA Minimum Cash Surrender Value After MVA Interest Crediting Rate Account Value Cash Surrender Value Before and After MVA (1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9) 1/55 $100,000 4.15% $104,150 $95,818 $92,000 4.15% $104,150 $95,818 2/56 $107,691 $100,153 $93,000 $107,691 $100,153 3/57 $111,353 $104,671 $95,614 $111,353 $104,671 4/58 $115,139 $109,382 $98,482 $115,139 $109,382 5/59 $119,053 $114,291 $114,291 $119,053 $114,291 6/60 $122,625 $118,946 $118,946 $123,101 $119,408 7/61 $126,304 $123,778 $123,778 $127,287 $124,741 8/62 $130,093 $130,093 $130,096 $131,614 $131,614 9/63 $133,996 $133,996 $133,996 $136,089 $136,089 10/64 $138,015 $138,015 $138,015 $140,716 $140,716 11/65 $142,156 $142,156 $142,156 $145,501 $145,501 16/70 $164,798 $164,798 $164,798 $171,976 $171,976 21/75 $191,046 $191,046 $191,046 $203,268 $203,268 26/80 $221,474 $221,474 $221,474 $240,225 $240,225 31/85 $256,749 $256,749 $256,749 $335,643 $335,643 36/90 $297,643 $297,643 $297,643 $335,643 $335,643 41/95 $345,050 $345,050 $345,050 $396,717 $396,717 Column Descriptions (1) Ages shown are measured from the Annuitant's age at issue.
(2) Premium Payments are assumed to be made at the beginning of the Contract Year shown. ### Values Based on Guaranteed Rates (3) Interest Crediting Rates shown are annual rates: however, interest is credited daily. During the Initial Interest Guarantee Period, values developed from the Initial Premium Payment are illustrated using the Initial Guaranteed Interest Rate(s) declared by the insurance company, which include an additional first year only interest bonus credit of 0.75%. The interest rates will be guaranteed for the Initial Interest Guarantee Period, subject to an MVA. After the Initial Interest Guaranteed Period, a new renewal interest rate will be declared annually, but can never be less than the Minium Guaranteed Interest Rate shown.
(4) Account Value is the amount you have at the end of each year if you leave your money in the contract until you start receiving annuity payments. It is also the amount available upon the Annuitant's death if it occurs before annuity payments begin. The death benefit is not affected by surrender charges or the MVA.
(5) Cash Surrender Value Before MVA is the amount available at the end of each year if you surrender the contract (after deduction of any Surrender Charge) but before the application of any MVA. Surrender charges are applied to the Account Value according to the schedule below until the surrender charge period ends, which may be after the Initial Interest Guarantee Period has ended.
Years Measured from Premium Payment: 1 8+ 8% Surrender Charge: 7% 6% 5% 4% 3% 2% 0 0% (6) Minimum Cash Surrender Value After MVA is the minimum amount available at the end of each year if you surrender your contract before the end of five years, no matter what the MVA is. The minimum is set by law. The amount you receive may be higher or lower than the cash surrender value due to the application of the MVA, but never lower than this minimum. Otherwise the MVA works as follows: If the interest rate available on new contracts offered by the company is LOWER than your Initial Guaranteed Interest Rate, the MVA will INCREASE the amount you receive. If the interest rate available on new contracts offered by the company is HIGHER than your Initial Guaranteed Interest Rate, the MVA will DECREASE the amount you receive. ### Values Based on Assumption that Initial Guaranteed Rates Continue (7) Interest Crediting Rates are the same as in Column (3) for the Initial Interest Guarantee Period. After the Initial Interest Guarantee Period, a new renewal interest rate will be declared annually. For the purposes of calculating the values in this column, it is assumed that the Initial Guaranteed Interest Rate (without the bonus) will continue as the new renewal interest rate in all years. The actual renewal interest rates are not subject to an MVA and will very likely NOT be the same as the illustrated renewal interest rates.
(8) Account Value is calculated the same way as Column (4).
(9) Cash Surrender Value Before and After MVA is the Cash Surrender Value at the end of each year assuming that Initial Guaranteed Interest Rates continue and that the continuing rates are the rates offered by the company on new contracts. In this case, the MVA would be zero and Cash Surrender Values before and after the MVA would be the same.
Important Note: This illustration assumes you will take no withdrawals from your annuity before you begin to receive periodic income payments. Withdrawals will reduce both the annuity Account Value and the Cash Surrender Value. You may make withdrawals of up to 10% of your account value each contract year without paying surrender charges. Excess withdrawals (above 10%) and full withdrawals will be subject to surrender charges.
This illustration assumes the annuity's current interest crediting rates will not change. It is likely that they will change and actual values may be higher or lower than those in the illustration.
The values in this illustration are not guarantees or even estimates of the amounts you can expect from your annuity. For more information, read the annuity disclosure and annuity buyer's guide. ## MVA-adjusted Cash Surrender Values (CSVs) Under Sample Scenarios The graphs below shows MVA-adjusted Cash Surrender Values (CSVs) During the first five years of the contract, as illustrated above ($100,000 single premium, a 5-year MVA Period), under two same scenarios, as described below.
Graph #1 shows if the interest rate on the new contracts is 3% LOWER than your Initial Guaranteed Interest Rate, the MVA will increase the amount you receive. The other line shows the Cash Surrender Values if the Initial Guaranteed Interest Rates continue (from Column (9) above).
Graph #2 shows if the interest rate on new contracts is 3% HIGHER than your Initial Guaranteed Interest Rate, the MVA will decrease the amount you receive, but not below the minimum set by law (Column (6) above), which in this scenario limits the decrease for the first 2 years. The other line shows the Cash Surrender Values if the Initial Guaranteed Interest Rates continue (from Column (9) above).
These graphs and the same guaranteed interest rates on new contracts used are for demonstration purposes only and are not intended to be a projection of how guaranteed interest rates on new contracts are likely to behave.
Initial Guaranteed Interest Rate on New Contracts is 3% LOWER 120,000 MVA Adjusted CSV CSV I'guaranteed Interest rate of new contracts i 3% LOWER 110,000 100,000 CSV Ifguaranteed Interest rate on hew contact stays at3.40% Çolim 1 9 01 Page 2) 90,000 Year Since Beginning of MVA Period Initial Guaranteed Interest Rate on New Contracts is 3% HIGHER 120,000 MVA Adjusted CSV CSV I'guaranteed hte æst te of bew col tracts stays at 3.10% Colim : 9 01 Page 2) 110,000 100,000 CSV Igianited hterest at os bew contracts Is 3% HIGHER @ object to m la Im im setby law, ip ti bigi 2 years) 90,000 Year Since Beginning of MVA Period
Series 12 Individual Accident And Sickness Insurance Minimum Standards
W. Va. Code R. § 114-12-1 General
1.1. Scope. -- The purpose of this legislative rule is to provide reasonable standardization of coverage and simplification of terms and benefits of individual accident and sickness insurance policies; to facilitate public understanding and comparison of such policies and contracts; to eliminate provisions contained in such policies and contracts which may be misleading or confusing in connection with either their purchase or the settlement of claims; and to provide for full disclosure in the sale of such policies and contracts. This rule applies to all individual accident and sickness insurance policies and all individual subscriber contracts of hospital, medical, dental and health service corporations, health care corporations, fraternal benefit societies, and all individual enrollee agreements of health maintenance organizations delivered or issued for delivery in this State on and after the effective date of this rule, except that it does not apply to:
a. Individual policies or contracts issued pursuant to a conversion privilege under a policy or contract of group or individual insurance when the group or individual policy or contract includes provisions which are inconsistent with the requirements of this rule;
b. Credit accident and sickness insurance subject to WV 114 CSR 6 "Regulation of Credit Life Insurance and Credit Accident and Sickness Insurance;@ c. Medicare supplement insurance policies subject to WV 114 CSR 24 "Medicare Supplement Insurance;@ d. Long-term care insurance policies subject to WV 114 CSR 32 "Long-Term Care Insurance;@ e. Coverage under the West Virginia Public Employees Insurance Act (W. Va. Code ''5-16-1 et seq.);
f. Coverage under Medicare or Medicaid; and g. Coverage under any automobile no-fault, workers' compensation, employer's liability, occupational disease or similar law.
The requirements contained in this rule are in addition to any other applicable rules previously or subsequently promulgated.
1.2. Authority. -- W. Va. Code ''33-2-10, 33-28-4, 33-28-5 and 33-28-6.
1.3. Filing Date. -- April 30, 1999.
1.4. Effective Date. -- April 30, 1999.
W. Va. Code R. § 114-12-2 Definitions
As used in this legislative rule:
2.1. "Applicant" means a person who seeks to contract for insurance coverage.
2.2. "Certificate" means any certificate delivered or issued for delivery in this State under a policy subject to this rule.
2.3. "Commissioner" means the Insurance Commissioner of the State of West Virginia.
2.4. "Creditable coverage" means, with respect to an individual, coverage of the individual under any of the following:
a. A group health plan;
b. Accident and sickness insurance coverage;
c. Part A or Part B of Title XVIII of the Social Security Act [42 U.S.C. '301 et seq.];
d. Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928;
e. Chapter 55 [10 U.S.C. '1071 et seq.] of Title 10 of the United States Code;
f. A medical care program of the Indian Health Service or of a tribal organization;
g. A state health benefits risk pool;
h. A health plan offered under Chapter 89 [5 U.S.C. '8901 et seq.] of Title 5 of the United States Code;
i. A public health plan (as defined in federal regulations); or j. A health benefit plan under section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)).
2.5. "Direct response insurance product" means a policy, the sale of which is effected through direct contact between an insurer and an individual insured, without employing the intermediary services of an agent, broker or solicitor.
2.6. "Excepted benefits" means benefits under one or more(or any combination) of the following:
a. Coverage only for accident, or disability income insurance, or any combination thereof;
b. Coverage issued as a supplement to liability insurance;
c. Liability insurance, including general liability insurance and automobile liability insurance;
d. Workers= compensation or similar insurance;
e. Automobile medical payment insurance;
f. Credit-only insurance;
g. Coverage for on-site medical clinics;
h. Other similar insurance coverage under which benefits for medical care are secondary or incidental to other insurance;
i. If provided under a separate policy, certificate or contract of insurance:
-
Limited scope dental or vision benefits;
-
Benefits for long-term care, nursing home care, home health care, community-based care or any combination thereof;
-
Coverage for only a specified disease or illness;
-
Hospital indemnity or other fixed indemnity insurance; and 5. Medicare supplement insurance (as defined under 1882 (g)(1) of the Social Security Act [42 U.S.C. '301 et seq.]), coverage supplemental to the coverage provided under Chapter 55 [10 U.S.C. '1071 et seq.] of Title 10, United States Code and similar supplemental coverage provided under group accident and sickness insurance.
2.7. "Eligible individual" means an individual:
a. For whom, as of the date on which the individual seeks coverage, the aggregate period of creditable coverage is eighteen months or more and whose most recent prior creditable coverage was under a group health plan, governmental plan (as defined in section 3(32) of the Employee Retirement Income Security Act of 1974), church plan (as defined in section 3(33) of the Employee Retirement Income Security Act of 1974), or accident and sickness insurance coverage offered in connection with any such plan;
b. Who is not eligible for coverage under a group health plan, Part A or Part B of Title XVIII of the Social Security Act, or state plan under Title XIX of such act (or any successor program), and does not have other accident and sickness insurance coverage;
c. With respect to whom the most recent prior creditable coverage was not terminated as a result of fraud, intentional misrepresentation of material fact under the terms of the coverage, or nonpayment of premium;
d. Who did not turn down an offer of continuation of coverage under a COBRA continuation provision or under a similar state program if it was offered; and e. Who, if the individual elected such continuation coverage, has exhausted that coverage under the COBRA continuation provision or similar state program.
2.8. A "home health care agency" is:
a. An agency approved under Title XVIII of the Social Security Act (42 U.S.C. '1395 et seq.) (Medicare); or b. An agency certified to provide home health care in this State.
2.9. "Individual market" means the market for accident and sickness insurance coverage offered to individuals other than in connection with a group health plan.
2.10. "Insurer" means any of the following entities that holds a valid certificate of authority from the commissioner: An insurance company authorized to transact accident and sickness insurance; fraternal benefit society organized pursuant to W. Va. Code ''33-23-1 et seq.; a hospital, medical, dental or health service corporation organized pursuant to W. Va. Code ''33-24-1 et seq.; a health care corporation organized pursuant to W. Va. Code ''33-25-1 et seq.; or a health maintenance organization organized pursuant to W. Va. Code ''33-25A-1 et seq.
2.11. "Medicare" means the "Health Insurance for the Aged Act," Title XVIII of the Social Security Amendments of 1965, as then constituted or later amended.
2.12. "Medicare supplement policy" means a policy of accident and sickness insurance or a subscriber contract of a hospital, medical, dental or health service corporation, other than a policy issued pursuant to a contract under Section 1876 of the federal Social Security Act (42 U.S.C. Sections 1395 et seq.) or an issued policy under a demonstration project specified in 42 U.S.C. '1395ss(g)(1), which is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare.
2.13. "Policy" means any policy, plan, contract, agreement, provision, rider or endorsement delivered or issued for delivery in this State by an insurer subject to this rule.
2.14. "Premium" means the consideration for insurance, by whatever name called.
2.15. "Preexisting condition exclusion" means a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received before such date.
W. Va. Code R. § 114-12-3 Policy Definitions
3.1. Except as provided in this rule, no policy or certificate subject to this rule may be advertised, solicited, delivered or issued for delivery in this State unless the policy or certificate contains definitions or terms which conform to the requirements of this section.
3.2. "Accident,@ "accidental injury,@ or "accidental means" shall be defined to employ "result" language and shall not include words which establish an accidental means test or use words such as "external, violent, visible wounds" or similar words of description or characterization.
a. The definition may not be more restrictive than the following: "Injury or injuries, for which benefits are provided" means accidental bodily injury sustained by the insured person which is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while the insurance coverage is in force.
b. The definition may provide that the term "injuries" excludes injuries for which benefits are provided or available under any motor vehicle no-fault, workers' compensation, employer's liability, occupational disease or similar law, unless prohibited by law.
3.3. "Convalescent nursing home,@ "extended care facility," "intermediate care facility," or "skilled nursing facility" shall be defined in relation to its status, facilities and available services.
a. A definition of such home or facility may not be more restrictive than one requiring that it:
-
Be operated pursuant to law;
-
Be approved for payment of Medicare benefits or be qualified to receive approval if requested;
-
Be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician;
-
Provide continuous twenty-four-hour-a-day nursing services by or under the supervision of a registered graduate professional nurse (R.N.); and 5. Maintain a daily medical record of each patient.
b. The definition of such home or facility may provide that the term excludes:
-
Any home, facility or part of a home or facility used primarily for rest;
-
A home or facility for the aged or for the care of drug addicts or alcoholics; or 3. A home or facility primarily used for the care and treatment of mental diseases or disorders, or custodial or educational care.
3.4. "Hospital" may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals.
a. The definition of "hospital" may not be more restrictive than one requiring that the hospital:
-
Be an institution operated pursuant to law;
-
Be primarily and continuously engaged in providing or operating, either on its premises or in facilities available to the hospital on a prearranged basis and under the supervision of a staff of duly licensed physicians, medical, diagnostic and major surgical facilities for the medical care and treatment of sick or injured persons on an in-patient basis for which a charge is made; and 3. Provide twenty-four-hour (24-hour) nursing services by or under the supervision of registered graduate professional nurses (R.N.'s).
b. The definition of "hospital" may state that the term excludes:
-
Any military or veterans hospital or soldiers home or any hospital contracted for or operated by any national government or agency thereof for the treatment of members or ex-members of the armed forces, except for services rendered on an emergency basis where a legal liability exists for charges made to the individual for the services: Provided, That no policy providing hospital indemnity coverage may exclude coverage because of confinement in a hospital operated by the federal or state government.
-
Convalescent homes, convalescent, rest or nursing facilities; or 3. Facilities for the aged, drug addicts or alcoholics and those primarily affording custodial, educational or rehabilitory care.
3.5. "Medicare" shall be defined as "the Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended," or "Title I, Part I Of Public Law 89-97 as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof," or words of similar import.
3.6. "Mental or nervous disorder" may not be defined more restrictively than a definition including neurosis, psycho-neurosis, psychosis, or mental or emotional disease or disorder of any kind.
3.7. "Nurse" may be defined so that the description of nurse is restricted to a type of nurse, such as registered graduate professional nurse (R.N.), a licensed practical nurse (L.P.N.), or a licensed vocational nurse (L.V.N.). If the words "nurse," "trained nurse," "registered nurse" or "nurse-midwife" are used without specific instruction, then the use of the terms requires the insurer to recognize the services of any individual who qualifies under that terminology in accordance with the applicable statutes or administrative rules of the licensing or registry board of this State.
3.8. "One (1) period of confinement" means consecutive days of in-hospital service received as an in-patient, or successive confinements when discharge from and readmission to the hospital occur within a period of time not more than ninety (90) days or three times the maximum number of days of in-hospital coverage provided by the policy to a maximum of one hundred eighty (180) days.
3.9. "Partial disability" shall be defined in relation to the individual's inability to perform one or more but not all of the "major,@ "important," or "essential" duties of employment or occupation, or may be related to a percentage of time worked or to a specified number of hours or to compensation. Where a policy provides total disability benefits and partial disability benefits, only one (1) elimination period may be required.
3.10. "Physician" may be defined by including words such as "duly qualified physician" or "duly licensed physician." The use of these terms requires an insurer to recognize and to accept, to the extent of its obligation under the policy, all providers of medical care and treatment when the services are within the scope of the provider's licensed authority and are provided pursuant to applicable laws.
3.11. "Preexisting condition" may not be defined to be more restrictive than the following: "Preexisting condition" means the existence of symptoms which would cause an ordinarily prudent person to seek diagnosis, care or treatment within a two-year (2-year) period preceding the effective date of the policy; or a condition for which medical advice or treatment was recommended by a physician or received from a physician within a two-year (2-year) period preceding the effective date of the policy.
3.12. "Residual disability" shall be defined in relation to the individual's reduction in earnings and may be related either to the inability to perform some part of the "major," "important" or "essential duties" of employment or occupation, or to the inability to perform all usual business duties for as long as is usually required. A policy which provides for residual disability benefits may require a qualification period, during which the insured shall be continuously totally disabled before residual disability benefits are payable. The qualification period for residual benefits may be longer than the elimination period for total disability. In lieu of the term "residual disability,@ the insurer may use "proportionate disability" or another term of similar import which, in the opinion of the Commissioner, adequately and fairly describes the benefit.
3.13. "Sickness" may not be defined to be more restrictive than the following: "Sickness" means illness or disease of an insured person which first manifests itself after the effective date of insurance and while the insurance is in force. The definition may be further modified to exclude sicknesses or diseases for which benefits are provided or available under any workers' compensation, occupational disease, employer's liability or similar law.
3.14. "Total disability" may not be defined more restrictively than a disability requiring that the individual who is totally disabled not be engaged in any employment or occupation for which he or she is or becomes qualified by reason of education, training or experience, and in fact not be engaged in any employment or occupation for wage or profit.
a. Total disability may be defined in relation to the inability of the person to perform duties but may not be based solely upon an individual's inability to:
- Perform "any occupation whatsoever," "any occupational duty," or "any and every duty of his or her occupation;@ or 2. Engage in any training or rehabilitation program.
b. An insurer may specify the requirement of the complete inability of the person to perform all of the substantial and material duties of his or her regular occupation, or words of similar import. An insurer may require care by a physician (other than the insured or a member of the insured's immediate family).
W. Va. Code R. § 114-12-4 Prohibited Policy Provisions
4.1. No policy may utilize an initial premium which is less than a pro rata portion of the applicable annual premium.
4.2. No policy may contain a provision establishing a probationary or waiting period during which no coverage is provided under the policy: Provided, That a policy may contain a probationary or waiting period not to exceed ninety (90) days for specified diseases or conditions. Accident policies may not contain probationary or waiting periods.
a. An insurer offering accident and sickness insurance coverage, other than excepted benefits, in the individual market may not, with respect to an eligible individual desiring to enroll in individual accident and sickness insurance coverage, impose any preexisting condition exclusion with respect to such coverage.
4.3. No policies or riders for additional coverage may be issued as a dividend, unless an equivalent cash payment is offered to the policyholder as an alternative to the dividend policy or rider. No dividend policy or rider may be issued for an initial term of less than six (6) months.
4.4. No policy may exclude coverage for a loss due to a preexisting condition for a period greater than twelve (12) months following issuance of the policy. Provided, That an insurer offering accident and sickness insurance coverage, other than excepted benefits, in the individual market may not, with respect to an eligible individual desiring to enroll in individual accident and sickness coverage, impose any preexisting condition with respect to such coverage.
4.5. A disability income policy may contain a "return of premium" or "cash value benefit" so long as:
a. The return of premium or cash value benefit is not reduced by an amount greater than the aggregate of any claims paid under the policy; and b. The insurer demonstrates that the reserve basis for the policies is adequate.
4.6. Policies providing hospital confinement indemnity coverage may not contain provisions excluding coverage because of confinement in a hospital operated by the state or federal government.
4.7. Except as otherwise prohibited by W. Va. Code '33-15-2b, this rule does not impair or limit the use of waivers to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases, physical conditions or extra-hazardous activity. Where waivers are required as a condition of policy issuance, renewal or reinstatement, signed acceptance by the insured is required unless on initial issuance of the policy, the full text of the waiver is contained either on the first page or the specification page.
4.8. Policy provisions expressly precluded in this section shall in no way be construed as a limitation on the authority of the Commissioner to disapprove other policy provisions including, but not limited to, provisions respecting limitations, exceptions, reductions or eliminations of coverage, not otherwise specifically authorized by statute or rule, which policy provisions are considered by the Commissioner to be unjust, unfair, unreasonable or unfairly discriminatory either to the policyholder, subscriber, beneficiary or any person insured under the policy.
W. Va. Code R. § 114-12-5 Minimum Standards for Benefits
5.1. General. -- The following minimum standards for benefits are prescribed for the categories of coverage noted in this section. No policy or certificate subject to this rule may be delivered or issued for delivery in this State which does not meet the required minimum standards for the specified categories, unless the Commissioner finds that policies or certificates containing less than the prescribed minimum standards for benefits, which are filed for approval, will be in the public interest and otherwise meet the requirements set forth in W. Va. Code '33-6-9. Nothing in this section precludes the issuance of any policy combining two (2) or more categories of coverage set forth in W. Va. Code '33-28-5(a)(1) through (6), inclusive.
a. An insurer providing inpatient benefits in connection with childbirth must meet all requirements of W. Va. Code '33-15-4e with respect to both the mother and her newborn.
b. A "noncancellable,@ "guaranteed renewable" or "noncancellable and guaranteed renewable" policy may not provide for termination of coverage of the spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than nonpayment of premium. The policy shall provide that in the event of the insured's death, the spouse of the insured, if covered under the policy, shall become the insured.
c. The terms "noncancellable,@ "guaranteed renewable,@ or "noncancellable and guaranteed renewable" may not be used without further explanatory language in accordance with the disclosure requirements of subsection 6.1 of this rule. The terms "noncancellable" or "noncancellable and guaranteed renewable" may be used only in a policy which the insured has the right to continue in force by the timely payment of premiums set forth in the policy until the age of sixty-five (65) or to eligibility for Medicare, during which period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force. Except as provided in this subdivision, the term "guaranteed renewable" may be used only in a policy which the insured has the right to continue in force by the timely payment of premiums until the age of sixty-five (65) or to eligibility for Medicare, during which period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force, except that the insurer may make changes in premium rates by classes.
d. In a family policy covering both husband and wife, the age of the younger spouse shall be used as the basis for meeting the age and durational requirements of the definitions of "noncancellable" and "guaranteed renewable." However, this requirement may not prevent termination of coverage of the older spouse upon attainment of the stated age limit, e.g., age sixty-five (65), so long as the policy may be continued in force as to the younger spouse to the age or for the durational period as specified in the definition.
e. When accidental death and dismemberment coverage is part of the insurance coverage offered under the policy, the insured shall have the option to include all insureds under the policy and not just the principal insured.
f. If a policy contains a status-type military service exclusion which suspends coverage during military service, the policy shall provide, upon receipt of written request, for refund of premiums as applicable to an insured in military service on a pro rata basis.
g. In the event the insurer cancels or refuses to renew, policies providing pregnancy benefits shall provide for an extension of benefits as to pregnancy commencing while the policy is in force and for which benefits would have been payable had the policy remained in force.
h. Policies providing convalescent or extended care benefits following hospitalization may not condition such benefits upon admission to the convalescent or extended care facility within a period of less than fourteen (14) days after discharge from the hospital.
i. Any policy which provides coverage of a dependent child may not terminate coverage for the dependent child if, upon attainment of any limiting age set forth in the policy, the child is and continues to be both incapable of self-sustaining employment due to mental retardation or physical handicap on the date that the child's coverage would otherwise terminate under the policy due to the attainment of the specified limiting age; and chiefly dependent on the policyholder for support and maintenance. The policy may require that within thirty-one (31) days of such date, the insurer receive due proof of the incapacity in order for the insured to elect to continue the policy in force with respect to the dependent child. As an alternative to this requirement, a separate converted policy may be issued to the child at the option of the insured or policyholder.
j. Any policy providing coverage for the recipient in a transplant operation shall also provide for the reimbursement of any medical expenses of a live donor to the extent that benefits remain and are available under the recipient's policy, after benefits for the recipient's own expenses have been paid.
k. A policy may contain a provision relating to recurrent disabilities: Provided, That no such provision may specify that a recurrent disability be separated by a period greater than six (6) months from the last previous occurrence of the disability.
l. Accidental death and dismemberment benefits shall be payable if the loss occurs within ninety (90) days from the date of the accident, irrespective of total disability. Disability income benefits, if provided, may not require the loss to commence less than thirty (30) days after the date of accident, nor may any policy which the insurer cancels or refuses to renew require that it be in force at the time disability commences if the accident occurred while the policy was in force.
m. Specific dismemberment benefits may not be in lieu of other benefits unless the specific benefit equals or exceeds the other benefits.
n. Termination of the policy by the insurer shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period the policy was in force may be predicated upon the continuous disability of the insured or limited to the duration of the policy benefit period, if any, or payment of the maximum benefits.
5.2. "Basic Hospital Expense Coverage" is a policy of accident and sickness insurance which provides coverage for a period of not less than thirty-one (31) days during any continuous hospital confinement for each person insured under the policy, for expenses incurred for necessary treatment and services rendered as a result of accident or sickness for at least the following:
a. Daily hospital room and board in an amount not less than the lesser of the average semi-private room rate of the confining hospital or thirty dollars ($30) per day;
b. Miscellaneous hospital service for expenses incurred for the charges made by the hospital for services and supplies which are customarily rendered by the hospital and provided for use only during the period of confinement in an amount not less than either eighty percent (80%) of the charges incurred up to at least one thousand dollars ($1,000) or ten (10) times the daily hospital room and board benefits; and c. Hospital outpatient services in an amount not less than fifty dollars ($50) for hospital services rendered to an insured as an outpatient for any one accident or sickness.
d. Benefits provided under subdivisions a and b of this subsection may be provided subject to a combined deductible amount not in excess of one hundred dollars ($100).
5.3. "Basic Medical-Surgical Expense Coverage" is a policy of accident and sickness insurance which provides coverage for each person insured under the policy for the expenses incurred for the necessary services rendered by a physician for treatment of an injury or sickness for at least the following:
a. Surgical services:
- In amounts not less than those provided on a fee schedule based on an acceptable relative value scale of surgical procedures, up to a maximum of at least five hundred dollars ($500) for any one procedure; or 2. Not less than eighty percent (80%) of the reasonable charges.
b. Anesthesia services, consisting of administration of necessary general anesthesia and related procedures in connection with covered surgical services rendered by a physician other than the physician (or his or her assistant) performing the surgical services:
- In an amount not less than eighty percent (80%) of the reasonable charges; or 2. Fifteen percent (15%) of the surgical service benefit.
c. In-hospital medical services, consisting of physicians' services rendered to a person who is a bed patient in a hospital for treatment of sickness or injury other than that for which surgical care is required, in an amount not less than eighty percent (80%) of the reasonable charges, or five dollars ($5) per call, one (1) call per day, for at least twenty-one (21) such calls during one (1) period of confinement.
5.4. "Hospital Confinement Indemnity Coverage" is a policy of accident and sickness insurance which provides daily benefits for hospital confinement on an indemnity basis in an amount not less than thirty dollars ($30) per day and for a period of not less than thirty-one (31) days during any one (1) period of confinement for each person insured under the policy.
5.5. "Major medical expense coverage" is a policy which provides hospital, medical and surgical expense coverage, to an aggregate maximum of not less than ten thousand dollars ($10,000); copayment by the covered person not to exceed twenty-five percent (25%) of covered charges; and a deductible stated on a per person, per family, per illness, per benefit period, or per year basis, or a combination of such basis not to exceed five per cent (5%) of the aggregate maximum limit under the policy, unless the policy is written to complement underlying hospital and medical insurance in which case the deductible may be increased by the amount of the benefits provided by the underlying insurance, for each covered person for at least:
a. Daily hospital room and board expenses for not less than fifty dollars ($50) daily (or in lieu thereof the average daily cost of the semi-private room rate in the area where the insured resides) for a period of not less than thirty-one (31) days during continuous hospital confinement;
b. Miscellaneous hospital services for an aggregate maximum of not less than four thousand five hundred dollars ($4,500) or fifteen (15) times the daily room and board rate if specified in dollar amounts;
c. Surgical services to a maximum of not less than six hundred dollars ($600) for the most expensive surgical procedure when two or more medically necessary surgical procedures are performed during the course of a single operation. Amounts paid for the second and each additional surgical procedure during a single operation shall be reasonably related to the maximum amount stated in this subdivision for the first surgical procedure.
d. Anesthesia services for a maximum of not less than fifteen (15%) percent of the covered surgical fees or, alternatively, if the surgical schedule is based on relative values, not less than the amount provided therein for anesthesia services at the same unit value as used for the surgical schedule;
e. In-hospital medical services, consisting of physicians' services rendered to a person who is a bed patient in a hospital for treatment of sickness or injury other than that for which surgical care is required, in an amount not less than eighty percent (80%) of the reasonable charges, or five dollars ($5) per call, one (1) call per day, for at least twenty-one (21) calls during one period confinement.
f. Out-of-hospital care, consisting of physicians' services rendered on an ambulatory basis where coverage is not provided elsewhere in the policy for diagnosis and treatment of sickness or injury, and diagnostic X-ray, laboratory services, radiation therapy and hemodialysis order by a physician; and g. Prosthetic appliances, meaning artificial limbs or other prosthetic appliances (except replacements thereof) and rental of durable medical equipment required for therapeutic use.
5.6. "Disability income protection coverage" is a policy which provides for periodic payments, weekly or monthly, for a specified period during the continuance of disability resulting from either sickness or injury or a combination thereof that:
a. Provides that periodic payments which are payable at ages after sixty-two (62) and reduced solely on the basis of age are at least fifty percent (50%) of amounts payable immediately prior to age sixty-two (62).
b. Contains an elimination period no greater than:
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Ninety (90) days in the case of coverage providing a benefit of one (1) year or less;
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One hundred eighty (180) days in the case of coverage providing a benefit of more than one year but not greater than two (2) years; or 3. Three hundred sixty-five (365) days in all other cases during the continuance of disability resulting from sickness or injury.
c. Has a maximum period of time for which it is payable during disability of at least six (6) months except in the case of a policy covering disability arising out of pregnancy, childbirth or miscarriage in which case the period for the disability may be one (1) month. No reduction in benefits may be put into effect because of an increase in Social Security or similar benefits during a benefit period.
d. This subsection does not apply to those disability income protection policies providing business buy-out coverage.
5.7. "Accident-only coverage" is a policy of accident insurance which provides coverage, singly or in combination, for death, dismemberment, disability or hospital and medical care caused by accident. Accidental death and double dismemberment amounts under such a policy shall be at least one thousand dollars ($1,000), and a single dismemberment amount shall be at least five hundred dollars ($500).
5.8. "Specified disease coverage" pays benefits for the diagnosis and treatment of a specifically named disease or diseases. Any such policy shall meet the following rules and one of the following sets of minimum standards for benefits. Such insurance covering cancer, whether cancer only or in conjunction with other conditions(s) or disease(s), shall meet the standards of subdivisions c, d and e of this subsection. Insurance covering specified disease(s) other than cancer shall meet the standards of subdivisions b or e of this subsection.
a. General Rules. -- Except for cancer coverage provided on an expense-incurred basis, either as cancer-only coverage or in combination with one or more other specified diseases, the following provisions shall apply to specified disease coverages in addition to all other requirements imposed by this rule. In cases of conflict between the following and other provisions, the following provisions shall govern:
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Policies covering a single specified disease or combination of specified diseases may not be sold or offered for sale other than as specified disease coverage under this section.
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Any policy issued pursuant to this section which conditions payment upon pathological diagnosis of a covered disease shall also provide that if a pathological diagnosis is medically inappropriate, a clinical diagnosis will be accepted in lieu thereof.
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Notwithstanding any other provision of this rule, specified disease policies shall provide benefits to any covered person not only for the specified disease(s) but also for any other conditions(s) or disease(s) directly caused or aggravated by the specified diseases(s) or the treatment of the specified disease(s).
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Policies containing specified disease coverage shall be at least guaranteed renewable.
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No policy issued pursuant to this section may contain a waiting or probationary period greater than thirty (30) days.
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Any application for specified disease coverage shall contain a statement above the signature of the applicant that no person to be covered for specified disease is also covered by any Title XIX program such as Medicaid. The statement may be combined with any other statement for which the insurer may require the applicant's signature.
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Payments may be conditioned upon a covered person receiving medically necessary care, given in a medically appropriate location, under a medically accepted course of diagnosis or treatment. .
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Except for the uniform provision regarding other insurance with this insurer, benefits for specified disease coverage shall be paid regardless of other coverage available through other individual health insurance.
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After the effective date of the coverage (or applicable waiting period, if any), benefits shall begin with the first day of care or confinement if the care or confinement is for a covered disease even though the diagnosis is made at some later date. The retroactive application of the coverage may not be less than ninety (90) days prior to the diagnosis.
b. The following minimum benefits standards apply to noncancer coverages:
- Coverage for each person insured under the policy for a specifically named disease (or diseases) with a deductible amount not in excess of two hundred fifty dollars ($250) and an overall aggregate benefit limit of not less than five thousand dollars ($5,000), and a benefit period of not less than two (2) years for at least the following incurred expenses:
A. Hospital room and board and any other hospital-furnished medical services or supplies;
B. Treatment by a legally qualified physician or surgeon;
C. Private duty services of a registered nurse (R.N.);
D. X-ray, radium and other therapy procedures used in diagnosis and treatment;
E. Professional ambulance for local service to or from a local hospital;
F. Blood transfusions, including expenses incurred for blood donors;
G. Drugs and medicines prescribed by a physician;
H. Rental of a mechanical ventilator or similar mechanical apparatus;
I. Braces, crutches and wheelchairs as are considered necessary by the attending physician for the treatment of the disease;
J. Emergency transportation if, in the opinion of the attending physician, it is necessary to transport the insured to another locality for treatment of the disease; and K. Any other expenses necessarily incurred in the treatment of the disease.
- Coverage for each person insured under the policy for a specifically named disease (or diseases) with no deductible amount, and an overall aggregate benefit limit of not less than twenty-five thousand dollars ($25,000) payable at the rate of not less than fifty dollars ($50) a day while confined in a hospital and a benefit period of not less than five hundred (500) days.
c. A policy which provides coverage for each person insured under the policy for cancer-only coverage or in combination with one or more other specified diseases on an expense-incurred basis for services, supplies, care and treatment of cancer, in amounts not in excess of the usual and customary charges, with a deductible amount not in excess of two hundred fifty dollars ($250), and an overall aggregate benefit limit of not less than ten thousand dollars ($10,000) and a benefit period of not less than three (3) years for at least the following:
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Treatment by, or under the direction of, a legally qualified physician or surgeon;
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X-ray, radium, chemotherapy and other therapy procedures used in diagnosis and treatment;
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Hospital room and board and any other hospital-furnished medical services or supplies;
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Blood transfusions, and the administration thereof, including expenses incurred for blood donors;
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Drugs and medicines prescribed by a physician;
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Professional ambulance for local service to or from a local hospital;
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Private duty services of a registered nurse (R.N.) provided in a hospital;
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Any other expenses necessarily incurred in the treatment of the disease: Provided, That paragraphs 1, 2, 4, 5 and 7 of this subdivision plus at least the following shall also be included, but may be subject to copayment by the covered person not to exceed twenty percent (20%) of covered charges when rendered on an out-patient basis;
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Braces, crutches and wheelchairs as are considered necessary by the attending physician for the treatment of the disease;
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Emergency transportation if, in the opinion of the attending physician, it is necessary to transport the insured to another locality for treatment of the disease; and 11. Home health care that is necessary care and treatment provided at the covered person's residence by a home health care agency or by others under arrangements made with a home health care agency. The program of care and treatment shall be ordered in writing by the covered person's attending physician, who shall approve the program prior to its start and renew the order for such care and treatment at least every sixty (60) days. The physician shall certify that hospital confinement would be otherwise required. Home health care coverages shall include:
A. Services provided by a registered nurse (R.N.) or a licensed practical nurse (L.P.N.);
B. Home health aide services to the extent that such services would be covered if provided to the insured on an in-patient basis;
C. Health services provided by physical, occupational, respiratory, or speech and hearing therapists; and D. Medical supplies, drugs and medicines prescribed by a physician and related pharmaceutical services, and laboratory services to the extent such charges or costs would be covered under the policy if provided to the insured on an in-patient basis.
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Physical, respiratory, speech, hearing and occupational therapy;
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Special equipment including hospital beds, toilettes, pulleys, wheelchairs, aspirators, chux, oxygen, surgical dressings, rubber shields, colostomy and ileostomy appliances;
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Prosthetic devices including wigs and artificial breasts; and 15. Nursing home care for noncustodial services.
d. The following minimum benefits standards apply to cancer coverages written on a per diem indemnity basis. Such coverages shall offer covered persons:
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A fixed-sum payment of at least one hundred dollars ($100) for each day of hospital confinement for at least three hundred sixty-five (365) days.
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A fixed-sum payment equal to one-half of the hospital inpatient benefit for each day of hospital or nonhospital outpatient surgery, chemotherapy and radiation therapy, for at least three hundred sixty-five (365) days of treatment.
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Benefits tied to confinement in a skilled nursing home or to receipt of home health care are optional. If a policy offers these benefits, they shall equal the following:
A. A fixed-sum payment equal to one-fourth of the hospital in-patient benefit for each day of skilled nursing home confinement for at least one hundred (100) days.
B. A fixed-sum payment equal to one-fourth of the hospital inpatient benefit for each day of home health care for at least one hundred (100) days.
C. Benefit payments shall begin with the first day of care or confinement after the effective date of coverage if such care or confinement is for a covered disease, even though the diagnosis of a covered disease is made at some later date (but not retroactive more than thirty (30) days from the date of diagnosis) if the initial care or confinement was for diagnosis or treatment of the covered disease.
D. Notwithstanding any other provision of this rule, any restriction or limitation applied to the benefits in subparagraphs A and B of this paragraph, whether by definition or otherwise, shall be no more restrictive than those under Medicare.
e. The following minimum benefits standards apply to lump-sum indemnity coverage of any specified disease(s):
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The coverage shall pay indemnity benefits on behalf of covered persons for a specifically named disease or diseases. The benefits are payable as a fixed, one-time payment made within thirty (30) days of submission to the insurer of proof of diagnosis of the specified disease(s). Dollar benefits shall be offered for sale only in even increments of one thousand dollars ($1,000).
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Where coverage is advertised or otherwise represented to offer generic coverage of a disease or diseases, the same dollar amounts shall be payable regardless of the particular subtype of the disease with one exception. In the case of clearly identifiable subtypes with significantly lower treatments costs, lesser amounts may be payable so long as the policy clearly differentiates that subtype and its benefits.
5.9. "Specified accident coverage" is an accident insurance policy which provides coverage for a specifically identified kind of accident (or accidents) for each person insured under the policy for accidental death or accidental death and dismemberment combined, with a benefit amount not less than one thousand dollars ($1,000) for accidental death, one thousand dollars ($1,000) for double dismemberment, and five hundred dollars ($500) for single dismemberment.
5.10. "Limited benefits insurance coverage" is any policy, other than a policy covering only a specified disease or diseases, which provides benefits that are less than the minimum standards for benefits required under subsections 5.2, 5.3, 5.4, 5.5, 5.7, 5.8 and 5.9 of this rule. A policy covering a single specified disease or combination of diseases shall meet the requirements of subsection 5.8 of this rule and shall not be offered for sale as a limited benefits policy.
W. Va. Code R. § 114-12-6 Required Disclosure Provisions
6.1. Each policy or certificate subject to this rule shall include a renewal, continuation or nonrenewal provision. The language or specifications of the provision shall be consistent with the type of policy or certificate to be issued. The provision shall be appropriately captioned, shall appear on the first page of the policy or certificate, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the policy or certificate is issued and for which it may be renewed.
6.2. Except for riders or endorsements by which the insurer effectuates a request made in writing by the policyholder or certificateholder, or exercises a specifically reserved right under the policy, all riders or endorsements added to a policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require signed acceptance by the policyholder or certificateholder, as appropriate. After date of policy issue, any rider or endorsement which increases benefits or coverage with concomitant increase in premium during the policy term shall be agreed to in writing signed by the policyholder or certificateholder, as appropriate, except if the increased coverage or benefits are required by law.
6.3. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy.
6.4. A policy which provides for the payment of benefits based on standards described as "usual and customary,@ "reasonable and customary,@ or words of similar import, shall include a definition of such terms within both the policy and its accompanying outline of coverage.
6.5. Any provisions limiting or excluding coverage of preexisting conditions shall appear in a separate paragraph on the first page of the policy, which shall be labeled "Preexisting Condition Limitations," and shall be included in the outline of coverage.
a. An insurer offering accident and sickness insurance coverage, other than excepted benefits, in the individual market may not, with respect to an eligible individual desiring to enroll in accident and sickness insurance coverage, impose any preexisting condition exclusion with respect to such coverage.
6.6. All accident-only policies shall contain as an overlay on the first page of the policy, in contrasting color, a prominent statement as follows: "This is an accident-only policy, and it does not pay benefits for loss from sickness."
6.7. Any accident-only policy providing benefits which vary according to the type of accidental cause shall prominently set forth in the outline of coverage the circumstances under which benefits are payable which are less than the maximum amount payable under the policy.
6.8. All policies, except single-premium nonrenewable policies, shall have a notice prominently printed on the first page of the policy or attached thereto stating in substance that the policyholder has the right to return the policy within ten (10) days of its delivery and to have the premium refunded if, after examination of the policy, the policyholder is not satisfied for any reason.
6.9. If age is to be used as a determining factor for reducing the maximum aggregate benefits made available in the policy as originally issued, that fact shall be prominently set forth in the outline of coverage.
6.10. If a policy contains a conversion privilege, it shall comply, in substance, with the following: The caption of the provision shall be "Conversion Privilege,@ or words of similar import. The provision shall indicate the persons eligible for conversion; the circumstances applicable to the conversion privilege, including any limitations on the conversion; and the person by whom the conversion privilege may be exercised. The provision shall specify the benefits to be provided on conversion, or may state that the converted coverage will be as provided on a policy form then being used by the insurer for that purpose.
6.11. Outlines of coverage delivered in connection with policies defined in this rule as hospital confinement indemnity (Subsection 5.4), specified disease (Subsection 5.8), specified accident (Subsection 5.9) or limited benefits health insurance coverages (Subsection 5.10) to persons eligible for Medicare shall contain, in addition to the requirements of subsections 6.17 and 6.21 of this rule, the following language which shall be printed on or attached to the first page of the outline of coverage: "This policy is not a Medicare Supplement policy. If you are eligible for Medicare, review the Medicare Supplement Buyer's Guide available from the insurer."
6.12. All specified disease policies shall contain on the first page of the policy or attached thereto, in either contrasting color or in boldface type at least equal to the size of type used for policy captions, a prominent statement as follows: "Caution: This is a limited benefits policy. Read it carefully with the Outline of Coverage."
6.13. Outline of coverage requirements generally as required in this section are as follows:
a. No policy or certificate subject to this rule may be delivered or issued for delivery in this State unless an appropriate outline of coverage, as prescribed in subsections 6.14 through 6.22 of this rule, is completed as to the policy and:
- In the case of a direct response insurance product is delivered with the policy; or 2. In all other cases is delivered to the applicant at the time application is made and acknowledgment of receipt or certification of delivery of the outline of coverage is provided to the insurer.
b. If an outline of coverage was delivered at the time of application and the policy is issued on a basis which would require revision of the outline, a substitute outline of coverage properly describing the policy shall accompany the policy when it is delivered and contain the following statement in no less than twelve (12) point type, immediately above the insurer's name: "Notice: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application, and the policy originally applied for has not been issued."
c. The appropriate outline of coverage for policies providing hospital coverage which only meets the standards of subsection 5.2 of this rule shall be that outline contained in subsection 6.14 of this rule. The appropriate outline of coverage for policies providing coverage which meets the standards of both subsections 5.2 and 5.3 of this rule shall be the outline contained in subsection 6.16 of this rule. The appropriate outline of coverage for policies providing coverage which meets the standards of both subsections 5.2 and 5.5 or subsections 5.3 and 5.5 or subsections 5.2, 5.3 and 5.5 of this rule shall be the outline contained in subsection 6.18 of this rule.
d. Appropriate changes in terminology shall be made in the outline of coverage in the case of subscriber contracts of hospital, medical, dental or health service corporations. In any other case where the prescribed outline of coverage is inappropriate for the coverage provided by the policy, an alternate outline of coverage shall be submitted to the Commissioner for prior approval. Should the Commissioner consider it appropriate to approve policies or contracts containing less than the prescribed minimum standards for benefits as provided in this rule, the outline of coverage issued in connection with any such policy or contract shall be approved prior to use and shall prominently state that the coverages therein described do not meet the minimum standards for benefits established for that category of coverage.
6.14. Basic Hospital Expense Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix A, shall be issued in connection with policies meeting the standards of subsection 5.2 of this rule. The items included in the outline of coverage shall appear in the sequence prescribed.
6.15. Basic Medical-Surgical Expense Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix B, shall be issued in connection with policies meeting the standards of subsection 5.3 of this rule. The items included in the outline of coverage shall appear in the sequence prescribed.
6.16. Basic Hospital and Medical-Surgical Expense Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix C, shall be issued in connection with policies meeting the standards of subsections 5.2 and 5.3 of this rule. The items included in the outline of coverage shall appear in the sequence prescribed.
6.17. Hospital Confinement Indemnity Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix D, shall be issued in connection with policies meeting the standards of subsection 5.4 of this rule. The items included in the outline of coverage shall appear in the sequence prescribed.
6.18. Major Medical Expense Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix E, shall be issued in connection with policies meeting the standards of subsection 5.5 of this rule. The items included in the outline of coverage shall appear in the sequence prescribed.
6.19. Disability Income Protection Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix F, shall be issued in connection with policies meeting the standards of subsection 5.6 of this rule. The items included in the outline of coverage shall appear in the sequence prescribed.
6.20. Accident-Only Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix G, shall be issued in connection with policies meeting the standards of subsection 5.7 of this rule. The items included in the outline of coverage shall appear in the sequence prescribed.
6.21. Specified Disease or Specified Accident Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix H, shall be issued in connection with policies meeting the standards of subsections 5.8 or 5.9 of this rule. The coverage shall be identified by the appropriate bracketed title. The items included in the outline of coverage shall appear in the sequence prescribed.
6.22. Limited Benefits Health Coverage (Outline of Coverage). -- An outline of coverage, in the form prescribed in appendix I, shall be issued in connection with policies which do not meet the minimum standards of subsections 5.2, 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 of this rule. The items included in the outline of coverage shall appear in the sequence prescribed.
W. Va. Code R. § 114-12-7 Requirements for Replacement
7.1. Application forms shall include a question designed to elicit information as to whether the policy to be issued is intended to replace any other accident and sickness insurance presently in force. A supplementary application or other form to be signed by the applicant containing such a question may be used.
7.2. Upon determining that a sale will involve replacement, an insurer, other than a direct response insurer, or its agent shall furnish the applicant, prior to issuance or delivery of the policy, the notice prescribed in appendix J of this rule. One (1) copy of the notice shall be retained by the insurer. A direct response insurer shall deliver to the applicant, upon issuance of the policy, the notice prescribed in appendix K of this rule. In no event, however, will a notice be required in the solicitation of accident-only and single-premium nonrenewable policies.
W. Va. Code R. § 114-12-8 Severability
If any provision of this legislative rule or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of the provision to other persons or circumstances shall not be affected.
APPENDIX A
BASIC HOSPITAL EXPENSE COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) Basic Hospital Expense Coverage. -- Policies of this category are designed to provide, to persons insured, coverage for hospital expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services and hospital outpatient services, subject to any limitations, deductibles and copayment requirements set forth in the policy. Coverage is not provided for physicians' or surgeons' fees or unlimited hospital expenses. [Note: Final sentence may be appropriately modified, if necessary, to reflect coverage provided].
(3) [A brief specific description of the benefits contained in this policy, in the following order:
(a) Daily hospital room and board;
(b) Miscellaneous hospital services;
(c) Hospital outpatient services; and (d) Other benefits, if any.]
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefits described in paragraph (3) above.]
(5) [A description of policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX B
BASIC MEDICAL-SURGICAL EXPENSE COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) Basic Medical-Surgical Expense Coverage. -- Policies of this category are designed to provide, to persons insured, coverage for medical-surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for surgical services, anesthesia services and in-hospital medical services, subject to any limitations, deductibles and copayment requirements set forth in the policy. Coverage is not provided for hospital expenses or unlimited medical-surgical expenses. [Note: Final sentence may be appropriately modified, if necessary, to reflect coverage provided.]
(3) [A brief specific description of the benefits, including dollar amounts and number of days' duration where applicable, contained in this policy, in the following order:
(a) Surgical services;
(b) Anesthesia services;
(c) In-hospital medical services; and (d) Other benefits, if any.]
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefits described in paragraph (3) above.]
(5) [A description of policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX C
BASIC HOSPITAL AND MEDICAL-SURGICAL EXPENSE COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) Basic Hospital and Medical-Surgical Expense Coverage. -- Policies of this category are designed to provide, to persons insured, coverage for hospital and medical-surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, hospital outpatient services, surgical services, anesthesia services and in-hospital medical services, subject to any limitations, deductibles and copayment requirements set forth in the policy. Coverage is not provided for unlimited hospital or medical-surgical expenses. [Note: Final sentence may be appropriately modified, if necessary, to reflect coverage provided.]
(3) [A brief specific description of the benefits, including dollar amounts and number of days' duration where applicable, contained in this policy, in the following order:
(a) Daily hospital room and board;
(b) Miscellaneous hospital services;
(c) Hospital outpatient services;
(d) Surgical services;
(e) Anesthesia services;
(f) In-hospital medical services; and (g) Other benefits, if any.]
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefits described in paragraph (3) above.]
(5) [A description of policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX D
HOSPITAL CONFINEMENT INDEMNITY COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) Hospital Confinement Indemnity Coverage. -- Policies of this category are designed to provide, to persons insured, coverage in the form of a fixed daily benefit during periods of hospitalization resulting from a covered accident or sickness, subject to any limitations, deductibles and copayment requirements set forth in the policy. Such policies do not provide any benefits other than the fixed daily indemnity for hospital confinement. [Note: Final sentence may be appropriately modified to reflect additional benefits provided, if any.]
(3) [A brief specific description of the benefits contained in this policy, in the following order:
(a) Daily benefit payable during hospital confinement; and (b) Duration of benefit described in (a) above.
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefit described in paragraph (3) above.]
(5) [A description of policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.]
(6) [Any benefits provided in addition to the daily hospital confinement indemnity benefit.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX E
MAJOR MEDICAL EXPENSE COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) Major Medical Expense Coverage. -- Policies of this category are designed to provide, to persons insured, coverage for major hospital, medical and surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, surgical services, anesthesia services, in-hospital medical services, out-of-hospital care and prosthetic appliances, subject to any limitations, deductibles or copayment requirements set forth in the policy. Basic hospital or basic medical insurance coverage is not provided. [Note: Final sentence may be appropriately modified, if necessary, to reflect coverage provided.]
(3) [A brief specific description of the benefits, including dollar amounts, contained in this policy, in the following order:
(a) Daily hospital room and board;
(b) Miscellaneous hospital services;
(c) Surgical services;
(d) Anesthesia services;
(e) In-hospital medical services;
(f) Out-of-hospital care;
(g) Prosthetic appliances;
(h) Maximum dollar amount for covered charges; and (i) Other benefits, if any.]
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefits described in paragraph (3) above.]
(5) [A description of any policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX F
DISABILITY INCOME PROTECTION COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) Disability Income Protection Coverage. -- Policies of this category are designed to provide, to persons insured, coverage for disabilities resulting from a covered accident or sickness, subject to any limitations, deductibles or copayment requirements set forth in the policy. Coverage is not provided for basic hospital, basic medical-surgical or major-medical expenses. [Note: Final sentence may be appropriately modified, if necessary, to reflect coverage provided.]
(3) [A brief specific description of the benefits contained in this policy.]
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefits described in paragraph (3) above.]
(5) [A description of policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX G
ACCIDENT-ONLY COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) Accident-Only Coverage. -- Policies of this category are designed to provide, to persons insured, coverage for certain losses resulting from a covered accident only, subject to any limitations, deductibles or copayment requirements set forth in the policy. Coverage is not provided for basic hospital, basic medical-surgical or major-medical expenses. [Note: Final sentence may be appropriately modified, if necessary, to reflect coverage provided.]
(3) [A brief specific description of the benefits contained in this policy.]
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefits described in paragraph (3) above.]
(5) [A description of policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX H
[SPECIFIED DISEASE] [SPECIFIED ACCIDENT] COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) [Specified Disease] [Specified Accident] Coverage. -- Policies of this category are designed to provide, to persons insured, restricted coverage paying benefits only when certain losses occur as a result of [specified diseases] [specified accidents], subject to any limitations, deductibles or copayment requirements set forth in the policy. Coverage is not provided for basic hospital, basic medical-surgical or major medical expenses. [Note: Final sentence may be appropriately modified, if necessary, to reflect coverage provided.]
(3) [A brief specific description of the benefits, including dollar amounts, contained in this policy.]
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefits described in paragraph (3) above.]
(5) [A description of policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX I
LIMITED BENEFITS HEALTH COVERAGE
(1) Read Your Policy Carefully. -- This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance policy, and only the actual policy provisions will control. The policy itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you Read Your Policy Carefully!
(2) Limited Benefits Health Coverage. -- Policies of this category are designed to provide, to persons insured, limited or supplemental insurance coverage, subject to any limitations, deductibles or copayment requirements set forth in the policy.
(3) [A brief specific description of the benefits, including dollar amounts, contained in this policy.]
(4) [A description of any policy provisions which exclude, eliminate, restrict, reduce, limit, delay or in any other manner operate to qualify payment of the benefits described in paragraph (3) above.]
(5) [A description of policy provisions respecting renewability or continuation of coverage, including age restrictions or any reservations of right to change premiums.]
NOTE: In the outline of coverage forms that follow, only the material appearing in brackets is to be composed by the insurer in language appropriate for the coverage provided. All other material shall appear in exactly the form set forth in this rule.
APPENDIX J
NOTICE TO APPLICANT REGARDING REPLACEMENT
OF ACCIDENT AND SICKNESS INSURANCE
According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness insurance and replace it with a policy to be issued by [insert company name] Insurance Company. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.
(1) Health conditions which you may presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits present under the new policy, whereas a similar claim might have been payable under your present policy.
(2) You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.
(3) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical/health history. Failure to include all material medical information on an application may provide a basis for the insurer to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, reread it carefully to be certain that all information has been properly recorded.
The above "Notice to Applicant" was delivered to me on: ____________________________ (Date) ____________________________ (Applicant's Signature)
APPENDIX K
NOTICE TO APPLICANT REGARDING REPLACEMENT
OF ACCIDENT AND SICKNESS INSURANCE
According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness insurance and replace it with the policy delivered herewith issued by [insert company name] Insurance Company. Your new policy provides ten days within which you may decide without cost whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.
(1) Health conditions which you may presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy.
(2) You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.
(3) [To be included only if the application is attached to the policy.] If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to [insert company name and address] within ten days if any information is not correct and complete, or if any past medical history has been left out of the application.
114CSR12
Series 13 Rules Of Practice And Procedure For Hearings Before The WV Insurance Commissioner
W. Va. Code R. § 114-13-1 General
1.1. Scope. -- The purpose of this rule is to set forth rules of practice and procedure to be followed in connection with administrative hearings conducted by the Insurance Commissioner, or his or her duly appointed representative, pursuant to authority granted the commissioner in W. Va. Code §33-2-13. These rules are intended to meet the requirements of W. Va. Code §29A-5-1 (State Administrative Procedures). These rules shall be applied in connection with any hearing conducted by the commissioner, or his or her representatives, to accomplish any purpose deemed necessary by the commissioner for the performance of his or her duties. This rule does not apply to hearings held under the “Insurance Tax Procedures Act,” W. Va. Code §§33-43-1 et seq., or investigative hearings held under W. Va. Code §33-2-9, which are subject to the requirements in subsection 33-2-9(k).
1.2. Authority. -- W. Va. Code §§33-2-10 and 29A-3-3.
1.3. Filing Date. -- September 29, 2003.
1.4. Effective Date. -- October 29, 2003.
W. Va. Code R. § 114-13-2 Definitions
As used in this regulation:
2.1. “Commissioner” means the Insurance Commissioner of West Virginia.
2.2. “Hearings Examiner” means the person conducting a hearing by the authority of the Insurance Commissioner.
2.3. “Hearing” means any proceeding held under authority granted the commissioner by law and conducted in accordance with the rules set forth in this regulation. A hearing may be designated by the commissioner as either a Category (A) or Category (B) proceeding.
2.4. “Category (A) Hearing” means a hearing the purpose of which is:
a. To determine whether the license of an individual insurance producer, insurance agency, excess line broker or solicitor is to be revoked, suspended, nonrenewed, or placed on probation and/or a penalty levied; or b. To determine whether the license of an insurer is to be revoked, suspended or nonrenewed or a fine levied in lieu thereof. For the purpose of this regulation, "Insurer" shall be deemed to include any legal entity holding a license to make and issue contracts of insurance.
2.5. “Category (B) Hearing” means a hearing the purpose of which is to determine any other matter not the subject of a Category (A) Hearing.
2.6. “Individual” means any private or natural person as distinguished from a partnership, corporation, limited liability company or other legal entity.
2.7. “Insurance agency” means an individual, corporation, partnership, association, limited liability company, or other legal entity except for an employee of the individual, corporation, partnership, association, limited liability company, or other legal entity, and other than an insurer or an adjuster as defined by W. Va. Code §33-12B-1, which employs individuals licensed to engage in activity or whose members engage in any activity be performed only by a licensed individual insurance producer or solicitor. It shall not include sole proprietor or partnerships in which there is only one licensed insurance producer.
2.8. “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.
2.9. “Insurer” means every person engaged in the business of making contracts of insurance under W. Va. Code §33-1-2.
2.10. “W. Va. Code” mean the code of West Virginia, 1931 as amended.
W. Va. Code R. § 114-13-3 Hearings
3.1. General. -- The commissioner may call and hold hearings for any purpose deemed necessary by him or her for the performance of his or her duties. The commissioner shall hold hearings when required by law or upon a written demand therefore by a person claiming to be aggrieved by any act or failure to act by the commissioner or by any rule or order of the commissioner.
3.2. Demand for hearing; form required. -- Any written demand filed pursuant to subsection 3.1 of this section by a person claiming to be aggrieved shall specify the grounds to be relied upon as basis for the relief to be requested at such hearing.
3.3. Hearing on written demand. -- When the commissioner is presented with a demand for a hearing as described in subsections 3.1 and 3.2 of this section, he or she shall conduct a hearing within forty-five (45) days of receipt by him or her of such written demand, unless postponed to a later date by mutual agreement. However, if the commissioner shall determine that the hearing demanded:
a. Would involve an exercise of authority in excess of that available to him or her under law; or b. Would serve no useful purpose, the commissioner shall, within forty-five (45) days of receipt of such demand, enter an order refusing to grant the hearing as requested, incorporating therein his or her reasons for such refusal. Appeal may be taken from such order as provided in W. Va. Code §33-2-14.
W. Va. Code R. § 114-13-4 Conferences; Informal Disposition of Cases
4.1. Conferences. -- At any time prior to the hearing or thereafter, the commissioner or a person conducting the hearing by his or her authority, may hold conferences:
a. To dispose of procedural requests or similar matters;
b. To simplify or settle issues by consent of the parties; or c. To provide for the informal disposition of cases by stipulation, agreed settlement or consent order.
The commissioner may cause such conferences to be held on his or her motion or by request of a party.
4.2. The commissioner, upon agreement of the parties, may require mediation or other alternative dispute resolution technique to assist the parties in identifying, clarifying and resolving issues regarding a category (B) hearing. Mediation may be requested at any time prior to the hearing. All of the information that is provided by parties during mediation is and shall remain confidential. Mediators may not be called as witnesses to provide testimony in unresolved issues that proceed to a hearing, and any hearing examiner involved in a mediation process may not hear the case or be consulted regarding the merits of the case.
W. Va. Code R. § 114-13-5 Notice of Hearing and Complaints
5.1. All Category (A) hearings conducted under these rules shall be initiated by the issuance of a formal written complaint containing a short and plain statement of the matters asserted. If the commissioner is unable to state the matters in detail at the time the complaint is served, the initial complaint may be limited to a statement of the issues involved. Thereafter, upon application, a more definite and detailed statement shall be furnished. The formal written complaint shall be given at least fifteen (15) days in advance of the date of the hearing.
5.2. Service of the complaint in connection with Category (A) hearings shall be given either by personal delivery thereof to the agency or person to be so notified, or by depositing the complaint in the United States Mail, postage prepaid, in an envelope addressed to the agency or person at the last known address of the agency or person or by any other manner permitted by law. With respect to complaints issued in connection with Category (A) Hearings, wherein the party respondent is a licensee of the commissioner, the complaint, if mailed, shall be addressed to the principal place of business or residence of the licensee as last of record in the commissioner's office.
5.3. All Category (B) hearings conducted under these rules shall be initiated by the issuance of a formal written notice of hearing containing a short and plain statement of the matters asserted. If the commissioner is unable to state the matters in detail at the time the notice is served, the initial notice may be limited to a statement of the issues involved. Thereafter, upon application, a more definite and detailed statement shall be furnished.
5.4. Notice of Category (A) and Category (B) hearings shall be given at least fifteen (15) days in advance of the hearing, by personal delivery thereof to the agency or person to be so notified, or by depositing the notice in the United States Mail, postage prepaid, in an envelope addressed to the agency or person at the last known address of the agency or person or by any other manner permitted by law. A notice of Category (A) or Category (B) hearing shall contain the date, time and place of the hearing. With respect to notices issued in connection with Category (A) Hearings, wherein the party respondent is a licensee of the Commissioner, the notice, if mailed, shall be addressed to the principal place of business or residence of such licensee as last of record in the Commissioner's office.
5.5. A complaint issued in connection with a Category (A) Hearing may be in the form of a notice to show cause stating that a proposed action may be taken unless the respondent shows cause, at a hearing to be held as specified in the notice, why the proposed action should not be taken. In addition to the requirements detailed in subsections 5.1 and 5.2 of this section, Category (A) Complaints shall include:
a. A statement of the purpose of the hearing and, where possible, a statement of charges, including the individual facts or conduct alleged which warrants the actions;
b. A statement of the legal authority and jurisdiction under which the hearing is to be held;
c. A reference to the particular section of the statute or rule involved; and d. A statement that the party or parties respondent may file a written verified answer in person or through counsel within ten (10) days from the service of the complaint or notice.
5.6. Answers, where filed, may be filed by personal delivery to the commissioner or by certified mail, return receipt requested.
Answers shall contain a general or specific affirmation or denial of each charge, allegation or matter asserted in the complaint or notice; or a denial of any knowledge or information thereof sufficient to form a belief. An answer may also contain a statement of any matter believed to constitute a defense.
Any charge, allegation or matter asserted in the complaint or notice which is not denied or admitted in the answer, unless the respondent states in the answer that he is without knowledge or information, shall be deemed admitted.
W. Va. Code R. § 114-13-6 Conduct of Hearings
6.1. General. -- An opportunity shall be afforded all parties to present evidence and argument with respect to the matters and issues involved. All hearings shall be conducted in an impartial manner. Every party shall have the right of cross-examination of witnesses who testify and shall have the right to submit rebuttal evidence. Persons directly affected by the hearing may appear in person or by counsel, may be present during the giving of all evidence, and shall have a reasonable opportunity to inspect all documentary evidence, to examine witnesses, to present relevant evidence, and to have subpoenas issued by the commissioner to compel attendance of witnesses and production of evidence.
6.2. Who shall conduct. -- Hearings shall be conducted by the commissioner or the person designated by him or her to be the Hearings Examiner. The person conducting the hearing shall have the power to:
a. Administer oaths and affirmations;
b. Rule upon offers of proof and receive relevant evidence;
c. Regulate the course of the hearings;
d. Hold conferences for the settlement or simplification of the issues by consent of the parties; and e. Dispose of procedural requests or similar matters.
6.3. Place of hearing. -- Hearings shall be held at such places as the commissioner may designate.
6.4. Evidence.
a. In contested cases irrelevant, immaterial or unduly repetitious evidence shall be excluded. Generally, the rules of evidence as applied in civil cases in the circuit courts of this state shall be followed: Provided, however, That whenever possible, formal rules of pleading or evidence need not be strictly observed. When necessary to ascertain facts not reasonably susceptible of proof under those rules, evidence not admissible thereunder may be admitted, except where precluded by statute, if it is of a type commonly relied upon by reasonably prudent men in the conduct of their affairs. Objections to evidentiary offers shall be noted in the record. Any party to any such hearing may vouch the record as to any excluded testimony or other evidence.
b. All evidence, including papers, records and documents in the possession of the commissioner, of which he or she desires to avail himself or herself, shall be offered and made a part of the record in the case and no other factual information or evidence shall be considered in the determination of the case. Documentary evidence may be received in the form of copies or excerpts or by incorporation by reference.
6.5. Stipulations. -- Written stipulations may be introduced in evidence, if signed by the persons sought to be bound thereby or by their attorneys. Oral stipulation may be made on the record as permitted by the Hearings Examiner.
6.6. Motions and objections. -- Motions made during a hearing and objections with respect to the conduct of a hearing, including objections to the introduction of evidence, shall be preserved in the record.
6.7. Memorandums and briefs. -- The Hearings Examiner may permit parties to submit legal memorandums or briefs within such time as he shall deem appropriate.
6.8. Improper conduct. -- The Hearings Examiner may exclude from the place of hearing or from further participation in the hearing any person who engages in improper conduct.
6.9. Continuation and adjournment. -- The Hearings Examiner may continue a hearing from one day to another or adjourn it to a later date or to a different place by announcement thereof at the hearing or by appropriate notice to all parties.
6.10. Subpoenas. -- In accordance with the provisions of W. Va. Code §33-2-4, the commissioner, or any person conducting a hearing by his or her authority, shall have power to issue subpoenas and subpoenas duces tecum. Such process shall be issued in conformity with the provisions of W. Va. Code §§33-2-5, 6, 7 and 8 and 29A-5-1(b).
6.11. Failure to appear. -- Notwithstanding the failure of any party to appear at a hearing in accordance with notice provided, the commissioner may proceed to hold a hearing at the time and place specified in said notice and may make findings of fact and conclusions of law and enter an order upon the testimony and evidence taken at the hearing.
6.12. Rehearing. -- In the discretion of the commissioner, a rehearing may be granted to any party to a hearing upon written request filed with the commissioner within thirty (30) days of the entry of an order.
6.13. Pro hac vice admission. -- Representation or appearance of parties in all formal proceedings pending before the commission shall be only by attorneys at law admitted to practice before the courts of this state, before the courts of last resort of other states, or before the Supreme Court of the United States; provided that attorneys appearing before the commission who are not licensed to practice in West Virginia shall have sought and obtained permission to practice before the commission in compliance with Rule 8.0 of the Rules for Admission to the Practice of Law of the State of West Virginia; provided, however, that an individual may appear for and represent himself or herself, or a partner may represent his or her partnership, upon permission granted in the discretion of the commission. Documentation of permission granted by the West Virginia State Bar shall be supplied to the commission before such attorney files any pleading or makes any appearance before the commission.
W. Va. Code R. § 114-13-7 Record; Transcript; When Required
7.1. Record; transcript; when required. -- All of the testimony and evidence taken at any hearing before the commissioner shall be reported by stenographic notes and characters or by mechanical means. The commissioner shall prepare an official record of each hearing, to include reported testimony, exhibits, notices of hearing, answers, stipulations, motions, orders and staff memoranda and data used in consideration of the case, but it shall not be necessary to transcribe the reported testimony unless:
a. Requested in writing by a person directly affected by a hearing at the expense of such person;
b. Required for purposes of rehearing; or c. Required for judicial review.
W. Va. Code R. § 114-13-8 Orders
8.1. Content. -- Every final order entered by the commissioner, following a hearing conducted pursuant to these rules, shall be made pursuant to the provisions of W. Va. Code §29A-5-3. Such orders shall be entered within forty-five (45) days following the completion of a hearing unless the time be extended by mutual consent. For the purposes of this section, a hearing shall be deemed completed at such time as the commissioner has concluded the taking of evidence and has received any briefs, memoranda, or motions, which may have been submitted by parties following the hearing.
8.2. Service. -- Copies of orders shall be delivered to all parties by certified mail, return receipt requested.
W. Va. Code R. § 114-13-9 Severability
9.1. Partial invalidity. -- If any provision of this regulation shall be held invalid, the remainder of the regulation shall not be affected thereby.
114CSR13
114CSR13
Series 14 Unfair Trade Practices
W. Va. Code R. § 114-14-1 General
1.1. Scope.
a. The purpose of this rule is to define certain practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices and to establish certain minimum standards and methods of settlements of both first-party and third-party claims.
b. This rule does not prohibit the use of additional methods above the minimum which are not in violation of this rule or any other West Virginia statute or rule.
c. This rule applies to all persons and to all insurance policies and insurance contracts except Workers’ Compensation Insurance.
d. This rule is not exclusive, and other acts, not herein specified, may also constitute unfair claims settlement practices.
e. Nothing in this rule creates or recognizes, either explicitly or impliedly, any new or different cause of action not otherwise recognized by law.
1.2. Authority. -- W. Va. Code §§33-11-4a(h) and 33-2-10.
1.3. Filing Date. -- April 13, 2006.
1.4. Effective Date. -- April 24, 2006.
W. Va. Code R. § 114-14-2 Definitions
For the purposes of this regulation, the following definitions shall apply:
2.1. “Agent” means any individual, corporation, association, partnership or other legal entity authorized to represent an insurer with respect to a claim.
2.2. “Claimant” means either a first-party claimant, a third-party claimant, or both.
2.3. “First-party claimant” or “Insured” means an individual, corporation, association, partnership or other legal entity asserting a right to payment under an insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by such policy or contract.
2.4. “Person” includes any individual, company, insurer, association, organization, society, reciprocal, business trust, corporation or any other legal entity, including agents, adjusters and brokers.
2.5. “Insurer” means a person licensed to issue or who issues any insurance policy or insurance contract covering risks resident, located or to be performed in this state.
2.6. “Investigation” means all activities of an insurer or agent directly or indirectly related to the determination of liabilities under coverages afforded by an insurance policy or insurance contract.
2.7. “Notification of claim” means any notification, whether in writing or other means acceptable under the terms of an insurance policy or insurance contract, to an insurer or its agents, by a claimant, which reasonably apprises the insurer or agent of the existence of an occurrence which might give rise to liability under a policy or contract of insurance.
2.8. “Third-party claimant” means any individual, corporation, association, partnership or other legal entity asserting a claim against any individual, corporation, association, partnership or other legal entity insured under an insurance policy or insurance contract of an insurer.
2.9. “Settlement of claims” means all activities of the insurer or its agent which are related directly or indirectly to the determination of the compensation that is due under coverage afforded by the insurance policy or insurance contract. This includes, but is not limited to, the requiring or preparing of repair estimates.
2.10. “Insurance policy” or “Insurance contract” means the contract effecting insurance, or the certificate thereof, by whatever name called, and includes all clauses, riders, endorsements and papers issued under the terms of the policy or contract.
2.11. “Claim” means any communication by a claimant to an insurer or its agent which reasonably apprises the insurer or agent of an occurrence which might give rise to liability under a policy or contract of insurance.
2.12. “Commissioner” means the West Virginia Insurance Commissioner.
2.13. “Licensee” means any person that holds a license or certificate of authority from the Commissioner, or any other entity for whom the Commissioner’s consent is required before transacting business in the State of West Virginia or with residents of West Virginia.
W. Va. Code R. § 114-14-3 File And Record Documentation
The insurer’s claim files shall be subject to examination by the Commissioner or by his or her duly appointed designees. Such files shall contain all notes and work papers pertaining to the claim in such detail that pertinent events and the dates of such events can be reconstructed. All communications and transactions emanating from or received by the insurer shall be dated by the insurer. A notation of the substance and date of all oral communications shall be contained in the claim file. Insurers shall either make a notation in the file or retain a copy of all forms mailed to claimants.
W. Va. Code R. § 114-14-4 Representation of Policy Provisions and Benefits
4.1. Failure to disclose pertinent policy provisions. -- No person may knowingly fail to fully disclose to first-party claimants all pertinent benefits, coverages or other provisions of an insurance policy or insurance contract under which a claim is presented.
4.2. Concealment of pertinent policy provisions. -- No person may knowingly conceal from first-party claimants benefits, coverages or other provisions of any insurance policy or insurance contract when such benefits, coverages or other provisions are pertinent to a claim.
4.3. Coercive statements. -- No person may make statements which indicate that the rights of a claimant may be impaired if a form or release is not completed within a given period of time unless the statement is given for the purpose of notifying the claimant of the provisions of a statute of limitation or of a policy or contract time limit.
4.4. Time limit for notification of claim. -- Except where a time limit is specified by statute or legislative rule, no insurer may require a first-party claimant to give notification of a claim or proof of claim within a specified time.
4.5. Releases.
a. No person may ask a first-party claimant to sign a release that extends beyond the subject matter which gave rise to the claim payment.
b. No insurer may issue any check or draft, in partial settlement of a loss or claim under a specific coverage, that contains language which releases the insurer or its insured from its total liability.
W. Va. Code R. § 114-14-5 Standards For The Acknowledgment Of Pertinent Communications
5.1. Acknowledgment of notices of claims. -- Every insurer, upon receiving notification of a claim shall, within fifteen (15) working days, acknowledge the receipt of such notice unless full payment is made within such period of time. If an acknowledgment is made by means other than writing, an appropriate notation of such acknowledgment shall be made in the claim file of the insurer and dated. Notification given to an agent of an insurer shall be notification to the insurer.
5.2. Answer of inquiries from Insurance Commissioner. -- Every insurer, producer or other licensee, upon receipt of any inquiry other than a notice of third-party administrative complaint from the Insurance Commissioner shall, within fifteen (15) working days of the date appearing on the inquiry, furnish the Commissioner with a complete written response to the inquiry. A “complete written response” addresses all issues raised by the claimant or the Commissioner and includes copies of any documentation requested. This subsection is not intended to permit delay in responding to inquiries by the Commissioner or his or her staff in conjunction with a scheduled examination on the insurer’s premises.
5.3. Replies to other pertinent communications. -- A reply shall be made within fifteen (15) working days of receipt by the insurer to all other pertinent communications from a claimant which reasonably suggest that a response is expected.
5.4. Provisions of assistance to first-party claimants. -- Every insurer, upon receiving notification of a claim, shall promptly provide necessary claim forms, instructions, and reasonable assistance so that first-party claimants can comply with the policy conditions and the insurer’s reasonable requirements. Compliance with this subsection within fifteen (15) working days of notification of a claim constitutes compliance with subsection 5.1. of this section.
W. Va. Code R. § 114-14-6 Standards For Prompt Investigations And Fair And Equitable Settlements Applicable To All Insurers
6.1. Investigation of claims. -- Every insurer shall promptly conduct and diligently pursue a thorough, fair and objective investigation and may not unreasonably delay resolution by persisting in seeking information not reasonably required for or material to the resolution of a claim dispute. This section is not intended to conflict with the statutory requirements of the Medical Professional Liability Act, W. Va. Code §§55-7B-1 to 11, as the same relate to the assertion and investigation of medical professional liability claims.
6.2. Establishment of investigatory procedures. -a. Every insurer shall establish procedures to commence an investigation of any claim filed by a claimant, or by a claimant’s authorized representative, within fifteen (15) working days of receipt of notice of claim.
b. Every insurer shall provide to every first-party claimant, or to the claimant’s authorized representative, a notification of all items, statements and forms, if any, which the insurer reasonably believes will be required of such claimant, within fifteen (15) working days of receiving notice of the claim.
c. A claim filed with an agent of an insurer shall be deemed to have been filed with the insurer unless, consistent with law or contract, such agent promptly provides written notification to the person filing the claim that the agent is not authorized to receive notices of claim.
6.3. Duty after investigation. -- Within ten (10) working days of completing its investigation, the insurer shall deny the claim in writing or make a written offer, subject to policy limits and, with respect to medical professional liability claims, subject to applicable statutory requirements set forth in the Medical Professional Liability Act, W. Va. Code §§55-7B-1 to 11.
6.4. Offers of settlement. -a. In any case where there is no dispute as to coverage and liability, it is the duty of every insurer to offer claimants or their authorized representatives, amounts which are fair and reasonable, as shown by the insurer’s investigation of the claim, providing the amounts so offered are within policy limits and in accordance with the policy provisions.
b. No insurer may attempt to settle a claim by making a settlement offer that is unreasonably low. The Commissioner shall consider any evidence offered regarding the following factors in determining whether a settlement offer is unreasonably low:
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The extent to which the insurer considered evidence submitted by the claimant to support the value of the claim;
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The extent to which the insurer considered legal authority or evidence made known to it or reasonably available;
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The extent to which the insurer considered the advice of its claims adjuster as to the amount of damages;
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The extent to which the insurer considered the opinions of independent experts;
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The procedures used by the insurer in determining the dollar amount of property damage;
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The extent to which the insurer considered the probable liability of the insured and the likely jury verdict or other final determination of the matter; and 7. Any other credible evidence presented to the Commissioner that demonstrates that the final amount offered in settlement of the claim by the insurer is or is not below the amount that a reasonable person would have offered in settlement of the claim after taking into consideration the relevant facts and circumstances at the time the offer was made.
6.5. Denial of claims. -- No insurer may deny a claim on the grounds of a specific policy provision, condition or exclusion unless reference to such provision, condition or exclusion is included in the denial. The denial must be given to the claimant in writing or as otherwise provided in subsection 6.6. of these rules.
6.6. Records of denial of claims. -- If a denial of a claim is made by any other means than writing, an appropriate notation shall be made in the claim file of the insurer.
6.7. Notice of necessary delay in investigating claims. -- If the insurer needs more than thirty (30) calendar days from the date that a proof of loss from a first-party claimant or notice of claim from a third-party claimant is received to determine whether a claim should be accepted or denied, it shall so notify the claimant in writing within fifteen (15) working days after the thirty-day period expires. If the investigation remains incomplete, the insurer shall provide written notification of the delay to the claimant every forty-five (45) calendar days thereafter until the investigation is complete. All such notifications must set forth the reason(s) additional time is needed for investigation. Where there is a reasonable basis supported by specific information available for review by the Commissioner that a claimant has fraudulently caused or contributed to the loss, the insurer is relieved from the requirements of this subsection: Provided, That the insurer shall notify the claimant of the acceptance or denial of the claim within a reasonable time allowing for full investigation. Nothing contained in this subsection requires an insurer to disclose any information that could reasonably be expected to alert a claimant to the fact that the subject claim is being investigated as a suspected fraudulent claim.
6.8. Liability of others. -- Insurers may not refuse to settle first-party claims on the basis that responsibility for payment should be assumed by others except as may otherwise be provided by policy provisions.
6.9. Denial of claims for failure to exhibit property. -- No insurer may deny a claim for failure to exhibit the insured property without proof of demand by the insurer and refusal by the claimant to exhibit said property.
6.10. Separation of claims. -- In any case where there is no dispute as to one (1) or more elements of a claim, payment for such element(s) shall be made notwithstanding the existence of disputes as to other elements of the claim where such payment can be made without prejudice to either party.
6.11. Time for payment of claims. -- Every insurer shall pay any amount finally agreed upon in settlement of all or part of any claim not later than fifteen (15) working days from the receipt of such agreement by the insurer or from the date of the performance by the claimant of any condition set by such agreement, whichever is later.
6.12. Notice of applicable time limitations. -- No person may negotiate for settlement of a claim with a claimant who is neither an attorney nor represented by an attorney without giving the claimant written notice that the claimant’s rights may be affected by a statute of limitations or a policy or contract time limit. Such notice shall be given to first-party claimants not less than thirty (30) days, and to third-party claimants not less than sixty (60) days, before the date on which such time limit expires.
6.13. Avoidance of payment. -- Where liability and damages are reasonably clear, no person may recommend that third-party claimants make claim under their own policies solely to avoid paying claims under an insurer’s insurance policy or insurance contract.
6.14. Unreasonable travel. -- No person may require a claimant to travel unreasonably either to inspect a replacement motor vehicle or to obtain a repair estimate.
6.15. Compensation based on claim denials. -- No insurer may offer incentives or compensate its employees, agents or contractors based on savings to the insurer as a result of improperly denying the payment of claims.
6.16. Claim proceeds used to pay premiums of another policy. -- No insurer may deduct from a claim payment made under one policy premiums owed by the insured on another policy unless the insured consents.
6.17. Required information for claim denial notices. -- Any notice rejecting any element of a claim shall contain the identity and the claims processing address of the insurer and the claim number. The notice must state that the claimant has the option of contacting the Commissioner. The notice must provide the Commissioner’s mailing address, telephone number and web site address.
6.18. Motor vehicle repair shops. -- An insurer may furnish to the claimant the names of one or more conveniently located motor vehicle repair shops that will perform the repairs; however no insurer may require the claimant to use a particular repair shop or location to obtain the repairs.
W. Va. Code R. § 114-14-7 Standards For Prompt, Fair And Equitable Settlements Applicable To Automobile Insurance
7.1. Applicability. -- This section is applicable to claims arising under motor vehicle collision and comprehensive coverage. The provisions of section 6 of these rules are applicable to these claims except to the extent that such provisions are inconsistent with the specific provisions of this section.
7.2. Definition of terms. -- The following shall govern the construction of the terms used in this section:
a. “Agreed price” means the amount agreed to by the insurer and the insured, or their representatives, as to the reasonable cost to repair damages to the motor vehicle resulting from the loss, without considering any deductible or other deductions;
b. “Designated representative” means a person designated by the insured to represent him or her in negotiations with the insurer in an attempt to settle the claim. The designated representative may be a member of the insured’s immediate family or any other person named by the insured who may legally act on his or her behalf and who so acts without compensation of any kind;
c. “Motor vehicle” has the meaning ascribed in subsection (b), section one, article one, chapter seventeen-a of the Code of West Virginia of 1931, as amended;
d. “Official used car guide” means a valuation source that has been approved by the Commissioner for setting the minimum value of a motor vehicle which is the subject of a total loss claim. In order to be approved by the Commissioner as an official used car guide, the valuation source must meet the following criteria:
- All valuation sources must:
A. Produce statistically valid fair market values based on current data available primarily from the area surrounding the location where the insured vehicle was principally garaged or a necessary expansion of parameters, such as time and area, to assure statistical validity;
B. Produce values for at least eighty-five percent (85%) of all makes and models of private passenger automobiles for the last fifteen (15) model years and include all major options. A sufficient number of vehicles shall be used for each year, make and model to represent a cross-section sufficient to determine fair market values;
C. Produce for examination by the Commissioner, at the time the request for approval is made or as soon thereafter as practicable, the source of the data in a manner that can be verified by the Commissioner;
D. Make available for examination by the Commissioner, at the time the request for approval is made or as soon thereafter as practicable, any contracts or agreements between the valuation source and insurers, which the valuation source may assert is a trade secret pursuant to W. Va. Code §47-22-1(d); and E. Produce for examination any other information determined by the Commissioner to be helpful or necessary in determining the statistical validity of the values produced by the valuation source, or otherwise bearing on the integrity of the valuation source, including the existence of and resolution of consumer complaints based upon total loss valuations performed by the source. If the information meets the definition of trade secret pursuant to W. Va. Code §47-22-1(d), then the valuation source may make available for examination by the Commissioner, without filing the same, any information requested pursuant to this subparagraph. If the information meets the definition of trade secret pursuant to W. Va. Code §47-22-1(d) and, after having been made available for examination by the Commissioner, the Commissioner determines that the information pertains to the existence of or resolution of consumer complaints, the valuation source shall propose a reasonable method for protection of the information.
- A valuation source that is other than a valuation manual, including a computerized database, must meet the criteria set forth in subparagraphs A, B, C, D and E of paragraph one of this subdivision, and in addition must:
A. Give primary consideration to the values of vehicles in the local market area but if necessary to obtain a reasonable cross-section of the market, may consider vehicles in the next closest area;
B. Rely upon values of vehicles that are currently available or were available within ninety days from the date of loss for all vehicles and apply appropriate standards of comparability;
C. Rely upon values derived primarily from verifiable data or inventory from licensed dealers which have minimum sales of one hundred motor vehicles per year in the local market area, for vehicles of five model years or less of age;
D. Monitor the average retail price of private passenger automobiles when there is insufficient data or inventory from licensed dealers to ensure statistically valid market area values; and E. Clearly indicate and describe the condition at which the vehicle is being valued, if the valuation source uses several price ranges for the same model vehicle depending on the condition of the vehicle. Documentation of the condition of the insured vehicle must be made a part of the written valuation. Deductions made for the condition of the insured vehicle must be reasonably based on a physical attribute that has the effect of decreasing the vehicle’s value.
e. “Substantially similar vehicle” means a motor vehicle of the same make, model, year and substantially the same condition, including all major options of the insured vehicle. Mileage may not exceed that of the insured vehicle by more than 4,000 miles unless mutually acceptable to both the insurer and the insured.
7.3. Adjustment of partial losses. -- The following subdivisions govern the conduct of insurers in the adjustment of partial losses:
a. Insurers shall include the insured’s deductible, if any, in subrogation demands. Subrogation recoveries shall be shared on a proportionate basis with the insured, unless the deductible amount has been otherwise recovered. No deduction for expenses may be made from the deductible recovery unless an outside attorney is retained to collect such recovery. The deduction may then be for only a pro rata share of the allocated loss adjustment expense;
b. If an insurer prepares an estimate of the cost of the motor vehicle repairs, such estimate shall be in an amount for which it may be reasonably expected the damage can be satisfactorily repaired. The insurer shall give a copy of the estimate to the insured and may furnish to the insured the names of one or more conveniently located repair shops that will perform the repairs for the amount tendered in settlement of the claim;
c. If the insurer intends to exercise its rights to inspect damages prior to repair, it has seven (7) working days from the date of receipt of notice of loss to inspect the insured’s damaged motor vehicle at a place and time reasonably convenient to the insured. In addition, negotiations shall commence and a good faith offer of settlement shall be made within the aforesaid seven (7) day period;
d. If the insured’s motor vehicle is repaired at a repair shop recommended by the insurer, for a sum estimated by the insurer as the reasonable cost to repair the vehicle, the insurer shall, at no additional cost to the claimant and within a reasonable period of time, cause the damaged vehicle to be restored to the condition it was in prior to the loss if the repair shop it recommended does not so repair the damaged motor vehicle;
e. Deductions for betterment and/or depreciation are permitted only for parts normally subject to repair and replacement during the useful life of the insured motor vehicle. Deductions for betterment and/or depreciation are limited to an amount equal to the proportion that the expired life of the part to be repaired or replaced bears to the normal useful life of that part. Calculations for betterment, depreciation and normal useful life must be included in the insurer’s claim file;
f. Deductions for previous damage or prior condition of the motor vehicle must be measurable, discernible, itemized and specified as to dollar amount, and such deductions must be detailed in the claim file;
g. The insurer must mail or hand deliver to the insured or his or her designated representative its proof of loss or payment within ten (10) working days after the insured has accepted the insurer’s offer;
h. If the insurer does not perform its own physical inspection, it is nevertheless bound by all the applicable requirements of this regulation.
7.4. Adjustment of total losses. -- The following subdivisions govern the conduct of insurers in the adjustment of total losses:
a. If the insurer elects to make a cash settlement:
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It must use the most recent version of an “Official Used Car Guide” approved by the Commissioner and uniformly and regularly used by the company, as a guide for setting the minimum value of the motor vehicle which is the subject of the claim. Any deviation downward from the guide’s retail valuation must be supported by documentation that gives detailed information about the vehicle’s condition, and any deductions must be measurable, discernible, itemized and specified concerning dollar amount, and they shall be appropriate in amount. This documentation must be maintained in the claim file;
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If the retail value of the specific motor vehicle is not contained in the most recent version of an “Official Used Car Guide” approved by the Commissioner and which is used uniformly and regularly by the company, the company must secure dealer quotations on the retail value of similar vehicles and base the settlement upon them. The offer must enable the insured to purchase the substantially similar vehicle for the cash settlement and any deviation from this practice must be supported by documentation giving particular information about the motor vehicle’s condition. The documentation and the source of the dealer quotations must be maintained in the claim file;
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The company shall provide a reasonable written explanation to the concerned parties when cash settlement offers, as set forth in paragraphs (1) and (2) above are made. The explanation must specify the dollar amount of the base figure and identify the actual source. Any additions or subtractions from the base dollar figure must be identified and explained; and 4. In addition to any cash settlement value agreed to by the claimant, there must be added an amount equal to five percent (5%) of such cash settlement value, as reimbursement to the claimant for the excise tax imposed by the state.
b. If the insurer elects to replace the vehicle, the replacement vehicle must be an immediately available, substantially similar vehicle that is both furnished and paid for by the insurer, subject to the deductible, if any.
c. If the insured vehicle is a private passenger automobile of the current model year, meaning that it has not been superseded in the marketplace by an officially introduced succeeding model, the insurer shall utilize one of the following methods in the settlement of the loss, except where the method used would be detrimental to the interests of the insured as compared with utilization of the methods described in subdivisions a. and b. above:
- The insurer shall pay to the insured the reasonable purchase price on the date of loss of a substantially similar vehicle, less any applicable deductible and an allowance for depreciation in accordance with an official used car guide which has been approved by the Commissioner and is used regularly by the insurer; or 2. The insurer shall furnish the insured with a substantially similar replacement vehicle, and charge the insured for any applicable deductible and for depreciation in accordance with the official used car guide.
d. If the insurer, in the process of adjusting a total loss, makes a deduction for the salvage value of the insured vehicle, the insurer must furnish the insured with the name and address of a salvage dealer who will purchase the salvage for the amount deducted.
e. All applicable provisions of subsection 7.3. of this section, “Adjustment of Partial Losses,” also apply to the adjustment of total losses, except that the insurer is allowed an additional five (5) working days to comply with the requirements set out in subsection 7.3. of these rules. Any letter of explanation or rejection of any element of a claim shall contain the identity and claims processing address of the insurer, the insured’s policy number and the claim number.
7.5. Unreasonable delay. -- If any element of a physical damage claim remains unresolved more than fifteen (15) working days from the date of receipt of proofs of loss by the insurer, the insurer shall provide the insured with a written explanation of the specific reasons for the delay in the claim settlement unless reasonable grounds exist to suspect fraud or arson. An updated letter of explanation shall be sent every thirty (30) calendar days thereafter until all elements of the claim are either honored or rejected.
7.6. Repair estimates. -- If an insurer requires that its insured obtain an estimate or estimates of vehicle damage, the reasonable charges, if any, of such estimates shall be borne by the insurer.
7.7. Notice of right to reimbursement for transportation expenses. -- In the event of the theft of the entire vehicle, it is the duty of the insurer at the time of notification of loss to advise the insured of his or her right under the policy to be reimbursed for transportation expenses. Such notification must be confirmed in writing immediately after receipt of notice of theft. All conditions and benefits related to this coverage as stated in the policy must be contained in the notification to the insured.
W. Va. Code R. § 114-14-8 Training and Certification
Within ninety (90) days of the effective date of this rule, every insurer shall adopt and communicate to all its claims agents written standards for the prompt investigation and processing of claims.
W. Va. Code R. § 114-14-9 Separability
If any provision of this rule is held invalid, the remainder of the rule shall not be affected thereby.
W. Va. Code R. § 114-14-10 Penalty For Violation Of Any Provision Of This Regulation
Any person who fails to comply with any provision of this regulation shall, after notice and hearing, be found to be transacting insurance in an illegal, improper or unjust manner. The Commissioner may, pursuant to W. Va. Code §§33-3-11, 33-11-6, 33-11-7, 33-11-8 and 33-12-25, refuse to renew, or may revoke or suspend the license of any such person or, in lieu thereof, the Commissioner may, at his or her discretion, order such person to pay to the State of West Virginia a penalty in a sum not to exceed that imposed by said sections of said code, and the Commissioner may, pursuant to W. Va. Code §33-2-11, order such person to discontinue such illegal, improper or unjust transaction of insurance and to adjust and pay obligations as they become due.
114CSR14
114CSR14
Series 15 Examiners And Examinations
W. Va. Code R. § 114-15-1 General
1.1. Scope. -- This legislative rule establishes:
a. Standards for the compensation, qualifications and classification of persons who conduct or participate in any analysis, review or examination provided for in W. Va. Code §33-2-9; and b. Standards for retention of records and documents that the commissioner may require to be produced by an insurer in connection with any analysis, review or examination provided for in W. Va. Code §33-2-9.
c. This rule applies to all insurers authorized to transact insurance in this state by the commissioner, health maintenance organizations, hospital, medical, dental and health service corporations, health care corporations, fraternal benefit societies, and prepaid limited health service organizations.
1.2. Authority. -- W. Va. Code §§33-2-9(n) and 33-2-10.
1.3. Filing Date. -- April 29, 2008.
1.4. Effective Date. -- July 1, 2008.
W. Va. Code R. § 114-15-2 Definitions
As used in this legislative rule:
2.1. "Accredited examiner" or "examiner" means a person who is an employee of the insurance commissioner whose principle duty is to conduct, supervise, or provide technical support for financial or market conduct examinations, including but not limited to the following division of personnel job classifications: insurance company examiner, or insurance company examiner supervisor, market conduct examiner, market conduct examiner supervisor, or computer audit specialist, pursuant to the classification plan of the West Virginia division of personnel or such other equivalent classification plan as the state of West Virginia may adopt.
2.2. "Additional examination assessment fee" means any additional or increased examination assessment fee levied by order of the commissioner in excess of the annual examination assessment fee as allowed by the provisions of W. Va. Code §33-2-9.
2.3. "Application and accompanying records" means any written or electronic application form, any enrollment form, any document or record thereof, used to add coverage under any existing policy, questionnaire, telephone interview form, paramedical interview form or any other document used to question or underwrite an applicant for any policy issued by an insurer or for any declination of coverage by an insurer.
2.4. "Claim file and accompanying records" means the file maintained so as to show clearly the inception, handling and disposition of each claim. The claim file shall be sufficiently clear and specific so that pertinent events and dates of these events can be reconstructed.
2.5. "Commissioner" means the insurance commissioner of the state of West Virginia.
2.6. "Complaint" means a written communication primarily expressing a grievance.
2.7. "Declination" or "declined underwriting file" means all written or electronic records concerning coverage for which an application has been completed and submitted to the insurer or its producer but the insurer has made a determination not to issue a policy or not to add additional coverage when requested.
2.8. "Examination assessment fee" means the annual fee due on or before the first day of July of every year, as specified in W. Va. Code §33-2-9.
2.9. "Governor's travel rules" means those rules promulgated by the governor pursuant to the authority granted by W. Va. Code §12-3-11.
2.10. "Grievance" for health insurance purposes, means a written complaint submitted by or on behalf of a covered person regarding the:
a. Availability, delivery or quality of health services, including a complaint regarding an adverse determination made pursuant to utilization review;
b. Claims payment, handling or reimbursement for health care services; or c. Matters pertaining to the contractual relationship between a covered person and a health carrier.
2.11. "Incidental expense" means any reasonable travel-related expense other than charges for lodging, meals or mileage, including but not limited to tolls, parking, gratuities or public transportation.
2.12. "Inquiry" means a specific question, criticism or request made in writing to an insurer by an examiner.
2.13. "Insurer" as used in this rule, means any entity covered by the scope of this rule pursuant to subdivision c, subsection 1.1 of this rule, unless otherwise specified herein.
2.14. "Lodging" means a temporary place of abode, such as a hotel, maintained by the examiner for the convenience of being closer to the examination site, and at which the examiner has no intention of establishing residence.
2.15. "On-site" or "site" means at or conveniently proximate to the business location of the entity being examined, as listed on the examiner's semi-monthly days worked report, but does not include the offices of the insurance commissioner when work related to an examination is performed there.
2.16. "Other employee" means any individual who is an employee of the offices of the insurance commissioner of West Virginia, excluding the commissioner's accredited examiners.
2.17. "Other individual or entity" means any individual, corporation, partnership or other business entity that is not an employee of the offices of the insurance commissioner, to include but not be limited to independent certified public accountants, independent actuaries, qualified insurance examiners, reinsurance examiners, investment or information systems specialists or other individuals, corporations, partnerships or other business entities with particular skills or areas of expertise, considered competent by the commissioner to conduct or participate in any examination, analysis or review as allowed by W. Va. Code §33-2-9 or this rule.
2.18. "Related entity" means a person authorized to act on behalf of the insurer in connection with the business of insurance.
2.19. "Residence" means a permanent or semi-permanent place of abode, maintained solely for the convenience of the examiner and not in connection with an on-site examination assignment, including the examiner's domicile and any temporary residence established by the examiner.
W. Va. Code R. § 114-15-3 Examination, Analysis and Review Funding
3.1. Every entity subject to the provisions of W. Va. Code §33-2-9 shall remit the examination assessment fee specified by the code or as increased by the commissioner on or before the first day of July of each year.
3.2. Every entity subject to the provisions of W. Va. Code §33-2-9 shall remit any additional examination assessment fee ordered by the commissioner on or before the date specified by the order.
3.3. The monies collected by the commissioner from the examination assessment fee and any additional examination assessment fee shall be deposited as specified in W. Va. Code §33-2-9. The monies deposited into the commissioner's examination revolving fund may be used for any of the following:
a. Salaries and expenses of the insurance commissioner's accredited examiners as specified in this rule for any activities conducted pursuant to W. Va. Code §33-2-9 or this rule;
b. Salaries and/or expenses of the insurance commissioner's special deputies or other employees for activities conducted pursuant to W. Va. Code §33-2-9 or this rule;
c. Salaries, contract rates, fees and/or expenses of other individuals or entities for activities conducted pursuant to W. Va. Code §33-2-9 or this rule; and d. Equipment, supplies, travel, education, and training and other incidental expenses for the commissioner, his or her deputies, other employees and accredited examiners as considered necessary by the commissioner for the performance of the duties and activities conducted pursuant to W. Va. Code §33-2-9 or this rule.
3.4. Other individuals or entities, when authorized in writing by the commissioner, may, and to the extent the commissioner considers necessary, bill and receive payments directly from the entities subject to examination under the provisions of W. Va. Code §33-2-9 and this rule for their work, travel and living expenses at rates approved by the commissioner, while involved in any of the activities set forth in this section.
W. Va. Code R. § 114-15-4 Examination, Analysis, Review Activities and Record Retention Requirements
4.1. Examination, analysis and review activities shall include the following as they relate to the operation of entities, individuals or persons subject to the provisions of W. Va. Code §33-2-9:
a. Examination of the financial condition or market conduct practices of the entity, individual or person;
b. On-site analysis or review of any practice or condition affecting the entity, individual or person; and c. Review of any statements, reports, or reviews of an entity, individual or person's financial condition, performance or market conduct practices including the review or development of any forecasts or projections or any type of filing made or intended to be made with the insurance commissioner. This review shall include but not be limited to the review or investigation of any audited financial report, compilation or review performed by a certified public accountant, actuarial statement or certification, documents submitted in application for licensure or registration in the state, or other matters or materials deemed necessary by the commissioner to fulfill his or her statutory obligations.
4.2. For the purpose of examination, analysis and review activities conducted pursuant to W. Va. Code §33-2-9 or this rule, an insurer or related entity licensed to do business in this state shall maintain its books, records and documents in a manner so that the commissioner can readily ascertain during an examination the insurer's compliance with the insurance laws and rules of this state, the standards outlined in the NAIC Financial Conditions Examiner Handbook, and with the standards outlined in the NAIC Market Regulation Handbook, including, but not limited to, company operations and management, policyholder service, marketing, producer licensing, underwriting, rating, complaint/grievance handling, and claims practices.
a. For an insurer subject to 114CSR51 or 114CSR53, the insurer or related entity shall, in addition, maintain its books, records, and documents in a manner so that the practices of the entity regarding network adequacy, utilization review, quality assessment and improvement and provider credentialing may be ascertained during a market conduct examination.
b. All insurer records within the scope of this rule must be retained for the lesser of:
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The current calendar year plus five (5) calendar years;
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From the closing date of the period of review for the most recent examination by the commissioner; or 3. A period otherwise specified by statute as the examination cycle for the insurer.
c. The producer of record shall maintain a file for each policy sold, and the file shall contain all work papers and written communications in his or her possession pertaining to the policy documented therein. These records shall be retained for the current calendar year plus additional years as set forth in subdivision b of this subsection.
d. During an examination of the insurer, the insurer shall provide a copy of the written contract entered into with each third party vendor or service provider as requested by an examiner within the time frames set forth in subsection 4.9 of this section.
4.3. All policy record files shall be maintained for each policy issued, and shall be maintained for the duration of the current policy term plus additional years as set forth in subdivision b, subsection 4.2 of this section: Provided, That for life insurance policies and annuity contracts, such files must be maintained from the original inception date of the policy or contract through termination, plus additional years as set forth in subdivision b, subsection 4.2 of this section. Policy records shall be maintained so as to show clearly the policy period, basis for rating and any imposition of additional exclusions from or exceptions to coverage. If a policy is terminated, either by the insurer or the policyholder, documentation supporting the termination and account records indicating a return of premiums, if any, shall also be maintained. Policy records need not be segregated from the policy records of other states so long as the records are readily available to market conduct examiners as required under this rule.
a. Policy records shall include the following:
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Any application and accompanying records for each contract. The application shall bear a clearly legible means by which an examiner can identify a producer involved in the transaction. The examiners shall be provided with information clearly identifying the producer involved in the transaction.
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Any declaration pages (the initial page and any subsequent pages), the insurance contract, any certificates evidencing coverage under a group contract, any endorsements or riders associated with a policy, any termination notices, and any written or electronic correspondence to or from the insured pertaining to the coverage. If any of these records have already been filed with the commissioner, a separate copy of the record need not be maintained in the individual policy files to which the record pertains, provided it is clear from the insurer's other records or systems that the record applies to a particular policy and that any data contained in the record relating to the policy, as well as the actual policy issued to the insured, can be retrieved or recreated;
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Any binder;
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Any guidelines, manuals or other information necessary for the reconstruction of the rating, underwriting, policy owner service and claims handling of the policy. The maintenance at the site of a market conduct examination of a single copy of each of the above shall satisfy this requirement. These types of records include, but are not limited to, the application, the policy form including any amendments or endorsements, rating manuals, underwriting rules, credit reports or scores, claims history reports, previous insurance coverage reports (e.g. reports obtained from the Medical Information Bureau), questionnaires, internal reports, and underwriting and rating notes; and 5. Any premium audit file.
b. A declined underwriting file shall be maintained and shall include an application, any documentation supporting the decision to decline an issuance of a policy, any binder issued without the insurer issuing a policy, any documentation supporting the decision not to add additional coverage when requested and, if required by law, any declination notification. Notes regarding requests for quotations that do not result in a completed application for coverage need not be maintained for purposes of this rule.
4.4. Claim files shall be maintained as follows:
a. A claim file and accompanying records shall be maintained for the calendar year in which the claim is closed plus additional years as set forth in subdivision b, subsection 4.2 of this section. The claim file shall be maintained so as to show clearly the inception, handling and disposition of each claim. The claim files shall be sufficiently clear and specific so that pertinent events and dates of these events can be reconstructed. A claim file shall, at a minimum, include the following items:
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For property and casualty: the file or files containing the notice of claim, claim forms, proof of loss or other form of claim submission, settlement demands, accident reports, police reports, adjustors' logs, claim investigation documentation, inspection reports, supporting bills, estimates and valuation worksheets, medical records, correspondence to and from insureds and claimants or their representatives, notes, contracts, declaration pages, certificates evidencing coverage under a group contract, endorsements or riders, work papers, any written communication, any documented or recorded telephone communication related to the handling of a claim, including the investigation, payment or denial of the claim, copies of claim checks or drafts, or check numbers and amounts, releases, all applicable notices, correspondence used for determining and concluding claim payments or denials, subrogation and salvage documentation, any other documentation created and maintained in a paper or electronic format, necessary to support claim handling activity, and any claim manuals or other information necessary for reviewing the claim;
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For life and annuity: the file or files containing the notice of claim, claim forms, proofs of loss, medical records, correspondence to and from insureds and claimants or their representatives, claim investigation documentation, claim handling logs, copies of checks or drafts, check numbers and amounts, releases, correspondence, all applicable notices, and correspondence used for determining and concluding claim payments or denials, any written communication, any documented or recorded telephone communication related to the handling of a claim, including the investigation, and any other documentation, maintained in a paper or electronic format, necessary to support claim handling activity; and 3. For health: the file or files containing the notice of claim, claim forms, medical records, bills, electronically submitted bills, proofs of loss, correspondence to and from insureds and claimants or their representatives, claim investigation documentation, health facility pre-admission certification or utilization review documentation, claim handling logs, copies of explanation of benefit statements, any written communication, any documented or recorded telephone communication related to the handling of a claim, including the investigation, copies of checks or drafts, or check numbers and amounts, releases, correspondence, all applicable notices, and correspondence used for determining and concluding claim payments or denials, and any other documentation, maintained in a paper or electronic format, necessary to support claim handling activity.
b. Where a particular document pertains to more than one file, insurers may satisfy the requirements of this section by making available, at the site of an examination, a single copy of each document.
c. Documents in a claim file received from an insured, the insured's agent, a claimant, the commissioner or any other insurer shall bear the initial date of receipt by the insurer, date stamped in a legible form in ink, in an electronic format, or some other permanent manner. Unless the company provides the examiners with written procedures to the contrary, the earliest date indicated on a document will be considered the initial date of receipt.
d. If an insurer, as its regular business practice, places the responsibility for handling certain types of claims upon company personnel other than its claims personnel, the insurer need not duplicate its files for maintenance by claims personnel. These claims records shall be maintained as part of the records of the insurer's operations and shall be readily available to examiners.
4.5. Records to be maintained relating to the insurer's compliance with licensing requirements shall include the licensing records of each producer associated with the insurer. Licensing records shall be maintained so as to show clearly the licensing status of the producer at the time of solicitation, negotiation or procurement, dates of the appointments and terminations of each producer, and any document relating to a termination of the producer’s appointment, including but not limited to producer termination letters that must include the specific reason for termination. A screenprint from the producer database (PDB) may serve to provide adequate proof only of a producer's current licensing status.
4.6. The complaint records required to be maintained shall include a complaint log or register, or grievance log or register for health insurers, in addition to the actual written complaints or grievances. The complaint log or register shall show clearly the total number of complaints for the period of time set forth in subdivision b, subsection 4.2 of this section, the classification of each complaint by line of insurance and by complainant, for example the insured, the commissioner, a third party, etc., the nature of each complaint, the insurer's disposition of each complaint, and the complaint number assigned by the commissioner, if applicable. If the insurer maintains the file in a computer format, the reference in the complaint log or register for locating the documentation shall be an identifier such as the policy number or other code. The codes shall be provided to the examiners at the time of an examination.
4.7. Records required to be maintained by this rule may be saved as follows:
a. Any record required to be maintained by an insurer may be created and stored in the form of paper, photograph, magnetic, mechanical or electronic medium; or any process that accurately forms a durable reproduction of the record, so long as the record is capable of duplication to a hard copy that is as legible as the original document. Documents that are produced and sent to an insured by use of a template and an electronic mail list shall be considered to be sufficiently reproduced if the insurer can provide proof of mailing of the document and a copy of the template. Documents that require the signature of the insured or insurer's producer shall be maintained in any format listed above provided that evidence of the signature is preserved in that format.
b. The maintenance of records in a computer-based format shall be archival in nature, so as to preclude the alteration of the record after the initial transfer to a computer format. Upon request of an examiner, all records shall be capable of duplication to a hard copy that is as legible as the original document. The records shall be maintained according to written procedures developed and adhered to by the insurer. The written procedures shall be made available to the commissioner during an examination.
c. Photographs, microfilms, or other image-processing reproductions of records shall be equivalent to the originals and may be certified as the same in actions or proceedings before the commissioner unless inconsistent with the state administrative procedure act, chapter twenty-nine-a of the West Virginia Code.
4.8. Records required to be maintained by this rule shall be located as follows:
a. All records required to be maintained under this rule shall be kept in a location that will allow the records to be produced for examination within the time period required. When, under normal circumstances, someone other than the insurer maintains a required record or type of record, the other person's responsibility to maintain the records shall be set forth in a written agreement, a copy of which shall be maintained by the insurer and shall be available to the examiners for purposes of examination.
b. If required by law or otherwise available, the insurer shall maintain disaster preparedness or disaster recovery procedures that include provisions for the maintenance or reconstruction of original or duplicate records at another location. These procedures shall be provided for review during the examination.
4.9. Initial data requests will be submitted to a company at least thirty (30) days prior to the commencement of the on-site examination, desk audit or other form of review to provide ample time for the company to prepare the materials requested. Subdivisions a and b below apply to requests for supplemental data and information not anticipated at the time of the initial request. Companies may secure by encryption or by any other method that renders non-public information unreadable or unusable, provided they provide at no cost the commissioner with the means to decode the information; the commissioner may, in his or her sole discretion, prohibit any method that he or she determines is inadequate for the purposes of the examination.
a. As a means to facilitate the examination and to aid in the examination in accordance with W. Va. Code §33-2-9, an insurer shall provide any requested document or written response to an inquiry submitted by an examiner within five (5) working days, or such other time period as mutually agreed upon by the examiner and the insurer. It is a violation of this rule for an insurer to fail to produce a requested document within the specified time period unless the insurer can demonstrate to the satisfaction of the commissioner that the requested record cannot reasonably be provided within the specified time period of the request.
b. Additional records requested by the commissioner shall be made available for the examination upon the date specified by the examiner in charge.
4.10. Original records required to be provided during a market conduct examination will be returned to the insurer following the examination. If the records relate to an inquiry made by an examiner, copies of the records will become a part of the work papers of the examination. W. Va. Code §33-2-9 shall govern the public access to the work papers of the examination.
W. Va. Code R. § 114-15-5 Contracts for Services and Bond Requirements for Other Individuals
5.1. The commissioner may, as he or she considers necessary, retain any other individual or entity, as defined in subsection 2.17 of this rule, to conduct, supervise, or participate in any examination, analysis or review as provided in W. Va. Code §33-2-9, or this rule.
5.2. Any contract between the commissioner and any other individual or entity, whose services are retained pursuant to this section, is specifically exempt from the competitive bidding requirements contained in W. Va. Code §5A-3-1 et seq.
5.3. The commissioner may, as he or she considers necessary, require any other individual or entity, whose services are retained pursuant to this section, to furnish an appropriate bond prior to conducting, supervising, or participating in any examination, analysis or review as provided in W. Va. Code §33-2-9 or this rule, as follows:
a. The bond shall be in an amount which in the commissioner's discretion is sufficient to complete the examination, analysis or review, but in no event shall be in an amount of less than ten thousand dollars ($10,000.00).
b. Should the commissioner require any other individual or entity, whose services are retained pursuant to this section, to provide a bond, it shall be issued by a company licensed to transact surety insurance in the state of West Virginia as provided in W. Va. Code §33-19-1 and which has received at least an A rating by A.M. Best Company, Inc. in the year immediately preceding the date of the bond's issuance.
c. Proof of payment for and issuance of the bond shall be submitted to the commissioner prior to commencement of any examination, analysis or review by any other individual or entity whose services are retained pursuant to this section.
5.4. Any contract between the commissioner and any other individual or entity whose services are retained pursuant to this section shall provide that all workpapers generated as a result of such contract are property of the commissioner and that all copies of such workpapers, including but not limited to electronic media, documents and communications, shall be returned to the commissioner by the later of the date on which the report is adopted or the expiration of the appeal period: Provided, That the commissioner may, in his or her sole discretion, direct that the workpapers be destroyed in lieu of being returned.
W. Va. Code R. § 114-15-6 Compensation and Accrued Time of Accredited Examiners
6.1. Subject to the commissioner's approval, insurance company examiner supervisors and market conduct examiner supervisors shall receive the salary recommended for insurance examiners in-charge by the Market Regulation Handbook or Financial Condition Examiners Handbook of the National Association of Insurance Commissioners. Subject to the commissioner's approval, insurance company examiners and market conduct examiners shall receive the salary recommended for insurance company examiners by the Market Regulation Handbook or Financial Condition Examiners Handbook of the National Association of Insurance Commissioners.
6.2. An examiner's salary shall be calculated based upon a five-day work week.
6.3. Examiners shall accrue and use annual leave and sick leave at the rates and in the manner established by current West Virginia Division of Personnel rules for state employees or by such other equivalent method as may be adopted by the state of West Virginia, and as supplemented by agency policies regarding use of annual and sick leave established by the commissioner.
a. On any West Virginia state or national holiday that a company being examined chooses to remain open and an examiner chooses to work, the examiner shall be properly compensated.
b. Examiners shall not be reimbursed for travel or living expenses for any day authorized as annual leave.
c. Examiners shall continue to be reimbursed for living expenses during times of sick leave as long as the examiner remains at his or her on-site lodging during the illness.
W. Va. Code R. § 114-15-7 Travel and Living Expenses
7.1. Travel by examiners in connection with activities conducted pursuant to W. Va. Code §33-2-9 or this rule shall not be undertaken unless authorized by the commissioner or his or her designee. Travel expenses are subject to the following limitations:
a. All travel shall be by automobile unless otherwise authorized by the commissioner or his or her designee.
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Examiners shall be compensated for the actual mileage traveled and other incidental expenses for in-state and out-of-state travel as allowed by the Governor's travel rules.
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When an automobile is used, and the distance to an examination or to an assignment is four hundred (400) miles or more, the distance traveled per day shall not be less than four hundred (400) miles per day.
b. When air travel is authorized, a maximum of one (1) day's travel time is allowed and the examiner shall be reimbursed for actual travel expenses incurred.
c. Examiners may travel during regular working hours to and from the examination site no more frequently than every two weeks, and must be reimbursed for travel expenses associated with the travel: Provided, That if travel expenses do not exceed the expenses that the examiner would incur if he or she remained on-site, examiners may travel to and from their residences more frequently than every two weeks and must be reimbursed for travel expenses.
7.2. Living expenses will be reimbursed in accordance with the Governor's travel rules.
a. The street address of the examiner's on-site lodging shall be used in determining the per diem allowance.
b. Weekend and holiday expenses: The examiner shall be reimbursed for lodging, meals and incidental expenses actually incurred on the basis of a seven-day week as long as the examiner actually occupies his or her on-site lodging on each day for which reimbursement is requested.
c. The commissioner may not authorize living expenses if the examination takes place in a location within fifty (50) miles (one way) of an examiner's residence. However, the examiner will be compensated for actual mileage traveled and other incidental expenses as allowed by the Governor's travel rules.
d. Examiners and other employees may, with the approval of the commissioner or his or her designee, be compensated for travel and living expenses in accordance with the Governor's travel rules when attending training, educational courses, conferences, seminars or other activities authorized by the commissioner. Registration fees may be included as expenses that can be reimbursed to the examiners or other employees.
7.3. Other individuals or entities involved in activities conducted pursuant to W. Va. Code §33-2-9 or this rule who are billing directly as authorized in subsection 3.4 of this rule shall file a schedule of their fees and charges with the commissioner prior to incurring any charges. These individuals or entities shall submit copies of their billings to the commissioner simultaneously with their submission to the billed entity, individual or person.
W. Va. Code R. § 114-15-8 Examiner Reporting Requirements
8.1. The examiner in charge shall prepare an "examiner's semimonthly days worked report" to be submitted on a form prescribed by the commissioner. The form shall be submitted to the commissioner within three (3) days of the end of each semimonthly pay period. The report shall contain the following information:
a. The period of time the report covers;
b. The name of entity, individual or person that is being examined and their normal hours of operation;
c. The mailing address and street address, including county, of the business location of the entity being examined, and the mailing address and street address of the examiner's on-site lodging;
d. The telephone number(s) and extension(s) where the examiner can be reached at all times;
e. The domiciliary state, if the examination is being performed on a non-domestic entity;
f. A listing of any other individual or entity participating in the assignment and their domicile or zone representation, if applicable;
g. A description of the phases of the examination or assignment that the examiner worked on during the reporting period;
h. Comments on any unusual or controversial items;
i. The tentative closing date of the assignment;
j. A schedule of each of the days in the reporting period and the examiner's status on that day, to include the total of days designated as work days, annual days, sick days and expense days; and k. The name and signature of the examiner in charge completing the report and a statement that the information provided is true and correct.
8.2. The information identified in subsection 8.1 of this section is necessary to satisfy the substantiation of business expenses requirement of the Internal Revenue Service placed upon the commissioner as an employer. Failure on the part of the examiner to provide any of the information could require the offices of the insurance commissioner of West Virginia to report expense amounts as income of the examiner to the Internal Revenue Service.
8.3. An examiner shall report changes to his or her telephone number and extension to the commissioner between reporting periods. Failure to report the changes could affect the commissioner's ability to consider an examiner's business expenses as substantiated.
114CSR15
114CSR15
Series 20 Surplus Lines Insurance
W. Va. Code R. § 114-20-1 General
1.1. Scope. -- This legislative rule establishes certain requirements for the licensing and regulation of surplus lines licensees, regulates access to the surplus lines market, prescribes procedures for the placement of insurance with surplus lines insurers and provides for the collection and allocation of premium taxes. This rule is largely based on the National Association of Insurance Commissioners' (NAIC) "Nonadmitted Insurance Model Act (Model 870)", as amended in 2002, and on the NRRA to the extent it has been incorporated in W. Va. Code §33-12C-1 et seq.
1.2. Authority. -- W. Va. Code §33-2-10.
1.3. Filing Date. -- April 20, 2012.
1.4. Effective Date. -- April 20, 2012.
W. Va. Code R. § 114-20-2 Definitions
2.1. “Admitted insurer” means an insurer licensed to do an insurance business in this state.
2.2. “Affiliate” means, with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured. An entity has control over another entity if it directly or indirectly or acting through one or more persons owns, controls, or has the power to vote 25% or more of any class of voting securities of the other entity, or the entity controls in any manner the election of a majority of the directors or trustees of the other entity.
2.3. “Affiliated Group” means any group of entities that are all affiliated.
2.4. “Business entity” means a corporation, association, partnership, limited liability company, or other legal entity.
2.5. “Capital,” as used in the financial requirements of W. Va. Code §33-12C-5, means funds paid in for stock or other evidence of ownership.
2.6. “Clearinghouse” means the entity established pursuant to NIMA to facilitate the receipt and distribution of premium taxes and transaction data related to nonadmitted insurance.
2.7. “Commissioner” means the West Virginia Insurance Commissioner.
2.8. “Eligible surplus lines insurer” means a nonadmitted insurer with which a surplus lines licensee may place surplus lines insurance.
2.9. “Evidence of Insurance” means written or printed statements evidencing the applicability and effectiveness of insurance coverages, including, but not limited to, policy forms, certificates, cover notes, binders and other traditionally acceptable evidences of insurance.
2.10. “Exempt commercial purchaser” means any person purchasing commercial insurance that, at the time of placement, employs or retains a qualified risk manager to negotiate insurance coverage, has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding twelve months, and meets at least one of the following criteria:
2.10.a. Has net worth in excess of $20 million;
2.10.b. Generates annual revenues in excess of $50 million;
2.10.c. Employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1000 employees in the aggregate;
2.10.d. Is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30 million; or
2.10.e. Is a municipality with a population in excess of 50,000 persons: Provided, that on January 1, 2015 and every five years thereafter, the amounts in subdivisions a, b and d of this subsection shall be adjusted to reflect the percentage change for such five-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the federal Department of Labor.
2.11. “Export” means to place surplus lines insurance with a nonadmitted insurer.
2.12. “Export list” means a list published by the Commissioner of coverages and classes of insurance for which the commissioner has determined no general market exists with admitted insurers.
2.13. “Foreign decree” means any decree or order in equity of a court located in any United States jurisdiction, including a federal court of the United States, against any person engaging in the transaction of insurance in this state.
2.14. “Home state” means, with respect to an insured:
2.14.a. The state in which an insured maintains its principal place of business, or, in the case of an individual, the individual’s principal residence; or
2.14.b. If 100% of the insured risk is located out of the state referred to in subdivision a of this subsection, the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
2.15. “Individual” means any private or natural person as distinguished from a partnership, corporation, limited liability company or other legal entity.
2.16. “Insolvent Insurer” means any insurer which is determined to be insolvent in accordance with the provisions of chapter thirty three of the West Virginia Code, or any insurer which is determined to be insolvent by the commissioner of any other state.
2.17. “Insurance” means any of the lines of authority listed in W. Va. Code §33-1-10.
2.18. “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.
2.19. “Insurer” means any person, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds insurer, insurance exchange syndicate, fraternal benefit society, and any other legal entity engaged in the business of making contracts of insurance.
2.20. “Kind of insurance” means one of the types of insurance required to be reported in the annual statement which must be filed with the Commissioner by admitted insurers.
2.21. “License” means a document issued by the Commissioner authorizing an individual to act as a surplus lines licensee of the lines of authority specified in the document. The license itself does not create any authority, actual, apparent or inherent, in the holder to represent to commit an insurer.
2.22. “Licensed Insurer” means an insurer licensed by the commissioner to do insurance business in the state of West Virginia.
2.23. “Line of insurance” means coverage afforded under the particular policy that is being placed.
2.24. “Model allocation schedule and reporting form” means the current version of the NAIC model allocation schedule and reporting form for surplus lines insurers.
2.25. “Nonadmitted and Reinsurance Reform Act of 2010” or “NRRA” means those provisions incorporated as Subtitle B of the Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-517.
2.26. “Nonadmitted Insurance Multi-State Agreement” or “NIMA” means the model agreement first adopted by the NAIC on December 16, 2010, to facilitate the collection, allocation and disbursement of premium taxes attributable to the placement of nonadmitted insurance, provide for uniform methods of allocation and reporting among nonadmitted insurance risk classifications, and share information among states relating to nonadmitted insurance taxes; such term includes the agreement’s allocation tables and any changes made thereto in response to changes of the laws of signatory states; a copy of the model agreement is attached as appendix A.
2.27. “Nonadmitted insurer” means an insurer not licensed to do an insurance business in this state.
2.28. “Person” means any natural person or other entity, including, but not limited to individuals, partnerships, associations, trusts or corporations.
2.29. “Policy” or “contract” means any contract of insurance.
2.30. “Producer” means an individual insurance producer.
2.31. “Signatory state” or “participating state” means a state that has entered into NIMA.
2.32. “Surplus lines insurance” or “excess lines insurance” means any property and casualty insurance in this state of properties, risks or exposures, located or to be performed in the state, permitted to be placed through a surplus lines licensee with a nonadmitted insurer eligible to accept such insurance.
2.33. “Surplus Lines Insurer” means an insurer not licensed by the commissioner to do insurance business, and considered to be a nonadmitted insurer, in the state of West Virginia.
2.34. “Surplus Lines Licensee” means an individual licensed pursuant to the provisions of this rule and W. Va. Code §33-12C-8 for the purposes of placing insurance on risks resident, located or to be performed in this state, with a surplus lines insurer.
2.35. “Surplus Lines Market” means the entire scope of insurance business on risks resident, located or to be performed in this state, to be placed with a surplus lines insurer.
2.36. “Surplus lines transaction” means the solicitation, negotiation, procurement or effectuation with a surplus lines insurer of an insurance contract or certificate of insurance. It also means any renewal, cancellation, endorsement, audit, or other adjustment to the insurance contract.
2.37. “Wet marine and transportation insurance” means:
2.37.a. Insurance upon vessels, crafts, hulls and other interest in them or with relation to them;
2.37.b. Insurance of marine builder’s risks, marine war risks and contracts of marine protection and indemnity insurance;
2.37.c. Insurance of freight and disbursements pertaining to a subject of insurance within the scope of this subsection;
2.37.d. Insurance of personal property and interests therein, in the course of exportation from or importation into any country, or in the course of transportations coastwise or on inland water, including transportation by land, water or air from point of origin to final destination, in connection with any and all risks or perils of navigation, transit or transportation, and while being prepared for and while awaiting shipment, and during any incidental delays, transshipment, or reshipment; provided, however, that insurance of personal property and interests therein shall not be considered wet marine and transportation insurance if the property has;
2.37.d.1. Been transported solely by land;
2.37.d.2. Reached its final destination as specified in the bill of lading or other shipping document; or
2.37.d.3. The insured no longer has an insurable interest in the property.
W. Va. Code R. § 114-20-3 Licensing of a Surplus Lines Licensee; Revocation, Suspension or Refusal to Renew License and Penalty in Lieu Thereof
3.1. Licensing requirements. -- Any applicant for a surplus lines licensee’s license issued or renewed under the provisions of W. Va. Code §33-12C-8:
3.1.a. Shall be a duly licensed individual insurance producer holding a current and valid license for the type(s) of insurance which the applicant expects and intends to export to the surplus lines market;
3.1.b. Shall have held for at least three (3) consecutive years immediately preceding the date of application a valid individual insurance producer’s license for the type(s) of insurance the applicant expects and intends to export to the surplus lines market, and shall have held a valid West Virginia resident or nonresident individual insurance producer’s license for such type(s) of insurance for at least one (1) of those three (3) years, or hold a valid excess or surplus line broker license issued by another state. The commissioner, in his or her discretion, may waive this requirement if the applicant otherwise demonstrates the necessary trustworthiness and competence by education, experience or other relevant factors;
3.1.c. Shall satisfactorily complete an examination administered by the office of the commissioner or its designated agent or hold a valid excess line broker or surplus lines license issued by another state.
3.1.d. Shall pay the required license fee as established by the provisions of W. Va. Code §33-12C-8;
3.1.e. Shall be considered trustworthy for the purpose of conducting insurance business as a surplus lines licensee, as required by the provisions of W. Va. Code §33-12C-8; and
3.1.f. Shall satisfy any other criteria reasonably established by the commissioner.
3.2. Revocation, suspension or refusal to renew license. -- Whenever, after notice and hearing, the commissioner is satisfied that any surplus lines licensee has violated any provisions of any administrative rule of the commissioner or any provisions of W. Va. Code §33-12C-9, or is incompetent or untrustworthy, the commissioner may place on probation, suspend, revoke or refuse to issue or renew a surplus lines licensee’s license, or may levy a civil penalty not to exceed five thousand dollars ($5,000.00) or any combination of actions for each violation, and upon failure of the licensee to pay the penalty by delivery of the sum to the commissioner within thirty (30) days of notice of the penalty, the commissioner shall revoke, suspend or refuse to renew the license.
W. Va. Code R. § 114-20-4 Placement of Surplus Lines Coverages
4.1. Diligent Search -- Except as provided in section 4A of this rule, insurance coverage written by a surplus lines insurer and placed by a surplus lines licensee for an insured whose home state is West Virginia may not be procured until a diligent search has been made by the individual insurance producer to place the risk with an admitted insurer. The surplus lines licensee shall submit to the commissioner a sworn notarized affidavit that a diligent search has been made by the individual insurance producer to place the risk with licensed insurers authorized to write and actually writing the particular risk sought to be placed in the excess lines market. This affidavit shall be maintained, as required by W. Va. Code §33-12C-16, as part of the full and true record of each surplus lines contract procured.
4.2. The following minimum requirements and conditions apply to the conduct of a diligent search to place a risk with licensed insurers:
4.2.a. The individual insurance producer shall execute and forward to the licensed surplus lines licensee a written statement, in a form prescribed by the commissioner, declaring that a diligent effort to procure the desired coverage from admitted insurers was made. The form shall contain an affidavit that the individual insurance producer complied with the due diligence requirements of this rule. The affidavit shall affirm that the insured was expressly advised prior to the placement of the insurance that:
4.2.a.1. The surplus lines insurer with which the insurance is to be placed is not an admitted authorized insurer in this state and is not subject to the commissioner’s supervision; and,
4.2.a.2. In the event the surplus lines insurance becomes insolvent, claims will not be paid nor will unearned premiums be returned by any West Virginia insurance guaranty fund.
4.2.b. No individual insurance producer may solicit, procure, place, or renew any insurance with a nonadmitted insurer unless the producer has been unable to procure the requested insurance from an authorized insurer after conducting a diligent search. A diligent search requires the individual insurance producer to contact as many insurers as the individual insurance producer represents, that customarily write the kind of insurance requested by the insured. A diligent search is presumed if declinations are received from each authorized insurer contacted.
4.2.c. An individual insurance producer shall obtain a declination in writing from the licensed insurer or create a written record of an oral declination by the licensed insurer. A written record of an oral declination shall be made by the person who initially received the declination or by another employee of the individual insurance producer from information transmitted by the person who received the declination. A declination shall be obtained from the licensed insurer or recorded by or on behalf of the individual insurance producer at or near the time of receipt of the declination, and the records shall be maintained in the regular course of business.
4.2.d. A written record documenting an oral declination shall include:
4.2.d.1. The name, office location and phone number of the licensed insurer or firm acting in the capacity of underwriting manager for the licensed insurer.
4.2.d.2. The name and position of the person contacted.
4.2.d.3. The date of contact.
4.2.d.4. A detailed explanation of the licensed insurer’s reasons for declining to insure the risk.
4.2.e. If a licensed insurer fails to respond within 5 business days after first being contacted by the individual insurance producer, the individual insurance producer may assume that the insurer has declined to write the risk. The individual insurance producer shall create a written record of the contact, including the manner in which contact was made and the information required under subdivision d of this subsection.
4.2.f. A declination of coverage by a licensed insurer shall be made by a full time employee of the licensed insurer who has underwriting responsibility or by a full time employee of a firm acting in the capacity of underwriting manager for the licensed insurer.
4.2.g. Affiliates.
4.2.g.1. A declination may not be obtained from a licensed insurer which is an affiliate of a licensed insurer from which a declination has already been obtained.
4.2.g.2. Surplus lines insurance may not be placed with an unlicensed insurer that is an affiliate of a licensed insurer from which a declination has been obtained.
4.2.g.3. The restrictions in paragraphs 1 and 2 of this subdivision do not apply if the affiliated insurers write coverage independently of each other using separate and independently developed underwriting criteria and marketing plans and, for underwriting purposes, compete with each other for the same type of coverage or class of insurance.
4.3. Notification. -- Each surplus lines insurance policy or evidence of insurance shall have printed or stamped in contrasting color on the front page the following statement:
THIS COMPANY IS NOT LICENSED TO DO BUSINESS IN WEST VIRGINIA
AND IS NOT SUBJECT TO THE WEST VIRGINIA INSURANCE GUARANTY ACT.
4.4. Records of surplus lines licensee. -- Each surplus lines licensee shall keep in his or her office a full and true record of each surplus lines contract procured by him or her on behalf of any insured whose home state is West Virginia, and the records may be examined at any time thereafter by the commissioner. The records shall include the following items as they are applicable:
4.4.a. The name and address of the surplus lines insurer;
4.4.b. The names and addresses of the insureds;
4.4.c. The amount of insurance;
4.4.d. The gross premium charged;
4.4.e. The return premium paid, if any;
4.4.f. The rate of premium charged on the several items of coverages;
4.4.g. The effective date of the contract and the terms of the contract;
4.4.h. A brief general description of the risks insured against and the property insured;
4.4.i. The policy number;
4.4.j. The written due diligence declaration of the individual insurance producer required in subsection 4.2 of this section unless the due diligence requirement is not applicable; and
4.4.k. Any additional information the commissioner may require to effectuate the provisions of The Nonadmitted Insurance Act, W. Va. Code §33-12C-1 et seq. and, if executed, NIMA.
4.5. Responsibilities of the surplus lines licensee. -- Each licensed surplus lines licensee who participates directly or indirectly in effecting any insurance contract on a surplus lines basis on behalf of any insured whose home state is West Virginia:
4.5.a. Shall, in no instance, knowingly place any coverage in an insolvent insurer, in accordance with the provisions of W. Va. Code §33-12C-26;
4.5.b. May accept and place authorized surplus lines business from any individual insurance producer licensed in this state for the kind of insurance involved, and may compensate the individual insurance producer. The surplus lines licensee has the right to receive from the surplus lines insurer the customary commission, in accordance with the provisions of W. Va. Code §33-12C-15; and
4.6. Surplus lines insurance valid. -- In accordance with the provisions of W. Va. Code §33-12C-5, any insurance contract procured as surplus lines coverage from a surplus lines insurer shall be fully valid and enforceable as to all parties, and shall be given recognition in all matters and respects to the same effect as like contracts issued by licensed insurers.
W. Va. Code R. § 114-20-4A Exempt Commercial Purchasers. 4A.1. A licensee is not required to perform a diligent search in accordance with section 4 of this rule when seeking to procure or place nonadmitted insurance for an exempt commercial purchaser whose home state is West Virginia if the prospective purchaser has signed a document prior to the placement of such insurance that provides that the licensee has disclosed that such insurance may or may not be available from an admitted insurer that might provide greater protection and more regulatory oversight and that the purchaser has nonetheless requested that the licensee procure or place with a nonadmitted carrier
W. Va. Code R. § 114-20-5 Surplus Lines Premium Tax Annual Return and Report by Surplus Lines Licensee
5.1. If NIMA is executed, on and after the date on which NIMA is made effective in this state, each surplus lines licensee with respect to those policies where West Virginia is the home state and for which the payment of premium taxes is due shall:
5.1.a. Forward such payments and related information as required by NIMA to the Clearinghouse for deposit in the Clearinghouse account and shall send any additional information to the Commissioner as may be required by him or her as set forth on the agency website.
5.1.b. Make a quarterly tax filing on or before February 15 for the quarter ending the preceding December 31, May 15 for the quarter ending the preceding March 31, August 15 for the quarter ending the preceding June 30, and November 15 for the quarter ending the preceding September 30; and
5.1.c. Pay such fees as may be established by the Clearinghouse.
5.2. Payment of surplus lines premium taxes. -- On and after the date on which NIMA is made effective in this state, the taxes required to be paid under the provisions of this rule where West Virginia is the home state, are as follows:
5.2.a. On the portion of premium allocated to West Virginia, as determined by the Commissioner based on Annex A and Annex B of NIMA – 4.55%;
5.2.b. On the portion of the premium allocated to each signatory state, as determined by the Commissioner based on Annex A and Annex B of NIMA – the rate specified by that state, as listed in allocation tables published by the Clearinghouse; and
5.2.c. On the portion not allocated under either subdivision a or b of this subsection and therefore deemed to be allocated to non-participating states – 4.55%.
5.3. Transition periods.
5.3.a. A policy with an effective date prior to July 1, 2011, remains subject to the provisions of this rule in effect on June 30, 2011, with respect to the applicable rates, allocation, remittance and reporting.
5.3.b. A policy with an effective date on or after July 1, 2011 and which is within a period that NIMA is not in effect in this state, is subject a tax of 4.55% on all premium, which amount is payable in the manner and at such times set forth on the Commissioner’s website.
5.3.c. A policy with an effective date which is within a period that NIMA is in effect in this state is subject to the provisions of subsections 5.1 and 5.2 of this section.
W. Va. Code R. § 114-20-6 Allocation of Premium Tax on Multi-State Risks
6.1. If NIMA is executed, the method of tax allocation for multi-state risks shall be that set forth in Annex A and Annex B of NIMA.
W. Va. Code R. § 114-20-7 Export List
7.1. Commissioner may maintain export list. -- The commissioner may maintain an export list of insurance coverages and classes that may be placed with surplus lines insurers for insureds whose home state is West Virginia.
7.1.a. The commissioner may consider the following in determining the insurance coverages and classes to be listed:
7.1.a.1. The current marketplace;
7.1.a.2. Information from the surplus line licensees;
7.1.a.3. Information from admitted and surplus lines insurers doing business in West Virginia;
7.1.a.4. Information from other sources, including producers and consumers; and
7.1.a.5. Any other information the commissioner deems relevant.
7.1.b. Any person may request in writing that, at the next publication of the list, the commissioner add or remove a coverage or class of insurance from the list. The person must provide evidence of market conditions to substantiate the request.
7.1.c. The list, if maintained, may be published at least annually but may be revised and republished at any time.
W. Va. Code R. § 114-20-8 Conditions For Marketing Insurance With Surplus Lines Insurers
8.1. Producers may not solicit business on behalf of a surplus lines insurer. However:
8.1.a. Producers may advertise the availability of insurance products for the insurance coverages and classes included on the export list to potential insureds and other producers.
8.1.b. Surplus lines licensees may advertise their services and product lines to other producers.
8.1.c. Such advertisements shall identify the fact that the insurance will be placed with a surplus lines insurer. The advertisements may not identify the insurer by name nor act as a solicitation on behalf of any surplus lines insurer. The advertisements may not identify specific rates or specific policy provisions.
8.2. Once negotiations over the available terms and conditions for specific coverages begin, at least the following facts must be disclosed in writing to the potential insured:
8.2.a. That the insurance will be placed through a surplus lines insurer and the name of the insurer;
8.2.b. That the producer is not an agent of the potential insurer because surplus lines insurers are not permitted to appoint individual insurance producers;
8.2.c. That the surplus lines market is a specialty market that has limited regulatory oversight by the commissioner, and specifically, there is no regulation of policy coverage forms or rates; and
8.2.d. That no protection is afforded under any West Virginia guaranty fund mechanism.
8.3. Subject to the general provisions of W. Va. Code §§33-12C-1 et seq., a surplus lines licensee may originate surplus lines insurance or accept applications for surplus lines insurance from any other producer duly licensed as to the kinds of insurance involved. The surplus lines licensee may compensate the producer.
APPENDIX A
NONADMITTED INSURANCE MULTI-STATE AGREEMENT (NIMA)
WHEREAS, the Nonadmitted and Reinsurance Reform Act of 2010 (“NRRA”), which was incorporated into the Dodd-Frank Wall Street Reform and Consumer Protection Act, provides that only an insured’s “Home State” may require a premium tax payment for Nonadmitted Insurance; and WHEREAS, the NRRA authorizes States to enter into a compact or otherwise establish procedures to allocate among the States the Nonadmitted Insurance premium taxes;
NOW, THEREFORE, in consideration of the foregoing, the Participating States that are signatories hereto, do freely and voluntarily enter into this Agreement under the following terms and conditions:
PART I
Purpose The purposes of this Agreement, through means of joint and cooperative action among the Participating States, are to:
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Facilitate the payment and allocation of premium taxes on Nonadmitted Insurance for Multi-State Risks among the Participating States in accordance with the premium tax allocation method and formula contained in the Annexes attached to this Agreement and based on the rates established by each Participating State.
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Require nationwide uniform requirements, forms and procedures that facilitate the reporting, payment, collection and allocation of premium taxes for Nonadmitted Insurance for Multi-State Risks as contemplated by the NRRA.
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Coordinate reporting of premium taxes and transaction data on Multi-State Risks among Participating States.
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Establish a Clearinghouse to facilitate the receipt and distribution of premium taxes and transaction data related to Nonadmitted Insurance of Multi-State Risks.
PART II
Definitions 5. For purposes of this Agreement, the following definitions shall apply:
a. “Agreement” means this Nonadmitted Insurance Multi-State Agreement (NIMA), entered into by the Participating States pursuant to Section 521(b)(1) of the NRRA.
b. "Admitted Insurer" means, with respect to a State, an insurer that is licensed to transact the business of insurance in such State.
c. “Clearinghouse” means the entity established pursuant to this Agreement to facilitate the receipt and distribution of premium taxes and transaction data related to Nonadmitted Insurance.
d. "Home State" means, (1) In General.—Except as provided in paragraphs (2) through (5), the term ‘‘Home State’’ means, with respect to an insured— (A) the State in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence; or (B) if 100 percent of the insured risk is located out of the State referred to in subparagraph (A), the State to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
(2) “Principal place of business” means, with respect to determining the Home State of the insured, (a) the State where the insured maintains its headquarters and where the insured’s high-level officers direct, control and coordinate the business activities; or (b) if the insured’s high-level officers direct, control and coordinate the business activities in more than one State, the State in which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated; or (c) if the insured maintains its headquarters or the insured’s high-level officers direct, control and coordinate the business activities outside any State, the State to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
(3) “Principal residence” means, with respect to determining the Home State of the insured, (a) the State where the insured resides for the greatest number of days during a calendar year; or (b) if the insured’s principal residence is located outside any State, the State to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
(4) Affiliated Groups.—If more than one insured from an affiliated group are named insureds on a single Nonadmitted Insurance contract, the term ‘‘Home State’’ means the Home State, as determined pursuant to subparagraph (A) of paragraph (1) of this subsection, of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.
(5) Group Insurance. When the group policyholder pays 100% of the premium from its own funds, the term “Home State” means the Home State, as determined pursuant to subparagraph (A) of paragraph (1) of this subsection, of the group policyholder. When the group policyholder does not pay 100% of the premium from its own funds, the term “Home State” means the Home State, as determined pursuant to subparagraph (A) of paragraph (1) of this subsection, of the group member.
e. "Independently Procured Insurance" means insurance procured by an insured directly from a Nonadmitted Insurer as permitted by the laws of the Home State.
f. “Licensed” means, with respect to an insurer, authorization to transact the business of insurance by a license, certificate of authority, charter, or otherwise.
g. “Multi-State Risk” means a risk covered by a Nonadmitted Insurer with insured exposures in more than one State.
h. “Nonadmitted Insurance” means any Property and Casualty Insurance permitted in a State to be placed directly or through a Surplus Lines Licensee with a Nonadmitted Insurer eligible to accept such insurance. For purposes of this Agreement, Nonadmitted Insurance includes Independently Procured Insurance and Surplus Lines Insurance.
i. “Nonadmitted Insurer” means, with respect to a State, an insurer not licensed to engage in the business of insurance in such State, but shall not include a risk retention group, as that term is defined in section (2)(a)(4) of the Liability Risk Retention Act of 1986 (15 U.S.C. 3901(a)(4)).
j. “Non-Participating State” means any State that has not executed this Agreement.
k. “Participating State” means any State that has executed this Agreement and that has not withdrawn or defaulted pursuant to Part VII.
l. “Property and Casualty Insurance” means any kind of insurance on property, fidelity and surety insurance, or liability insurance, but does not mean title insurance, workers’ compensation insurance, or any insurance on the life of a person, including life insurance, annuities, accident and health insurance, or disability insurance.
m. “Single-State Risk" means a risk with insured exposures in only one State.
n. “Surplus Lines Insurance” means insurance procured by a Surplus Lines Licensee from a Surplus Lines Insurer as permitted under the law of the Home State; for purposes of this Agreement, “Surplus Lines” shall also mean excess line as may be defined by applicable State law.
o. "Surplus Lines Insurer" means a Nonadmitted Insurer permitted under the law of the Home State to accept business from a Surplus Lines Licensee.
p. “Surplus Lines Licensee" means an individual, firm or corporation that is licensed in a State to sell, solicit or negotiate insurance, including the agent of record on a Nonadmitted Insurance policy, on properties, risks or exposures located or to be performed in a State with Nonadmitted Insurers.
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In this Agreement, unless otherwise specified, words or expressions used in this Agreement have the same meaning as in the Nonadmitted and Reinsurance Reform Act of 2010.
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The following are the Annexes that are attached to, and that form an integral part of, this Agreement: Annex A - Nonadmitted Insurance Premium Tax Allocation Schedule; Annex B – Allocation Formula; and Exhibit 1 – Information Required to be Submitted by the Broker or Insured via the Clearinghouse Web Portal.
PART III
Implementation 8. The Participating State, as signatory herein, represents that it has the legal authority necessary to enter into this Agreement for the purposes stated in the Agreement, including the allocation among the other Participating States of applicable Nonadmitted Insurance premium taxes and the use of the designated Clearinghouse for the facilitation of the payment and distribution of such premium taxes.
- Pursuant to the terms of this Agreement, each Participating State agrees to:
a. implement nationwide uniform requirements, forms and procedures that facilitate the reporting, payment, collection and allocation of premium taxes for Nonadmitted Insurance for Multi-State Risks;
b. allocate among the applicable Participating States the Nonadmitted Insurance premium taxes required by an insured’s Home State as described herein;
c. work collaboratively and in a timely manner towards the imposition of NRRA’s Nonadmitted Insurance premium tax reforms by July 21, 2011; and d. establish and utilize a Clearinghouse to facilitate the receipt, allocation, and distribution of the payment of Nonadmitted Insurance premium taxes to the Participating States.
PART IV
Collection and Allocation Procedures 10. The Clearinghouse will operate pursuant to a plan of operation, to be agreed upon by two-thirds of the Participating States, to ensure that the Clearinghouse and its computer software system are capable of meeting the requirements of this Agreement.
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Each Participating State agrees to use the Clearinghouse for all Multi-State Risks for which that state is the Home State. Except as otherwise provided, each Participating State agrees to require Surplus Lines Licensees and insureds who independently procure insurance to utilize the Clearinghouse for the reporting and payment of Nonadmitted Insurance premium taxes for all Multi-State Risks for which that state is the Home State. This Agreement shall not require a State to treat any Property and Casualty Insurance as Nonadmitted Insurance where the laws of the State do not provide such treatment. Further, each Participating State may, at its discretion, agree to use the Clearinghouse for any Single-State Risks or non-Property and Casualty Insurance risks for which that state is the Home State.
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Each Participating State agrees to contract with the Clearinghouse to provide the services that are the subject of this Agreement. There shall be no material variations in the terms of each Participating State’s contract with the Clearinghouse and each such contract shall include, but not be limited to, terms prohibiting the Clearinghouse from lobbying, accepting gifts or donations, political activity of any kind, or conflicts of interest, and shall include terms requiring confidentiality of information received by or provided to the Clearinghouse.
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Each Participating State agrees to require the payment of taxes, fees and assessments when the Participating State is the Home State as follows: (a) as determined by the Home State on the portion of the premium allocated to the Home State based on Annex A and Annex B; (b) specified by each Participating State on the portion of the premium allocated to that State based on Annex A and Annex B; and (c) determined by the Home State on any portion of the premium not allocated under subsections (a) and (b) of this section. Each Participating State agrees to establish one tax rate, encompassing any applicable taxes, fees and assessments, that applies to Nonadmitted Insurance; provided, however, that nothing shall require a Participating State to impose a tax on any kind of insurance for which the State presently does not have an obligation to tax or has allowed an exemption; and further provided that, where a Home State utilizes a surplus lines stamping office, the stamping office may, in accordance with the laws of that State, impose stamping fees in addition to the tax.
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Each Participating State shall give notice to the Clearinghouse of any changes to its statewide Nonadmitted Insurance premium tax rate and any statewide assessments at least 90 days prior to the effective date of such changes. The Clearinghouse will send notice of any changes to all of the Participating States via electronic mail to the designated contact of each Participating State.
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Each Participating State agrees to authorize the Clearinghouse, when the Participating State is the Home State, to collect a reasonable fee, to be established by contract between the Participating State and the Clearinghouse, payable by the insured directly or through a Surplus Lines Licensee on each transaction processed through the Clearinghouse to cover the cost of the operations and activities of the Clearinghouse. If the Home State has a stamping office, this fee shall be in addition to the service fee that is received by the stamping office.
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No Participating State, other than the Home State, may require a Surplus Lines Licensee to submit data, reports or insurance documentation to a stamping office of that State. A Home State with a stamping office may require the initial submission of transaction data, premium taxes and fees with the stamping office of that State provided the State agrees by contract with the Clearinghouse to forward relevant transaction data, premium taxes and fees to the Clearinghouse for distribution to other Participating States.
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Except as otherwise provided, each Participating State agrees to require, by statute or rule, for those policies of Nonadmitted Insurance where that State is the Home State and for which the payment of Nonadmitted Insurance premium taxes is due, that the Surplus Lines Licensee or insured who independently procures insurance shall forward such payments and related information based on Annex A and Annex B to the Clearinghouse for deposit in the Clearinghouse account. Each Participating State agrees to require that the payment of Nonadmitted Insurance premium taxes will be accompanied by transaction data consistent with Exhibit 1. After the Clearinghouse has collected and reconciled the payments, the appropriate amount will be deposited into each Participating State’s depository account at the banking institution selected by the Participating State. With respect to the depository accounts of the Participating States, the Clearinghouse shall only have the authority to transfer premium taxes collected and on deposit in the Clearinghouse account into the depository account of the Participating States.
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For those policies of Nonadmitted Insurance where transaction data consistent with Exhibit 1 is submitted prior to the payment of Nonadmitted Insurance premium taxes, each Participating State agrees that the accounting of taxes due will be tracked by the Clearinghouse, and the payment thereof will be handled by the Clearinghouse. Each Participating State agrees to require the Surplus Lines Licensee or insured who independently procures insurance, as applicable, to submit information based on Annex A and Annex B. The Clearinghouse will assess the allocated premium based upon each Participating State’s statewide Nonadmitted Insurance tax rate and statewide assessments for each Participating State with exposure. At the end of the reporting period, the Clearinghouse will allocate the amount collected on behalf of the Home State to all other Participating States and net the amounts owed to or from each of the States. The netting of taxes will be based on the actual amount collected.
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The Clearinghouse will report to the Participating States, Surplus Lines Licensees and insureds who independently procure insurance, within 15 days of the quarterly premium tax filing and payment dates set forth in section 20 of this Part, all premium taxes owed to each of the Participating States for the preceding quarter, the dates upon which payment of such premium taxes are due, and the method through which they were paid to the Clearinghouse.
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Each Participating State agrees that, when it is the Home State, it shall require tax filings and payments quarterly utilizing the following dates only: February 15 for the quarter ending the preceding December 31, May 15 for the quarter ending the preceding March 31, August 15 for the quarter ending the preceding June 30, and November 15 for the quarter ending the preceding September 30.
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The Home State agrees to enforce, if necessary and to the extent allowed by the laws of the Home State, any of the following: unpaid tax; interest due; and applicable penalties. The Home State will follow the calculation of these amounts and the methods of collection governed by the laws of the Home State and the plan of operation adopted pursuant to this Agreement.
PART V
Dispute Resolution 22. Each Participating State agrees to exercise best efforts to reach consensus in respect to disputed issues arising on matters governed by this Agreement.
- If a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute cannot be settled through negotiation, the affected Participating States agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to arbitration, litigation, or some other dispute resolution procedure. A dispute involving one or more Participating States or the Clearinghouse is a dispute arising out of or relating to this Agreement for purposes of this Part.
PART VI
Participating States, Effective Date and Amendment 24. Any State is eligible to become a Participating State. This Agreement shall become effective and binding as of the first day after the conclusion of the calendar quarter in which the Agreement is executed by the duly authorized representative of at least two (2) Participating States. Thereafter, it shall become effective and binding as to any other Participating State as of the first day after the conclusion of the calendar quarter in which such State executes this Agreement.
- Amendments may be proposed by any of the Participating States under this Agreement. The amendment shall become effective after two-thirds of the Participating States agree in writing to accept the amendment.
PART VII
Withdrawal, Default and Dissolution 26. Withdrawal a. Once effective, this Agreement shall continue in force and remain binding upon each and every Participating State, provided that a Participating State may withdraw from the Agreement ("Withdrawing State") by providing 60 days’ written notice to the Clearinghouse, which shall provide advance written notice to all Participating States and facilitate public notice of the State’s withdrawal from the Agreement.
b. The Withdrawing State is responsible for all obligations, duties and liabilities incurred through the effective date of withdrawal, including any obligations, the performance of which extend beyond the effective date of withdrawal.
- Default a. If any Participating State has at any time defaulted ("Defaulting State") in the performance of any of its obligations or responsibilities under this Agreement, the Defaulting State shall be suspended from the effective date of default. The grounds for default include, but are not limited to, failure of a Participating State to perform its obligations or responsibilities as required by this Agreement.
b. Reinstatement following termination of any Participating State requires renewed execution of the Agreement.
- Dissolution of Agreement a. The Agreement dissolves effective upon the date of the withdrawal or default of the Participating State that reduces membership in the Agreement to one Participating State.
b. Upon the dissolution of this Agreement, the Agreement becomes null and void and shall be of no further force or effect.
PART VIII
Severability and Construction 29. The provisions of this Agreement shall be severable and if any phrase, clause, sentence or provision is deemed unenforceable, the remaining provisions of this Agreement shall be enforceable.
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The provisions of this Agreement shall be liberally construed to effectuate its purposes.
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Throughout this Agreement, the use of the singular shall include the plural and vice-versa. The headings and captions of parts, sections, subsections, paragraphs and sub-paragraphs used in this Agreement are for convenience only and shall be ignored in construing the substantive provisions of this Agreement.
PART IX
Binding Effect of Agreement and Other Laws 32. The terms of this Agreement, and the procedures to be established as amendments to this Agreement, are binding upon the Participating States, except as otherwise may be provided herein.
- Each Participating State agrees to abide by the applicable laws, regulations, and statutes concerning confidentiality and nondisclosure of information to the extent required or allowed by law. This Agreement neither abrogates nor supersedes applicable Participating State laws respecting confidentiality, trade secrets and proprietary information.
PART X
Miscellaneous 34. This Agreement may be executed in any number of counterparts, each of which will constitute an original and all of which taken together will constitute one and the same instrument. Counterparts may be executed either by hard copy or electronically, or by facsimile, and the Participating States shall accept any signatures received by electronic mail or facsimile as original signatures of the Participating State. The Participating State will promptly forward to the other Participating States and the Clearinghouse a signed copy of this Agreement.
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By entering into this Agreement, a Participating State is not deemed to surrender or abandon any of the powers, rights, privileges or authorities vested in it under its State constitution, statutes, acts, or otherwise, or to impair any of such powers, rights, privileges or authorities.
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This Agreement, including all Annexes and the Exhibit attached, constitutes the entire agreement between the Participating States with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings between the Participating States with respect to that subject matter.
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After execution of this Agreement, each Participating State will do, or cause to be done, all acts as the other Participating States may reasonably require from time to time for the purpose of giving effect to this Agreement and each Participating State will use reasonable efforts, and take all steps as may be reasonably within that Participating State’s power, to implement to its full extent the provisions of this Agreement. _____________________________________ [SIGNATURE OF STATE OFFICIAL]
ANNEX A
Nonadmitted Insurance Premium Tax Allocation Schedule This Annex to the Agreement sets forth the provisions governing the method of tax allocation for Multi-State Risks, as specified in Part III. If the allocation schedule does not identify a classification appropriate to the property or risk being insured, then the Surplus Lines Licensee, or an insured who independently procures insurance, consistently shall use an alternative method of equitable allocation across similar types of insurance policies and contracts, and shall maintain for at least five years, documented evidence of the bases and other criteria used by the Surplus Lines Licensee or insured who independently procures insurance in order to substantiate the method.
EXPOSURE ALLOCATION METHODOLOGY
MAJOR COVERAGE
COVERAGE TYPE
INCLUDING
*ALLOCATION BASIS BY STATE
PROPERTY
ALL PROPERTY UNLESS MORE SPECIFICALLY DESCRIBED ELSEWHERE
INCLUDES BOTH REAL AND PERSONAL PROPERTY, GLASS, CROP, ANIMALS, RESIDUAL VALUE
ALL RISK INCLUDING LEAKAGE OF SPRINKLERS, EXPLOSION, RIOT & CIVIL COMMOTION, EARTHQUAKE, BLANKET FORM, WATER DAMAGE, BUSINESS INTERRUPTION, TIME ELEMENT OR SIMILAR TIME VALUE COVERAGE, FIRE AND EXCESS OF LOSS TIV (TIV= PD + BI) TOTAL INSURED VALUE = PHYSICAL DAMAGE + BUSINESS INTERRUPTION AVIATION PHYSICAL DAMAGE, ALL OTHERS BOILER & MACHINERY DIRECT, CONSEQUENTIAL, ENGINE & MACHINERY, ALL OTHERS INLAND MARINE FINE ARTS DEALERS, JEWELERS BLOCK, FURRIERS BLOCK, BUSINESS & PERSONAL FLOATER, BUILDERS RISK, ALL OTHER NON APPEARANCE & ABANDONMENT INLAND MARINE MOTOR TRUCK CARGO GARAGE LOCATION MOTOR VEHICLE PHYSICAL DAMAGE TIV OF MOTOR VEHICLES PRINCIPALLY GARAGED OR PRINCIPALLY USED IN STATES CASUALTY GENERAL LIABILITY / UMBRELLA / EXCESS LIABILITY MANUFACTURERS AND CONTRACTORS PAYROLL IN STATE PREMISES OPERATIONS SQUARE FOOTAGE OF PREMISES IN STATE OWNERS AND CONTRACTORS PROTECTIVE COST OF CONTRACT IN STATE PRODUCTS SALES IN STATE COMPLETED OPERATIONS RECEIPTS IN STATE CHILD CARE NUMBER OF CHILDREN IN STATE CONTRACTUAL IF “STAND ALONE” POLICY, VALUE OF SALES IN STATE RECREATIONAL AMOUNT OF GATE RECEIPTS IN STATE SPECIAL EVENTS NUMBER OF EVENTS IN STATE PROFESSIONAL LIABILITY NUMBER OF INSUREDS IN STATE ERRORS & OMISSIONS (E&O) / PROFESSIONAL LIABILITY REVENUES (RECEIPTS) OR NUMBER OF PROFESSIONALS BY STATE MEDICAL MALPRACTICE INCLUDES MEDICAL MALPRACTICE FOR INDIVIDUAL HEALTHCARE PROVIDERS OR FACILITIES, I.E. HOSPITALS, NURSING HOMES, PSYCHIATRIC CENTERS REVENUES (RECEIPTS), NUMBER OF PROFESSIONALS OR BED COUNT BY STATE CASUALTY (CONT’D)
EMPLOYMENT PRACTICES LIABILITY (EPLI)
EPLI FOR ALL INDUSTRIES
HEADCOUNT BY STATE
MUNICIPALITIES, PUBLIC AUTHORITIES AND OTHER POLITICAL SUBDIVISIONS
NUMBER OF MUNICIPALITIES, ETC.
ENVIRONMENTAL IMPAIRMENT
NUMBER OF UNITS OF EXPOSURE
ASBESTOS ABATEMENT
PAYROLL
EMPLOYEE/MEMBER BENEFIT PROGRAM
NUMBER OF EMPLOYEES/MEMBERS
MOTOR VEHICLE
AUTOMOBILE LIABILITY, EXCESS AUTOMOBILE LIABILITY
NUMBER OF MOTOR VEHICLES PRINCIPALLY GARAGED OR PRINCIPALLY USED IN STATES
RAILROAD PROTECTIVE
MILES OF TRACK IN STATE
MARINE
VESSELS
PRINCIPAL BERTHING LOCATION
ALL OTHER PROPERTY
AVIATION
AIRCRAFT
NON-OWNED AIRCRAFT, AIRCRAFT LIABILITY
HANGAR LOCATION
FINANCIAL RISK
DIRECTORS AND OFFICERS LIABILITY
GENERAL PARTNERSHIP LIABILITY
SEC LIABILITY
UNAUTHORIZED TRADING
KIDNAP & RANSOM
EMPLOYEES
EXCESS SIPC
MORTGAGE IMPAIRMENT
FINANCIAL RISK (CONT’D)
PATENT INFRINGEMENT
SECURITIES
MEDIA LIABILITY
SERVICE CONTRACTS/WARRANTIES
TAX OPINION GUARANTEE
INTELLECTUAL PROPERTY
CRIME
CRIME
BLANKET CRIME, FIDELITY BOND, INDIVIDUAL BOND, EMPLOYEE DISHONESTY, FORGERY, THEFT, ROBBERY, BURGLARY, FRAUD
EMPLOYEE COUNT
ACCIDENT AND HEALTH
ACCIDENT AND HEALTH
DISEASE, ACCIDENTAL INJURY OR DEATH, MEDICAL SURGICAL EXPENSES AND INCOME PAYMENTS
LOCATION OF EMPLOYEES OR CORPORATE HEADQUARTERS
CREDIT
CREDIT
VALUE OF INSURED DEBT IN STATE
FIDELITY & SURETY
PERFORMANCE BONDS
TOTAL BOND VALUE OF CONTRACTS IN STATE
OTHER SURETY BONDS
TOTAL BOND VALUE OF CONTRACTS IN STATE
- U.S. PREMIUM ONLY
ANNEX B
Allocation Formula For the purposes of this Annex and subject to Parts III, IV, and VII, the Nonadmitted Insurance premium tax revenue for a calendar tax year or for a sub-period of a calendar tax year, as the case may be, is the amount determined by the formula:
Tax Allocation = (Net tax due to each State/net tax due to all States) x Amount collected Home State Net Taxes = (Taxes collected for the Home State + Taxes due from other Participating States) – Taxes owed to other Participating States Total Premium Tax to be Collected on Each Multi-State Policy = (Home State’s tax rate x Portion of premium allocated to Home State) + (Home State’s tax rate x Premium allocated to Non-Participating State if insurer is nonadmitted in that State) + (Participating States’ tax rate x Premium allocated to each Participating State if insurer is nonadmitted in that state)
Exhibit 1 Information Required to be Submitted By the Broker or Insured via the Clearinghouse Web Portal A. Submission Contact Name Address Phone Number E-mail address Independently procured policy? (Y/N)
B. Agency/Brokerage Firm Data State License Number Name Address Phone Number C. Agent/Sublicensee or Individual Licensee Data State License Number Name Office Address Mailing Address Phone Number E-mail Address D. Billing Contact Name Address E-mail Address Phone Number E. Policy Data Policy Number/Binder Number if Policy Number is not available Effective Date Expiration Date Insured Name Home State of Insured F. Transaction Data NAIC Insurer Code Number(s)
Insurer Name(s)
Total Policy Premium by Insurer(s)
Coverage Code Tax Status Transaction Type (New, Renewal or Endorsement)
Allocation among States:
Allocation Method Premiums Allocated to Each State 114CSR20 114CSR20 114CSR20 114CSR20
Series 21 WV Essential Property Insurance Association
W. Va. Code R. § 114-21-1 General
1.1. Scope. -- This legislative rule sets forth the plan of operation of the West Virginia Essential Property Insurance Association.
1.2. Authority. -- W. Va. Code §§33-20A-3(b) and 3-2-10.
1.3. Filing Date. -- April 13, 2006.
1.4. Effective Date. -- July 1, 2006.
W. Va. Code R. § 114-21-2 Definitions
As used in this legislative rule:
2.1. Producer means an individual insurance producer licensed by the Commissioner to sell property and casualty insurance in West Virginia.
2.2. Association means the West Virginia Essential Property insurance Association.
2.3. Board means the Board of Directors of the Association.
2.4. Commissioner means the West Virginia Insurance Commissioner.
2.5. Eligible applicant means any person having an insurable interest in habitational or commercial property eligible for coverage under the provisions of this legislative rule and the Association's Plan of Organization.
2.6. Extended coverage insurance means indemnification against loss caused by the perils of fire, lightning, riot, explosion, vehicle, smoke, hail, aircraft, and wind.
2.7. Essential Property Insurance Coverage means fire and extended coverage insurance as well as any other kind of insurance that the Commissioner finds is required by the public interest but which is not readily available in the voluntary insurance market. Such a finding may only be made after a public hearing conducted by the Commissioner.
2.8. Insurer means any insurance company authorized to write and engage in writing essential property insurance coverage in West Virginia.
W. Va. Code R. § 114-21-3 Type of Organization
3.1. Nonprofit unincorporated organization. The Association shall be a nonprofit unincorporated organization.
W. Va. Code R. § 114-21-4 Administration
4.1. Board of Directors. The Association shall be administered by a Board of Directors under the general supervision of the Commissioner.
a. The Board shall be appointed by the Commissioner with due consideration given to the composition of the membership of the Association and to the interests of the insureds who are provided essential property insurance coverage by the Association.
b. The Board shall consist of not less than five (5) nor more than nine (9) members serving terms of one (1) year or until their successors are appointed.
W. Va. Code R. § 114-21-5 Management
5.1. Servicing facilities. The Board may contract with one or more servicing facilities and/or hire its own employee as are necessary to issue and service policies on risks insured by the Association.
5.2. Approval by Commissioner. Designation of a servicing facility by the Board is subject to approval by the Commissioner.
W. Va. Code R. § 114-21-6 Commencement and Termination of Operation
6.1. Commencement of operation. The Association shall begin issuing policies of insurance for risks found insurable by the Association effective November 1, 1986.
6.2. Termination of operation. The Association shall be dissolved at the earliest date when essential property insurance coverage becomes readily available in the voluntary market.
a. Dissolution of the Association is subject to approval of the Commissioner.
b. Dissolution of the Association shall be accomplished under the supervision of the Commissioner in an equitable and reasonable manner.
W. Va. Code R. § 114-21-7 Rates
7.1. Establishment of rates. The Association shall establish appropriate rates, rate classifications and rating adjustments in accordance with the provisions of W. Va. Code §33-20A-5(b)(6).
7.2. Approval of rates. The Association's rates, rate classifications and rating adjustments are subject to approval by the Commissioner.
W. Va. Code R. § 114-21-8 Policy Forms
8.1. Standard fire policy. All policies issued by the Association shall conform with the provisions of W. Va. Code §33-17-2.
8.2. Total or partial fire loss. The provisions of W. Va. Code §33-17-9 do not apply to policies issued by the Association.
8.3. Policy term. All policies issued by the Association shall be for a term of one (1) year.
8.4. Policy form approval. Policies and endorsements may be issued on forms approved by the Commissioner.
W. Va. Code R. § 114-21-9 Coverage Limits and Types
9.1. Coverage limits. Coverage for risks found insurable by the Association shall be provided in an amount up to the reasonable insurable value of the property but in no event shall coverage provided by the Association exceed the amount of two hundred thousand dollars ($200,000) for any one habitational risk or five hundred thousand dollars ($500,000) for any one commercial risk.
9.2. Coverage types. Coverage issued by the Association shall be limited to indemnification against loss caused by the perils of fire, lightning, riot, explosion, vehicle, smoke, hail, aircraft and wind.
W. Va. Code R. § 114-21-10 Underwriting
10.1. Underwriting standards. The Board shall adopt reasonable and equitable underwriting standards.
10.2. Approval by commissioner. Underwriting standards adopted by the Board are subject to approval by the Commissioner.
W. Va. Code R. § 114-21-11 Application For Insurance and Policy Issuance
11.1. Method of application. An eligible applicant may authorize a producer to make application to the Association for essential property insurance coverage. The application shall be accompanied by proof, in such form as may be prescribed or approved by the Commissioner, of the applicant's effort and inability to obtain essential property insurance in the voluntary market.
11.2. Policy issuance. Upon approval by the Association of an application for coverage and upon receipt by the Association of the premium due, the Association shall issue a policy and a binding receipt. The Association may decline to issue a policy and binding receipt when the applicant owes premium monies to the Association for previous insurance coverage.
W. Va. Code R. § 114-21-12 Producer Commissions
12.1. New and renewal business. Producer commission shall be ten percent (10%) of the premium on new business and at such level as the Board shall determine on renewal business, not to exceed ten percent (10%) of the renewal commission.
12.2. Cancellation of business. Upon cancellation of a policy, the producer shall refund commissions on the return premium to the Association at the same rate at which such commissions were originally paid.
W. Va. Code R. § 114-21-13 Inspection of Property
13.1. Inspection of property. Upon submission to the Association of a completed application for insurance, the property requested to be insured may be physically inspected.
13.2. Cost of inspection. Any physical inspection shall be made without cost to the eligible applicant.
13.3. Inspection report. A written inspection report shall be made for each property inspected and a copy provided to the eligible applicant.
W. Va. Code R. § 114-21-14 Appeal Procedures
14.1. Initial appeal to board. Any applicant for insurance, person insured by the Association or member insurer aggrieved by any ruling, action or decision of the Association or the designated servicing facility may appeal to the Board within fifteen (15) days of such ruling, action or decision. The appeal shall be in writing. The Board or an Appeals Committee designated by the Board shall hear and determine the appeal within fifteen (15) days after the appeal is filed.
14.2. Appeal to commissioner. The determination of the Board may be appealed in writing to the commissioner within ten (10) days of such determination. The Commissioner shall render a decision concerning the appeal within thirty (30) days.
W. Va. Code R. § 114-21-15 Premium Taxes
15.1. Premium tax liability. The Association shall be liable for premium taxes to the same extent and in the same manner as a licensed insurer engaged in writing fire and extended coverage insurance in West Virginia.
W. Va. Code R. § 114-21-16 Annual Report
16.1. Annual report. The Board shall, on or before July 1 of each year, submit to the Commissioner a report of the operation of the Association for the previous calendar year.
W. Va. Code R. § 114-21-17 Severability
17.1. Severability. If any provision of this legislative rule is held invalid, the remainder of the rule shall not be affected thereby.
114CSR21
114CSR21
Series 24 Medicare Supplement Insurance
W. Va. Code R. § 114-24-1 General
1.1. Scope. -- The purpose of this rule is to provide for the reasonable standardization of coverage and simplification of terms and benefits of Medicare supplement policies; to facilitate public understanding and comparison of these policies; to eliminate provisions contained in these policies which may be misleading or confusing in connection with the purchase of these policies or with the settlement of claims; and to provide for full disclosures in the sale of accident and sickness insurance coverages to persons eligible for Medicare. This rule is based on the National Association of Insurance Commissioners’ “Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act” (Model 651), as amended in 2016.
1.2. Authority. -- W. Va. Code §§33-28-5b, 33-2-10, and 33-16-3d.
1.3. Filing Date. -- May 6, 2025.
1.4. Effective Date. -- June 1, 2025.
1.5. Sunset provision. -- This rule shall terminate and have no further force or effect upon August 1, 2035.
1.6. Applicability. -- This legislative rule amends West Virginia 114CSR24 “Medicare Supplement Insurance” filed April 14, 2010 and effective on April 14, 2010. Except as otherwise specifically provided, this rule shall apply to:
1.6.1. All Medicare supplement policies delivered or issued for delivery in this state or which are otherwise subject to the jurisdiction of this state on or after the effective date hereof; and
1.6.2. All certificates issued under group Medicare supplement policies, which certificates have been delivered or issued for delivery in this state.
1.6.3. This rule shall not apply to a policy or contract of one or more employers or labor organizations, or of the trustees of a fund established by one or more employers or labor organizations, or a combination thereof, for employees or former employees, or a combination thereof, or for members or former members, or a combination thereof, of the labor organizations.
W. Va. Code R. § 114-24-2 Definitions
2.1. “Applicant” means:
2.1.1. In the case of an individual Medicare supplement policy, the person who seeks to contract for insurance benefits, and
2.1.2. In the case of a group Medicare supplement policy, the proposed certificate holder.
2.2. “Bankruptcy” means when a Medicare Advantage organization that is not an issuer has filed, or has had filed against it, a petition for declaration of bankruptcy and has ceased doing business in the state.
2.3. “Certificate” means any certificate delivered or issued for delivery in this state under a group Medicare supplement policy.
2.4. “Certificate Form” means the form on which the certificate is delivered or issued for delivery by the issuer.
2.5. “Creditable coverage” means:
2.5.1. With respect to an individual, coverage of the individual provided under any of the following:
2.5.1.a. A group health plan;
2.5.1.b. Health insurance coverage;
2.5.1.c. Part A or Part B of Title XVIII of the Social Security Act (Medicare);
2.5.1.d. Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of benefits under section 1928;
2.5.1.e. Chapter 55 of Title 10 United States Code (CHAMPUS);
2.5.1.f. A medical care program of the Indian Health Service or of a tribal organization;
2.5.1.g. A State health benefits risk pool;
2.5.1.h. A health plan offered under chapter 89 of Title 5 United States Code (Federal Employees Health Benefits Program);
2.5.1.i. A public health plan as defined in federal regulation; and
2.5.1.j. A health benefit plan under Section 5(e) of the Peace Corps Act (22 United States Code 2504(e)).
2.5.2. “Creditable coverage” shall not include one or more, or any combination of, the following:
2.5.2.a. Coverage only for accident or disability income insurance, or any combination thereof;
2.5.2.b. Coverage issued as a supplement to liability insurance;
2.5.2.c. Liability insurance, including general liability insurance and automobile liability insurance;
2.5.2.d. Workers’ compensation or similar insurance;
2.5.2.e. Automobile medical payment insurance;
2.5.2.f. Credit-only insurance;
2.5.2.g. Coverage for on-site medical clinics; and
2.5.2.h. Other similar insurance coverage, specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.
2.5.3. “Creditable coverage” shall not include the following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan:
2.5.3.a. Limited scope dental or vision benefits;
2.5.3.b. Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof; and
2.5.3.c. Other similar, limited benefits as are specified in federal regulations.
2.5.4. “Creditable coverage” shall not include the following benefits if offered as independent, non-coordinated benefits:
2.5.4.a. Coverage only for a specified disease or illness; and
2.5.4.b. Hospital indemnity or other fixed indemnity insurance.
2.5.5. “Creditable coverage” shall not include the following if it is offered as a separate policy, certificate or contract of insurance:
2.5.5.a. Medicare supplemental health insurance as defined under section 1882(g)(1) of the Social Security Act;
2.5.5.b. Coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code; and
2.5.5.c. Similar supplemental coverage provided to coverage under a group health plan.
2.6. “Commissioner” means the Insurance Commissioner of the State of West Virginia.
2.7. “Continuous period of creditable coverage” means the period during which an individual was covered by creditable coverage, if during the period of the coverage the individual had no breaks in coverage greater than sixty-three (63) days.
2.8. “Employee welfare benefit plan” means a plan, fund or program of employee benefits as defined in 29 U.S.C. Section 1002 (Employee Retirement Income Security Act).
2.9. “Insolvency” means when an issuer, licensed to transact the business of insurance in this state, has had a final order of liquidation entered against it with a finding of insolvency by a court of competent jurisdiction in the issuer’s state of domicile.
2.10. “Issuer” means an insurance company, fraternal benefit society, health care service plan, health maintenance organization, or any other entity delivering or issuing for delivery in this state Medicare supplement policies or certificates.
2.11. “Medicare” means the “Health Insurance for the Aged Act,” Title XVIII of the Social Security Amendments of 1965, as then constituted or later amended.
2.12. “Medicare Advantage plan” means a plan of coverage for health benefits under Medicare Part C as defined in 42 U.S.C. 1395w-28(b)(1), and includes:
2.12.1. Coordinated care plans which provide health care services, including but not limited to health maintenance organization plans (with or without a point-of-service option), plans offered by provider-sponsored organizations, and preferred provider organization plans;
2.12.2. Medical savings account plans coupled with a contribution into a Medicare Advantage plan medical savings account; and
2.12.3. Medicare Advantage private fee-for-service plans.
2.13. “Medicare Supplement Policy” means a group or individual policy of accident and sickness insurance or a subscriber contract of hospital and medical service associations or corporations or health maintenance organizations, other than a policy issued pursuant to a contract under Section 1876 of the federal Social Security Act (42 U.S.C. Section 1395 et seq.) or an issued policy under a demonstration project specified in 42 U.S.C. §1395ss(g)(1), which is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare. “Medicare supplement policy” does not include Medicare Advantage plans established under Medicare Part C, Outpatient Prescription Drug plans established under Medicare Part D, or any Health Care Prepayment Plan (HCPP) that provides benefits pursuant to an agreement under §1833(a)(1)(A) of the Social Security Act.
2.14. “Pre-Standardized Medicare supplement benefit plan,” “Pre-Standardized benefit plan” or “Pre-Standardized plan” means a group or individual policy of Medicare supplement insurance issued prior to August 5, 1991.
2.15. “Policy Form” means the form on which the policy is delivered or issued for delivery by the issuer.
2.16. “Secretary” means the Secretary of the United States Department of Health and Human Services.
2.17. “1990 Standardized Medicare supplement benefit plan,” “1990 Standardized benefit plan” or “1990 plan” means a group or individual policy of Medicare supplement insurance issued on or after August 5, 1991 and with an effective date for coverage prior to June 1, 2010 and includes Medicare supplement insurance policies and certificates renewed on or after that date which are not replaced by the issuer at the request of the insured.
2.18. “2010 Standardized Medicare supplement benefit plan,” “2010 Standardized benefit plan” or “2010 plan” means a group or individual policy of Medicare supplement insurance with an effective date for coverage on or after June 1, 2010.
W. Va. Code R. § 114-24-3 Policy Definitions and Terms
3.1. No policy or certificate may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy or certificate unless that policy or certificate contains definitions or terms which conform to the requirements of this section.
3.2. “Accident,” “Accidental Injury,” or “Accidental Means” shall be defined to employ “result” language and shall not include words which establish an accidental means test or use words such as “external, violent, visible wounds” or similar words of description or characterization.
3.2.1. The definition shall not be more restrictive than the following: “Injury or injuries for which benefits are provided means accidental bodily injury sustained by the insured person which is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while insurance coverage is in force.”
3.2.2. The definition may provide that injuries shall not include injuries for which benefits are provided or available under any workers’ compensation, employer’s liability or similar law, or motor vehicle no-fault plan, unless prohibited by law.
3.3. “Benefit Period” or “Medicare Benefit Period” shall not be defined more restrictively than as defined in the Medicare program.
3.4. “Convalescent Nursing Home,” “Extended Care Facility,” or “Skilled Nursing Facility” shall not be defined more restrictively than as defined in the Medicare program.
3.5. “Health Care Expenses” means, for purposes of section 12 of this rule, expenses of health maintenance organizations associated with the delivery of health care services, which expenses are analogous to incurred losses of insurers.
3.6. “Hospital” may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals, but not more restrictively than as defined in the Medicare program.
3.7. “Medicare” shall be defined in the policy and certificate. Medicare may be substantially defined as “The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended,” or “Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof,” or words of similar import.
3.8. “Medicare Eligible Expenses” shall mean expenses of the kinds covered by Medicare Parts A and B, to the extent recognized as reasonable and medically necessary by Medicare.
3.9. “Physician” shall not be defined more restrictively than as defined in the Medicare program.
3.10. “Sickness” shall not be defined to be more restrictive than the following: “Sickness means illness or disease of an insured person which first manifests itself after the effective date of insurance and while the insurance is in force.” The definition may be further modified to exclude sicknesses or diseases for which benefits are provided under any workers’ compensation, occupational disease, employer’s liability or similar law.
W. Va. Code R. § 114-24-4 Policy Provisions
4.1. Except for permitted preexisting condition clauses as described in subdivision 1 of subsection 5.2 of this rule, subdivision 1 of subsection 6.2 of this rule, and subdivision 1 of subsection 6A.2 of this rule, no policy or certificate may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy if the policy or certificate contains limitations or exclusions on coverage that are more restrictive than those of Medicare.
4.2. No Medicare supplement policy or certificate may use waivers to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions.
4.3. No Medicare supplement policy or certificate in force in the state shall contain benefits which duplicate benefits provided by Medicare.
4.4. Subject to subdivisions 4, 5 and 7, subsection 5.2 of this rule, and subdivisions 4 and 5, subsection 6.2 of this rule, a Medicare supplement policy with benefits for outpatient prescription drugs in existence prior to January 1, 2006 shall be renewed for current policyholders who do not enroll in Part D at the option of the policyholder.
4.4.1. A Medicare supplement policy with benefits for outpatient prescription drugs shall not be issued after December 31, 2005.
4.4.2. After December 31, 2005, a Medicare supplement policy with benefits for outpatient prescription drugs may not be renewed after the policyholder enrolls in Medicare Part D unless:
4.4.3. The policy is modified to eliminate outpatient prescription coverage for expenses of outpatient prescription drugs incurred after the effective date of the individual’s coverage under a Part D plan and;
4.4.4. Premiums are adjusted to reflect the elimination of outpatient prescription drug coverage at the time of Medicare Part D enrollment, accounting for any claims paid, if applicable.
W. Va. Code R. § 114-24-5 Minimum Benefit Standards for Pre-Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery Prior to August 5, 1991
5.1. No policy or certificate may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy or certificate unless it meets or exceeds the minimum standards set forth in this section. These are minimum standards and do not preclude the inclusion of other provisions or benefits which are not inconsistent with these standards.
5.2. General Standards. -- The following standards apply to Medicare supplement policies and certificates and are in addition to all other requirements of this rule.
5.2.1. A Medicare supplement policy or certificate shall not exclude or limit benefits for losses incurred more than six (6) months from the effective date of coverage because it involved a preexisting condition. The policy or certificate shall not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six (6) months before the effective date of coverage.
5.2.2. A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents.
5.2.3. A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, copayment or coinsurance amounts. Premium modifications to correspond to these changes are permissible subject to prior approval of the Commissioner. Any proposed premium modifications shall be filed with the Commissioner in compliance with procedures applicable to accident and sickness filings generally and with other applicable sections of this rule.
5.2.4. A “noncancellable,” “guaranteed renewable,” or “noncancellable and guaranteed renewable” Medicare supplement policy shall not:
5.2.4.a. Provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium; or
5.2.4.b. Be canceled or nonrenewed by the issuer solely on the grounds of deterioration of health.
5.2.5. Except as authorized by the Commissioner, an issuer shall neither cancel nor nonrenew a Medicare supplement policy or certificate for any reason other than nonpayment of premium or material misrepresentation.
5.2.5.a. If a group Medicare supplement insurance policy is terminated by the group policyholder and not replaced as provided in paragraph c of this subdivision, the issuer shall offer certificate holders an individual Medicare supplement policy. The issuer shall offer the certificate holder at least the following choices:
5.2.5.a.1. An individual Medicare supplement policy currently offered by the issuer having comparable benefits to those contained in the terminated group Medicare supplement policy; and
5.2.5.a.2. An individual Medicare supplement policy which provides only the benefits as are required to meet the minimum standards as defined in subsection 6A.3 of this rule.
5.2.5.b. If membership in a group is terminated, the issuer shall:
5.2.5.b.1. Offer the certificate holder the conversion opportunities described in paragraph a of this subdivision; or
5.2.5.b.2. At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.
5.2.5.c. If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new group policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.
5.2.6. Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or to payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss.
5.2.7. If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this subsection.
5.3. Minimum Benefit Standards.
5.3.1. Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;
5.3.2. Coverage for either all or none of the Medicare Part A inpatient hospital deductible amount;
5.3.3. Coverage of Part A Medicare eligible expenses incurred as daily hospital charges during use of Medicare’s lifetime hospital inpatient reserve days;
5.3.4. Upon exhaustion of all Medicare hospital inpatient coverage including the lifetime reserve days, coverage of ninety percent (90%) of all Medicare Part A eligible expenses for hospitalization not covered by Medicare subject to a lifetime maximum benefit of an additional 365 days;
5.3.5. Coverage under Medicare Part A for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations or already paid for under Part B;
5.3.6. Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to a maximum calendar year out-of-pocket amount equal to the Medicare Part B deductible [$183];
5.3.7. Effective January 1, 1990, coverage under Medicare Part B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations), unless replaced in accordance with federal regulations or already paid for under Part A, subject to the Medicare deductible amount.
W. Va. Code R. § 114-24-6 Benefit Standards for 1990 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery on or After August 5, 1991 and with an Effective Date for Coverage Prior to June 1, 2010
6.1. The standards set forth in this section are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state on or after August 5, 1991 and with an effective date of coverage prior to June 1, 2010. No policy or certificate may be advertised, solicited, delivered or issued for delivery in this state as a Medicare supplement policy or certificate unless it complies with these benefit standards.
6.2. General Standards. -- The following standards apply to Medicare supplement policies and certificates and are in addition to all other requirements of this rule.
6.2.1. A Medicare supplement policy or certificate shall not exclude or limit benefits for losses incurred more than six (6) months from the effective date of coverage because it involved a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six (6) months before the effective date of coverage.
6.2.2. A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents.
6.2.3. A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, copayment or coinsurance amounts. Premium modifications to correspond to these changes are permissible subject to prior approval of the Commissioner. Any proposed premium modifications shall be filed with the Commissioner in compliance with procedures applicable to accident and sickness filings generally and with other applicable sections of this rule.
6.2.4. No Medicare supplement policy or certificate shall provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium.
6.2.5. Each Medicare supplement policy shall be guaranteed renewable.
6.2.5.a. The issuer shall not cancel or nonrenew the policy solely on the ground of health status of the individual; and
6.2.5.b. The issuer shall not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.
6.2.5.c. If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under paragraph e of this subdivision, the issuer shall offer certificate holders an individual Medicare supplement policy which (at the option of the certificate holder):
6.2.5.c.1. Provides for continuation of the benefits contained in the group policy, or
6.2.5.c.2. Provides for benefits that otherwise meet the requirements of this subsection.
6.2.5.d. If an individual is a certificate holder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall:
6.2.5.d.1. Offer the certificate holder the conversion opportunity described in paragraph c of this subdivision; or
6.2.5.d.2. At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.
6.2.5.e. If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.
6.2.5.f. If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this subdivision.
6.2.6. Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or to payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss. 6.2.7.
6.2.7.a. A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificate holder for the period (not to exceed twenty-four (24) months) in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of the policy or certificate within ninety (90) days after the date the individual becomes entitled to assistance.
6.2.7.b. If suspension occurs and if the policyholder or certificate holder loses entitlement to medical assistance, the policy or certificate shall be automatically reinstituted (effective as of the date of termination of entitlement) as of the termination of entitlement if the policyholder or certificate holder provides notice of loss of entitlement within ninety (90) days after the date of loss and pays the premium attributable to the period, effective as of the date of termination of entitlement.
6.2.7.c. Each Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended (for the period provided by federal regulation) at the request of the policyholder if the policyholder is entitled to benefits under Section 226(b) of the Social Security Act and is covered under a group health plan (as defined in Section 1862 (b)(1)(A)(v) of the Social Security Act). If suspension occurs and if the policyholder or certificate holder loses coverage under the group health plan, the policy shall be automatically reinstituted (effective as of the date of loss of coverage) if the policyholder provides notice of loss of coverage within ninety (90) days after the date of loss and pays the premium attributable to the period, effective as of the date of termination of entitlement.
6.2.7.d. Reinstitution of coverages as described in paragraphs b and c of this subdivision:
6.2.7.d.1. Shall not provide for any waiting period with respect to treatment of preexisting conditions;
6.2.7.d.2. Shall provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension. If the suspended Medicare supplement policy provided coverage for outpatient prescription drugs, reinstitution of the policy for Medicare Part D enrollees shall be without coverage for outpatient prescription drugs and shall otherwise provide substantially equivalent coverage to the coverage in effect before the date of suspension; and
6.2.7.d.3. Shall provide for classification of premiums on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended.
6.2.8. If an issuer makes a written offer to the Medicare Supplement policyholders or certificate holders of one or more of its plans, to exchange during a specified period from his or her 1990 Standardized plan (as described in section 7 of this rule) to a 2010 Standardized plan (as described in section 7A of this rule), the offer and subsequent exchange shall comply with the following requirements:
6.2.8.a. An issuer need not provide justification to the Commissioner if the insured replaces a 1990 Standardized policy or certificate with an issue age rated 2010 Standardized policy or certificate at the insured’s original issue age and duration. If an insured’s policy or certificate to be replaced is priced on an issue age rate schedule at the time of the offer, the rate charged to the insured for the new exchanged policy shall recognize the policy reserve buildup, due to the pre-funding inherent in the use of an issue age rate basis, for the benefit of the insured. The method proposed to be used by an issuer must be filed with the Commissioner in a manner prescribed by the Commissioner.
6.2.8.b. The rating class of the new policy or certificate shall be the class closest to the insured’s class of the replaced coverage.
6.2.8.c. An issuer may not apply new pre-existing condition limitations or a new incontestability period to the new policy for those benefits contained in the exchanged 1990 Standardized policy or certificate of the insured but may apply pre-existing condition limitations of no more than six (6) months to any added benefits contained in the new 2010 Standardized policy or certificate not contained in the exchanged policy.
6.2.8.d. The new policy or certificate shall be offered to all policyholders or certificate holders within a given plan, except where the offer or issue would be in violation of state or federal law.
6.3. Standards for Basic Core Benefits Common to Benefit Plans A - J. -- Every issuer shall make available a policy or certificate including only the following basic core package of benefits to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare Supplement Insurance Benefit Plans in addition to the basic core package, but not in lieu thereof.
6.3.1. Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;
6.3.2. Coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;
6.3.3. Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer’s payment as payment in full and may not bill the insured for any balance;
6.3.4. Coverage under Medicare Parts A and B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations;
6.3.5. Coverage for the coinsurance amount (or in the case of hospital outpatient department services under a prospective payment system, the copayment amount) of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible.
6.4. Standards for Additional Benefits. -- The following additional benefits shall be included in Medicare Supplement Benefit Plans “B” through “J” only as provided by section 7 of this rule.
6.4.1. Medicare Part A Deductible: Coverage for all of the Medicare Part A inpatient hospital deductible amount per benefit period.
6.4.2. Skilled Nursing Facility Care: Coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A.
6.4.3. Medicare Part B Deductible: Coverage for all of the Medicare Part B deductible amount per calendar year regardless of hospital confinement.
6.4.4. Eighty Percent (80%) of the Medicare Part B Excess Charges: Coverage for eighty percent (80%) of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge.
6.4.5. One Hundred Percent (100%) of the Medicare Part B Excess Charges: Coverage for all of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge.
6.4.6. Basic Outpatient Prescription Drug Benefit: Coverage for fifty percent (50%) of outpatient prescription drug charges, after a two hundred fifty dollar ($250) calendar year deductible, to a maximum of one thousand two hundred fifty dollars ($1,250) in benefits received by the insured per calendar year, to the extent not covered by Medicare. The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006.
6.4.7. Extended Outpatient Prescription Drug Benefit: Coverage for fifty percent (50%) of outpatient prescription drug charges, after a two hundred fifty dollar ($250) calendar year deductible, to a maximum of three thousand dollars ($3,000) in benefits received by the insured per calendar year, to the extent not covered by Medicare. The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006.
6.4.8. Medically Necessary Emergency Care in a Foreign Country: Coverage to the extent not covered by Medicare for eighty percent (80%) of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first sixty (60) consecutive days of each trip outside the United States, subject to a calendar year deductible of two hundred fifty dollars ($250), and a lifetime maximum benefit of fifty thousand dollars ($50,000). For purposes of this benefit, “emergency care” shall mean care needed immediately because of an injury or an illness of sudden and unexpected onset. 6.4.9.
6.4.9.a. Preventive Medical Care Benefit: Coverage for the following preventive health services not covered by Medicare:
6.4.9.a.1. An annual clinical preventive medical history and physical examination that may include tests and services from paragraph 2 of this subdivision and patient education to address preventive health care measures;
6.4.9.a.2. Preventive screening tests or preventive services, the selection and frequency of which is determined to be medically appropriate by the attending physician.
6.4.9.b. Reimbursement shall be for the actual charges up to one hundred percent (100%) of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association Current Procedural Terminology (AMA CPT) codes, to a maximum of one hundred twenty dollars ($120) annually under this benefit. This benefit shall not include payment for any procedure covered by Medicare.
6.4.10. At-Home Recovery Benefit: Coverage for services to provide short term, at-home assistance with activities of daily living for those recovering from an illness, injury or surgery.
6.4.10.a. For purposes of this benefit, the following definitions shall apply:
6.4.10.a.1. “Activities of daily living” include, but are not limited to, bathing, dressing, personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally self-administered, and changing bandages or other dressings.
6.4.10.a.2. “At-home recovery visit” means the period of a visit required to provide at-home recovery care, without limit on the duration of the visit, except each consecutive four (4) hours in a 24-hour period of services provided by a care provider is one visit.
6.4.10.a.3. “Care provider” means a duly qualified or licensed home health aide or homemaker, personal care aide or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurses’ registry.
6.4.10.a.4. “Home” shall mean any place used by the insured as a place of residence, provided that the place would qualify as a residence for home health care services covered by Medicare. A hospital or skilled nursing facility shall not be considered the insured’s place of residence.
6.4.10.b. Coverage Requirements and Limitations
6.4.10.b.1. At-home recovery services provided must be primarily services which assist in activities of daily living.
6.4.10.b.2. The insured’s attending physician must certify that the specific type and frequency of at-home recovery services are necessary because of a condition for which a home care plan of treatment was approved by Medicare.
6.4.10.b.3. Coverage is limited to:
6.4.10.b.3.A. No more than the number and type of at-home recovery visits certified as necessary by the insured’s attending physician. The total number of at-home recovery visits shall not exceed the number of Medicare-approved home health care visits under a Medicare-approved home care plan of treatment;
6.4.10.b.3.B. The actual charges for each visit up to a maximum reimbursement of forty dollars ($40) per visit;
6.4.10.b.3.C. One thousand six hundred dollars ($1,600) per calendar year;
6.4.10.b.3.D. Seven (7) visits in any one week;
6.4.10.b.3.E. Care furnished on a visiting basis in the insured’s home;
6.4.10.b.3.F. Services provided by a care provider as defined in this section;
6.4.10.b.3.G. At-home recovery visits while the insured is covered under the policy or certificate and not otherwise excluded;
6.4.10.b.3.H. At-home recovery visits received during the period the insured is receiving Medicare-approved home care services or no more than eight (8) weeks after the service date of the last Medicare-approved home health care visit.
6.4.10.c. Coverage is excluded for:
6.4.10.c.1. Home care visits paid for by Medicare or other government programs; and
6.4.10.c.2. Care provided by family members, unpaid volunteers or providers who are not care providers. 6.5 Standards for Plans K and L
6.5.1. Standardized Medicare supplement benefit plan “K” shall consist of the following:
6.5.1.a. Coverage of one hundred percent (100%) of the Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period;
6.5.1.b. Coverage of one hundred percent (100%) of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period;
6.5.1.c. Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer’s payment as payment in full and may not bill the insured for any balance;
6.5.1.d. Medicare Part A Deductible: Coverage for fifty percent (50%) of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in paragraph j of this subdivision;
6.5.1.e. Skilled Nursing Facility Care: Coverage for fifty percent (50%) of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in paragraph j of this subdivision;
6.5.1.f. Hospice Care: Coverage for fifty percent (50%) of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of pocket limitation is met as described in paragraph j of this subdivision;
6.5.1.g. Coverage of fifty percent (50%), under Medicare Part A or B, of the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in paragraph j of this subdivision;
6.5.1.h. Except for coverage provided in paragraph 9 of this subdivision, coverage of fifty percent (50%) of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in paragraph j of this subdivision;
6.5.1.i. Coverage of one hundred percent (100%) of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and
6.5.1.j. Coverage of one hundred percent (100%) of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of four thousand dollars ($4,000) in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary of the U.S. Department of Health and Human Services.
6.5.2. Standardized Medicare supplement benefit plan “L” shall consist of the following:
6.5.2.a. The benefits described in paragraphs a, b, c and i, subdivision 1 of this subsection;
6.5.2.b. The benefit described in paragraphs d, e, f, g and h, subdivision 1 of this subsection, but substituting seventy-five percent (75%) for fifty percent (50%); and
6.5.2.c. The benefit described in paragraph j, subdivision 1 of this subsection, but substituting two thousand dollars ($2,000) for four thousand dollars ($4,000).
W. Va. Code R. § 114-24-6A Benefit Standards for 2010 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery with an Effective Date for Coverage on or After June 1, 2010. 6A.1. The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state with an effective date for coverage on or after June 1, 2010. No policy or certificate may be advertised, solicited, delivered, or issued for delivery in this state as a Medicare supplement policy or certificate unless it complies with these benefit standards. No issuer may offer any 1990 Standardized Medicare supplement benefit plan for sale on or after June 1, 2010. Benefit standards applicable to Medicare supplement policies and certificates issued with an effective date for coverage prior to June 1, 2010 remain subject to the requirements of sections 6 and 7 of this rule. 6A.2. General Standards. The following standards apply to Medicare supplement policies and certificates and are in addition to all other requirements of this rule. 6A.2.1. A Medicare supplement policy or certificate shall not exclude or limit benefits for losses incurred more than six (6) months from the effective date of coverage because it involved a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six (6) months before the effective date of coverage. 6A.2.2. A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents. 6A.2.3. A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, co-payment, or coinsurance amounts. Premium modifications to correspond to these changes are permissible subject to prior approval of the Commissioner. Any proposed premium modifications shall be filed with the Commissioner in compliance with procedures applicable to accident and sickness filings generally and with other applicable sections of this rule. 6A.2.4. No Medicare supplement policy or certificate shall provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium. 6A.2.5. Each Medicare supplement policy shall be guaranteed renewable. 6A.2.5.a. The issuer shall not cancel or non-renew the policy solely on the ground of health status of the individual. 6A.2.5.b. The issuer shall not cancel or non-renew the policy for any reason other than nonpayment of premium or material misrepresentation. 6A.2.5.c. If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under paragraph e of this subdivision, the issuer shall offer certificate holders an individual Medicare supplement policy which (at the option of the certificate holder): 6A.2.5.c.1. Provides for continuation of the benefits contained in the group policy; or 6A.2.5.c.2. Provides for benefits that otherwise meet the requirements of this subsection. 6A.2.5.d. If an individual is a certificate holder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall: 6A.2.5.d.1. Offer the certificate holder the conversion opportunity described in paragraph c of this subdivision; or 6A.2.5.d.2. At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy. 6A.2.5.e. If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced. 6A.2.6. Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss
6A.2.7. 6A.2.7.a. A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificate holder for the period (not to exceed twenty-four (24) months) in which the policy holder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of the policy or certificate within ninety (90) days after the date the individual becomes entitled to assistance. 6A.2.7.b. If suspension occurs and if the policyholder or certificate holder loses entitlement to medical assistance, the policy or certificate shall be automatically reinstituted (effective as of the date of termination of entitlement) as of the termination of entitlement if the policyholder or certificate holder provides notice of loss of entitlement within ninety (90) days after the date of loss and pays the premium attributable to the period, effective as of the date of termination of entitlement. 6A.2.7.c. Each Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended (for any period that may be provided by federal regulation) at the request of the policyholder if the policyholder is entitled to benefits under Section 226 (b) of the Social Security Act and is covered under a group health plan (as defined in Section 1862 (b)(1)(A)(v) of the Social Security Act). If suspension occurs and if the policyholder or certificate holder loses coverage under the group health plan, the policy shall be automatically reinstituted (effective as of the date of loss of coverage) if the policyholder provides notice of loss of coverage within ninety (90) days after the date of the loss. 6A.2.7.d. Reinstitution of coverages as described in paragraphs b and c of this subdivision: 6A.2.7.d.1. Shall not provide for any waiting period with respect to treatment of preexisting conditions; 6A.2.7.d.2. Shall provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension; and 6A.2.7.d.3. Shall provide for classification of premiums on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended. 6A.3. Standards for Basic Core Benefits Common to Medicare Supplement Insurance Benefit Plans A, B, C, D, F, F With High Deductible, G, M and N. Every issuer of Medicare supplement insurance benefit plans shall make available a policy or certificate including only the following basic core package of benefits to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare supplement insurance benefit plans in addition to the basic core package, but not in lieu thereof. 6A.3.1. Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period; 6A.3.2. Coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used; 6A.3.3. Upon exhaustion of the Medicare hospital inpatient coverage including the lifetime reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer’s payment as payment in full and may not bill the insured for any balance; 6A.3.4. Coverage under Medicare Parts A and B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined in federal regulations) unless replaced in accordance with federal regulations; 6A.3.5. Coverage for the coinsurance amount, or in the case of hospital outpatient department service paid under a prospective payment system, the co-payment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible; 6A.3.6. Hospice Care: Coverage of cost sharing for all Part A Medicare eligible hospice care and respite care expenses. 6A.4. Standards for Additional Benefits. The following additional benefits shall be included in Medicare supplement benefit Plans B, C, D, F, F With High Deductible, G, M and N as provided by section 7A of this rule. 6A.4.1. Medicare Part A Deductible: Coverage for one hundred percent (100%) of the Medicare Part A inpatient hospital deductible amount per benefit period. 6A.4.2. Medicare Part A Deductible: Coverage for fifty percent (50%) of the Medicare Part A inpatient hospital deductible amount per benefit period. 6A.4.3. Skilled Nursing Facility Care: Coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A. 6A.4.4. Medicare Part B Deductible: Coverage for one hundred percent (100%) of the Medicare Part B deductible amount per calendar year regardless of hospital confinement. 6A.4.5. One Hundred Percent (100%) of the Medicare Part B Excess Charges: Coverage for all of the difference between the actual Medicare Part B charges as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge. 6A.4.6. Medically Necessary Emergency Care in a Foreign Country: Coverage to the extent not covered by Medicare for eighty percent (80%) of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first sixty (60) consecutive days of each trip outside the United States, subject to a calendar year deductible of two hundred fifty dollars ($250), and a lifetime maximum benefit of fifty thousand dollars ($50,000). For purposes of this benefit, “emergency care” shall mean care needed immediately because of an injury or an illness of sudden and unexpected onset.
W. Va. Code R. § 114-24-7 Standard Medicare Supplement Benefit Plans 1990 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery on or After August 5, 1991 and with an Effective Date for Coverage Prior to June 1, 2010
7.1. An issuer shall make available to each prospective policyholder and certificate holder a policy form or certificate form containing only the basic core benefits, as defined in subsection 6.3 of this rule.
7.2. No groups, packages or combinations of Medicare supplement benefits other than those listed in this section shall be offered for sale in this state, except as may be permitted in subsection 7.7 of this section and in section 8 of this rule.
7.3. Benefit plans shall be uniform in structure, language, designation and format to the standard benefit plans “A” through “L” listed in this subsection and conform to the definitions in section 2 of this rule. Each benefit shall be structured in accordance with the format provided in subsections 6.3 and 6.4 or 6.5 of this rule and list the benefits in the order shown in this subsection. For purposes of this section, “structure, language, and format” means style, arrangement and overall content of a benefit.
7.4. An issuer may use, in addition to the benefit plan designations required in subsection 7.3 of this section, other designations to the extent permitted by law.
7.5. Make-up of benefit plans:
7.5.1. Standardized Medicare supplement benefit plan “A” shall be limited to the basic core benefits common to all benefit plans, as defined in subsection 6.3 of this rule.
7.5.2. Standardized Medicare supplement benefit plan “B” shall include only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible as defined in subdivision 1, subsection 6.4 of this rule.
7.5.3. Standardized Medicare supplement benefit plan “C” shall include only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible and medically necessary emergency care in a foreign country as defined in subdivisions 1, 2, 3 and 8 of subsection 6.4, respectively, of this rule.
7.5.4. Standardized Medicare supplement benefit plan “D” shall include only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, medically necessary emergency care in a foreign country and the at-home recovery benefit as defined in subdivisions 1, 2, 8 and 10 of subsection 6.4, respectively, of this rule.
7.5.5. Standardized Medicare supplement benefit plan “E” shall include only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, medically necessary emergency care in a foreign country and preventive medical care as defined in subdivisions 1, 2, 8 and 9 of subsection 6.4, respectively, of this rule.
7.5.6. Standardized Medicare supplement benefit plan “F” shall include only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, the skilled nursing facility care, the Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in subdivisions 1, 2, 3, 5 and 8 of subsection 6.4, respectively, of this rule.
7.5.7. Standardized Medicare supplement benefit high deductible plan “F” shall include only the following: one hundred percent (100%) of covered expenses following the payment of the annual high deductible plan “F” deductible. The covered expenses include the core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, the Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in subdivisions 1, 2, 3, 5, and 8 of subsection 6.4, respectively, of this rule. The annual high deductible plan “F” deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement plan “F” policy, and shall be in addition to any other specific benefit deductibles. The annual high deductible plan “F” deductible shall be one thousand five hundred dollars ($1,500) for 1998 and 1999, and shall be based on the calendar year. It shall be adjusted annually thereafter by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($10).
7.5.8. Standardized Medicare supplement benefit plan “G” shall include only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, eighty percent (80%) of the Medicare Part B excess charges, medically necessary emergency care in a foreign country, and the at-home recovery benefit as defined in subdivisions 1, 2, 4, 8 and 10 of subsection 6.4, respectively, of this rule.
7.5.9. Standardized Medicare supplement benefit plan “H” shall consist of only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, basic prescription drug benefit, and medically necessary emergency care in a foreign country as defined in subdivisions 1, 2, 6 and 8 of subsection 6.4, respectively, of this rule. The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005.
7.5.10. Standardized Medicare supplement benefit plan “I” shall consist of only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, one hundred percent (100%) of the Medicare Part B excess charges, basic prescription drug benefit, medically necessary emergency care in a foreign country and at-home recovery benefit as defined in subdivisions 1, 2, 5, 6, 8 and 10 of subsection 6.4, respectively, of this rule. The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005.
7.5.11. Standardized Medicare supplement benefit plan “J” shall consist of only the following: The core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, extended prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care and at-home recovery benefit as defined in subdivisions 1, 2, 3, 5, 7, 8, 9 and 10 of subsection 6.4, respectively, of this rule. The outpatient drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005.
7.5.12. Standardized Medicare supplement benefit high deductible plan “J” shall consist of only the following: one hundred percent (100%) of covered expenses following the payment of the annual high deductible plan “J” deductible. The covered expenses include the core benefit as defined in subsection 6.3 of this rule, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, extended prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care benefit and at-home recovery benefit as defined in subdivisions 1, 2, 3, 5, 7, 8, 9 and 10 of subsection 6.4, respectively, of this rule. The annual high deductible plan “J” deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement plan “J” policy, and shall be in addition to any other specific benefit deductibles. The annual deductible shall be one thousand five hundred dollars ($1,500) for 1998 and 1999, and shall be based on a calendar year. It shall be adjusted annually thereafter by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($10). The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005.
7.6. Make-up of two Medicare supplement plans mandated by The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA);
7.6.1. Standardized Medicare supplement benefit plan “K” shall consist of only those benefits described in subdivision 1, subsection 6.5 of this rule.
7.6.2. Standardized Medicare supplement benefit plan “L” shall consist of only those benefits described in subdivision 2, subsection 6.5 of this rule.
7.7. New and Innovative Benefits: An issuer may, with the prior approval of the Commissioner, offer policies or certificates with new or innovative benefits in addition to the benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits may include benefits that are appropriate to Medicare supplement insurance, new or innovative, not otherwise available, cost-effective, and offered in a manner which is consistent with the goal of simplification of Medicare supplement policies. After December 31, 2005, the innovative benefit shall not include an outpatient prescription drug benefit.
W. Va. Code R. § 114-24-7A Standard Medicare Supplement Benefit Plans for 2010 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery with an Effective Date for Coverage on or After June 1, 2010. 7A.1. The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state with an effective date of coverage on or after June 1, 2010. No policy or certificate may be advertised, solicited, delivered or issued for delivery in this state as a Medicare supplement policy or certificate unless it complies with these benefit plan standards. Benefit plan standards applicable to Medicare supplement policies and certificates issued with an effective date of coverage before June 1, 2010 remain subject to the requirements of sections 6 and 7 of this rule
7A.2. 7A.2.1. An issuer shall make available to each prospective policyholder and certificate holder a policy form or certificate form containing only the basic core benefits as defined in subsection 6A.3 of this rule. 7A.2.2. If an issuer makes available any of the additional benefits described in subsection 6A.4, or offers standardized benefit Plans K or L (as described in subdivisions 8 and 9, subsection 7A.6 of this section), then the issuer shall make available to each prospective policyholder and certificate holder, in addition to a policy form or certificate form with only the basic core benefits as described in subdivision a of this subsection, a policy form or certificate form containing either standardized benefit Plan C (as described in subdivision 3, subsection 7A.6 of this section) or standardized benefit Plan F (as described in subdivision 5, subsection 7A.6 of this section). 7A.3. No groups, packages or combinations of Medicare supplement benefits other than those listed in this section shall be offered for sale in this state, except as may be permitted in subsection 7A.7 of this section and section 8 of this rule. 7A.4. Benefit plans shall be uniform in structure, language, designation and format to the standard benefit plans listed in this subsection and conform to the definitions in section 2 of this rule. Each benefit shall be structured in accordance with the format provided in subsections 6A.3 and 6A.4 of this rule; or in the case of plans K or L in subdivisions 8 and 9, subsection 7A.6 of this section and list the benefits in the order shown. For purposes of this section, “structure, language and format” means style, arrangement and overall content of a benefit. 7A.5. In addition to the benefit plan designations required in subsection 7A.4 of this section, an issuer may use other designations to the extent permitted by law. 7A.6. Make-up of 2010 Standardized Benefit Plans: 7A.6.1. Standardized Medicare supplement benefit Plan A shall include only the following: The basic core benefits as defined in subsection 6A.3 of this rule. 7A.6.2. Standardized Medicare supplement benefit Plan B shall include only the following: The basic core benefits as defined in subsection 6A.3 of this rule, plus one hundred percent (100%) of the Medicare Part A deductible as defined in subdivision 1, subsection 6A.4 of this rule. 7A.6.3. Standardized Medicare supplement benefit Plan C shall include only the following: The basic core benefit as defined in subsection 6A.3 of this rule, plus one hundred percent (100%) of the Medicare Part A deductible, skilled nursing facility care, one hundred percent (100%) of the Medicare Part B deductible and medically necessary emergency care in a foreign country as defined in subdivisions 1, 3, 4 and 6 of subsection 6A.4, respectively, of this rule. 7A.6.4. Standardized Medicare supplement benefit Plan D shall include only the following: The basic core benefit as defined in subsection 6A.3 of this rule, plus one hundred percent (100%) of the Medicare Part A deductible, skilled nursing facility care and medically necessary emergency care in a foreign country as defined in subdivisions 1, 3 and 6 of subsection 6A.4, respectively, of this rule. 7A.6.5. Standardized Medicare supplement Plan F shall include shall include only the following: The basic core benefit as defined in subsection 6A.3 of this rule, plus one hundred percent (100%) of the Medicare Part A deductible, the skilled nursing facility care, one hundred percent (100%) of the Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges and medically necessary emergency care in a foreign country as defined in subdivisions 1, 3, 4, 5 and 6 of subsection 6A.4, respectively, of this rule. 7A.6.6. Standardized Medicare supplement Plan F With High Deductible shall include only the following: one hundred percent (100%) of covered expenses following the payment of the annual deductible set forth in paragraph b of this subdivision. 7A.6.6.a. The basic core benefit as defined in subsection 6A.3 of this rule, plus one hundred percent (100%) of the Medicare Part A deductible, skilled nursing facility care, one hundred percent (100%) of the Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges and medically necessary emergency care in a foreign country as defined in subdivisions 1, 3, 4, 5 and 6 of subsection 6A.4, respectively, of this rule. 7A.6.6.b. The annual deductible in Plan F With High Deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by Plan F (as described in subdivision e of this subsection), and shall be in addition to any other specific benefit deductibles. The basis for the deductible shall be one thousand five hundred dollars ($1,500) and shall be adjusted annually from 1999 by the Secretary of the U.S. Department of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($10). 7A.6.7. Standardized Medicare supplement benefit Plan G shall include only the following: The basic core benefit as defined in subsection 6A.3 of this rule, plus one hundred percent (100%) of the Medicare Part A deductible, skilled nursing facility care, one hundred percent (100%) of the Medicare Part B excess charges and medically necessary emergency care in a foreign country as defined in subdivisions 1, 3, 5 and 6 of subsection 6A.4, respectively. Effective January 1, 2020, the standardized benefit plans described in subdivision 4, subsection 7B.2 of this rule (Redesignated Plan G With High Deductible) may be offered to any individual who was eligible for Medicare prior to January 1, 2020. 7A.6.8. Standardized Medicare supplement Plan K is mandated by The Medicare Prescription Drug, Improvement and Modernization Act of 2003 and shall include only the following: 7A.6.8.a. Part A Hospital Coinsurance 61st through 90th days: Coverage of one hundred percent (100%) of the Part A hospital coinsurance amount for each day used from the 61st day through the 90th day in any Medicare benefit period; 7A.6.8.b. Part A Hospital Coinsurance 91st day through 150th days: Coverage of one hundred percent (100%) of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st day through the 150th day in any Medicare benefit period; 7A.6.8.c. Part A Hospitalization After Lifetime Reserve Days are Exhausted: Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer’s payment as payment in full and may not bill the insured for any balance; 7A.6.8.d. Medicare Part A Deductible: Coverage for fifty percent (50%) of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in paragraph j of this subdivision; 7A.6.8.e. Skilled Nursing Facility Care: Coverage for fifty percent (50%) of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in paragraph j of this subdivision; 7A.6.8.f. Hospice Care: Coverage for fifty percent (50%) of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in paragraph j of this subdivision; 7A.6.8.g. Blood: Coverage for fifty percent (50%), under Medicare Part A or B, of the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in paragraph j of this subdivision; 7A.6.8.h. Part B Cost Sharing: Except for coverage provided in paragraph i of this subdivision, coverage for fifty percent (50%) of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in paragraph j of this subdivision; 7A.6.8.i. Part B Preventive Services: Coverage of one hundred percent (100%) of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and 7A.6.8.j. Cost Sharing After Out-of-Pocket Limits: Coverage of one hundred percent (100%) of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of four thousand dollars ($4,000) in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary of the U.S. Department of Health and Human Services. 7A.6.9. Standardized Medicare supplement Plan L is mandated by The Medicare Prescription Drug, Improvement and Modernization Act of 2003, and shall include only the following: 7A.6.9.a. The benefits described in paragraphs a, b, c and i, subdivision 8 of this subsection; 7A.6.9.b. The benefits described in paragraphs d, e, f, g and h, subdivision 8 of this subsection, but substitution seventy-five percent (75%) for fifty percent (50%); and 7A.6.9.c. The benefit described in paragraph j, subdivision 8 of this subsection, but substituting two thousand dollars ($2,000) for four thousand dollars ($4,000). 7A.6.10. Standardized Medicare supplement Plan M shall include only the following: The basic core benefit as defined in subsection 6A.3 of this rule, plus fifty percent (50%) of the Medicare Part A deductible, skilled nursing facility care and medically necessary emergency care in a foreign country as defined in subdivision 2, 3 and 6 of subsection 6A.4, respectively: 7A.6.11. Standardized Medicare supplement Plan N shall include only the following: The basic core benefit as defined in subsection 6A.3 of this rule, plus one hundred percent (100%) of the Medicare Part A deductible, skilled nursing facility care and medically necessary emergency care in a foreign country as defined in subdivision 1, 3 and 6 of subsection 6A.4, respectively, of this rule, with co-payments in the following amounts: 7A.6.11.a. The lesser of twenty dollars ($20) or the Medicare Part B coinsurance or co-payment for each covered health care provider office visit (including visits to medical specialists); and 7A.6.11.b. The lesser of fifty dollars ($50) or the Medicare Part B coinsurance or co-payment for each covered emergency room visit, however, this co-payment shall be waived if the insured is admitted to any hospital and the emergency visit is subsequently covered as a Medicare Part A expense. 7A.7. New or Innovative Benefits: An issuer may, with the prior approval of the Commissioner, offer policies or certificates with new or innovative benefits, in addition to the standardized benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits shall include only benefits that are appropriate to Medicare supplement insurance, are new or innovative, are not otherwise available and are cost-effective. Approval of new or innovative benefits must not adversely impact the goal of Medicare supplement simplification. New or innovative benefits shall not include an outpatient prescription drug benefit. New or innovative benefits shall not be used to change or reduce benefits, including a change of any cost-sharing provision, in any standardized plan.
W. Va. Code R. § 114-24-7B Standard Medicare Supplement Benefit Plans for 2020 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery to Individuals Newly Eligible for Medicare on or After January 1, 2020. 7B.1. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) requires the following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state to individuals newly eligible for Medicare on or after January 1, 2020. No policy or certificate that provides coverage of the Medicare Part B deductible may be advertised, solicited, delivered or issued for delivery in this state as a Medicare supplement policy or certificate to individuals newly eligible for Medicare on or after January 1, 2020. All policies must comply with the following benefit standards. Benefit plan standards applicable to Medicare supplement policies and certificates issued to individuals eligible for Medicare before January 1, 2020, remain subject to the requirements of sections 6A and 7A of this rule. 7B.2. Benefit Requirements. The standards and requirements of section 7A of this rule shall apply to all Medicare supplement policies or certificates delivered or issued for delivery to individuals newly eligible for Medicare on or after January 1, 2020, with the following exceptions: 7B.2.1. Standardized Medicare supplement benefit Plan C is redesignated as Plan D and shall provide the benefits contained in subdivision 3, subsection 7A.6 of this rule but shall not provide coverage for one hundred percent (100%) or any portion of the Medicare Part B deductible. 7B.2.2. Standardized Medicare supplement benefit Plan F is redesignated as Plan G and shall provide the benefits contained in subdivision 5, subsection 7A.6 of this rule but shall not provide coverage for one hundred percent (100%) or any portion of the Medicare Part B deductible. 7B.2.3. Standardized Medicare supplement benefit plans C, F, and F With High Deductible may not be offered to individuals newly eligible for Medicare on or after January 1, 2020. 7B.2.4. Standardized Medicare supplement benefit Plan F With High Deductible is redesignated as Plan G With High Deductible and shall provide the benefits contained in subdivision 6, subsection 7A.6 of this rule but shall not provide coverage for one hundred percent (100%) or any portion of the Medicare Part B deductible; provided further that, the Medicare Part B deductible paid by the beneficiary shall be considered an out-of-pocket expense in meeting the annual high deductible. 7B.2.5. The reference to Plans C or F contained in subdivision 2, subsection 7A.2 of this rule is deemed a reference to Plans D or G for purposes of this section. 7B.3. Applicability to Certain Individuals. This section applies to only individuals that are newly eligible for Medicare on or after January 1, 2020: 7B.3.1. By reason of attaining age 65 on or after January 1, 2020; or 7B.3.2. By reason of entitlement to benefits under part A pursuant to section 226(b) or 226A of the Social Security Act, or who is deemed to be eligible for benefits under section 226(a) of the Social Security Act on or after January 1, 2020. 7B.4. Guaranteed Issue for Eligible Persons. For purposes of subsection 10.5 of this rule, in the case of any individual newly eligible for Medicare on or after January 1, 2020, any reference to a Medicare supplement policy C or F (including F With High Deductible) shall be deemed to be a reference to Medicare supplement policy D or G (including G With High Deductible), respectively, that meet the requirements of subsection 7B.2 of this section. 7B.5. Applicability to Waivered States. In the case of a state described in Section 1882(p)(6) of the Social Security Act (“waivered” alternative simplification states), MACRA prohibits the coverage of the Medicare Part B deductible for any Medicare supplement policy sold or issued to an individual that is newly eligible for Medicare on or after January 1, 2020. 7B.6. Offer of Redesignated Plans to Individuals Other Than Newly Eligible. On or after January 1, 2020, the standardized benefit plans described in subdivision 4, subsection 7B.2 of this section may be offered to any individual who was eligible for Medicare prior to January 1, 2020 in addition to the standardized plans described in subsection 7A.6 of this rule
W. Va. Code R. § 114-24-8 Medicare Select Policies and Certificates
8.1. This section shall apply to Medicare Select policies and certificates, as defined in this section.
8.2. No policy or certificate may be advertised as a Medicare Select policy or certificate unless it meets the requirements of this section.
8.3. For the purposes of this section:
8.3.1. “Complaint” means any dissatisfaction expressed by an individual concerning a Medicare Select issuer or its network providers.
8.3.2. “Grievance” means dissatisfaction expressed in writing by an individual insured under a Medicare Select policy or certificate with the administration, claims practices, or provision of services concerning a Medicare Select issuer or its network providers.
8.3.3. “Medicare Select issuer” means an issuer offering, or seeking to offer, a Medicare Select policy or certificate.
8.3.4. “Medicare Select policy” or “Medicare Select certificate” mean respectively a Medicare supplement policy or certificate that contains restricted network provisions.
8.3.5. “Network provider” means a provider of health care, or a group of providers of health care, which has entered into a written agreement with the issuer to provide benefits insured under a Medicare Select policy.
8.3.6. “Restricted network provision” means any provision which conditions the payment of benefits, in whole or in part, on the use of network providers.
8.3.7. “Service area” means the geographic area approved by the Commissioner within which an issuer is authorized to offer a Medicare Select policy.
8.4. The Commissioner may authorize an issuer to offer a Medicare Select policy or certificate, pursuant to this section and Section 4358 of the Omnibus Budget Reconciliation Act (OBRA) of 1990 if the Commissioner finds that the issuer has satisfied all of the requirements of this rule.
8.5. A Medicare Select issuer shall not issue a Medicare Select policy or certificate in this state until its plan of operation has been approved by the Commissioner.
8.6. A Medicare Select issuer shall file a proposed plan of operation with the Commissioner in a format prescribed by the Commissioner. The plan of operation shall contain at least the following information:
8.6.1. Evidence that all covered services that are subject to restricted network provisions are available and accessible through network providers, including a demonstration that:
8.6.1.a. Services can be provided by network providers with reasonable promptness with respect to geographic location, hours of operation and after-hour care. The hours of operation and availability of after-hour care shall reflect usual practice in the local area. Geographic availability shall reflect the usual travel times within the community.
8.6.1.b. The number of network providers in the service area is sufficient, with respect to current and expected policyholders, either:
8.6.1.b.1. To deliver adequately all services that are subject to a restricted network provision; or
8.6.1.b.2. To make appropriate referrals.
8.6.1.c. There are written agreements with network providers describing specific responsibilities.
8.6.1.d. Emergency care is available twenty-four (24) hours per day and seven (7) days per week.
8.6.1.e. In the case of covered services that are subject to a restricted network provision and are provided on a prepaid basis, there are written agreements with network providers prohibiting the providers from billing or otherwise seeking reimbursement from or recourse against any individual insured under a Medicare Select policy or certificate. This paragraph shall not apply to supplemental charges or coinsurance amounts as stated in the Medicare Select policy or certificate.
8.6.2. A statement or map providing a clear description of the service area.
8.6.3. A description of the grievance procedure to be utilized.
8.6.4. A description of the quality assurance program, including:
8.6.4.a. The formal organizational structure;
8.6.4.b. The written criteria for selection, retention and removal of network providers; and
8.6.4.c. The procedures for evaluating quality of care provided by network providers, and the process to initiate corrective action when warranted.
8.6.5. A list and description, by specialty, of the network providers.
8.6.6. Copies of the written information proposed to be used by the issuer to comply with subsection 8.10 of this section.
8.6.7. Any other information requested by the Commissioner.
8.7. A Medicare Select issuer shall file:
8.7.1. Any proposed changes to the plan of operation, except for changes to the list of network providers, with the Commissioner prior to implementing the changes. The changes shall be considered approved by the Commissioner after thirty (30) days unless specifically disapproved.
8.7.2. An updated list of network providers with the Commissioner at least quarterly.
8.8. A Medicare Select policy or certificate shall not restrict payment for covered services provided by non-network providers if:
8.8.1. The services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury or a condition; and
8.8.2. It is not reasonable to obtain services through a network provider.
8.9. A Medicare Select policy or certificate shall provide payment for full coverage under the policy for covered services that are not available through network providers.
8.10. A Medicare Select issuer shall make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare Select policy or certificate to each applicant. This disclosure shall include at least the following:
8.10.1. An outline of coverage sufficient to permit the applicant to compare the coverage and premiums of the Medicare Select policy or certificate with:
8.10.1.a. Other Medicare supplement policies or certificates offered by the issuer; and
8.10.1.b. Other Medicare Select policies or certificates.
8.10.2. A description (including address, phone number and hours of operation) of the network providers, including primary care physicians, specialty physicians, hospitals, and other providers.
8.10.3. A description of the restricted network provisions, including payments for coinsurance and deductibles when providers other than network providers are utilized. Except to the extent specified in the policy or certificate, expenses incurred when using out-of-network providers do not count toward the out-of-pocket annual limit contained in plans K and L.
8.10.4. A description of coverage for emergency and urgently needed care and other out of service area coverage.
8.10.5. A description of limitations on referrals to restricted network providers and to other providers.
8.10.6. A description of the policyholder’s right to purchase any other Medicare supplement policy or certificate otherwise offered by the issuer.
8.10.7. A description of the Medicare Select issuer's quality assurance program and grievance procedure.
8.11. Prior to the sale of a Medicare Select policy or certificate, a Medicare Select issuer shall obtain from the applicant a signed and dated form stating that the applicant has received the information provided pursuant to subsection 8.10 of this section and that the applicant understands the restrictions of the Medicare Select policy or certificate.
8.12. A Medicare Select issuer shall have and use procedures for hearing complaints and resolving written grievances from the subscribers. The procedures shall be aimed at mutual agreement for settlement and may include arbitration procedures.
8.12.1. The grievance procedure shall be described in the policy and certificates and in the outline of coverage.
8.12.2. At the time the policy or certificate is issued, the issuer shall provide detailed information to the policyholder describing how a grievance may be registered with the issuer.
8.12.3. Grievances shall be considered in a timely manner and shall be transmitted to appropriate decision-makers who have authority to fully investigate the issue and take corrective action.
8.12.4. If a grievance is found to be valid, corrective action shall be taken promptly.
8.12.5. All concerned parties shall be notified about the results of a grievance.
8.12.6. The issuer shall report no later than each March 31 to the Commissioner regarding its grievance procedure. The report shall be in a format prescribed by the Commissioner and shall contain the number of grievances filed in the past year and a summary of the subject, nature and resolution of grievances.
8.13. At the time of initial purchase, a Medicare Select issuer shall make available to each applicant for a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate otherwise offered by the issuer. 8.14.
8.14.1. At the request of an individual insured under a Medicare Select policy or certificate, a Medicare Select issuer shall make available to the individual insured the opportunity to purchase a Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make the policies or certificates available without requiring evidence of insurability after the Medicare Select policy or certificate has been in force for six (6) months.
8.14.2. For the purposes of this subsection, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced. For the purposes of this subdivision, a significant benefit means coverage for the Medicare Part A deductible, coverage for at-home recovery services or coverage for Part B excess charges.
8.15. Medicare Select policies and certificates shall provide for continuation of coverage in the event the Secretary of Health and Human Services determines that Medicare Select policies and certificates issued pursuant to this section should be discontinued due to either the failure of the Medicare Select Program to be reauthorized under law or its substantial amendment.
8.15.1. Each Medicare Select issuer shall make available to each individual insured under a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make the policies and certificates available without requiring evidence of insurability.
8.15.2. For the purposes of this subsection, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced. For the purposes of this subdivision, a significant benefit means coverage for the Medicare Part A deductible, coverage for at-home recovery services or coverage for Part B excess charges.
8.16. A Medicare Select issuer shall comply with reasonable requests for data made by state or federal agencies, including the United States Department of Health and Human Services, for the purpose of evaluating the Medicare Select Program.
W. Va. Code R. § 114-24-9 Open Enrollment
9.1. No issuer shall deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of a policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a policy or certificate that is submitted prior to or during the six (6) month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Each Medicare supplement policy and certificate currently available from an insurer shall be made available to all applicants who qualify under this subsection without regard to age.
9.2. If an applicant qualifies under subsection 9.1 of this section and submits an application during the time period referenced in subsection 9.1 of this section, and, as of the date of application, has had a continuous period of creditable coverage of at least six (6) months, the issuer shall not exclude benefits based on a preexisting condition.
9.3. If the applicant qualifies under subsection 9.1 of this section and submits an application during the time period referenced in subsection 9.1 of this section and, as of the date of application has had a continuous period of creditable coverage that is less than six (6) months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The Secretary shall specify the manner of the reduction under this subsection.
9.4. Except as provided in subsections 9.2 and 9.3 of this section and sections 10 and 21 of this rule, subsection 9.1 of this section shall not be construed as preventing the exclusion of benefits under a policy, during the first six (6) months, based on a preexisting condition for which the policyholder or certificate holder received treatment or was otherwise diagnosed during the six (6) months before the coverage became effective.
W. Va. Code R. § 114-24-10 Guaranteed Issue for Eligible Persons. 10.1
10.1.1. Eligible persons are those individuals described in subsection 10.2 of this section who seek to enroll under the policy during the period specified in subsection 10.3 of this section, and who submit evidence of the date of termination, disenrollment, or Medicare Part D enrollment with the application for a Medicare supplement policy.
10.1.2. With respect to eligible persons, an issuer shall not deny or condition the issuance or effectiveness of a Medicare supplement policy described in subsection 10.5 of this section that is offered and is available for issuance to new enrollees by the issuer, shall not discriminate in the pricing of a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition, and shall not impose an exclusion of benefits based on a preexisting condition under a Medicare supplement policy.
10.2. An eligible person is an individual described in any of the following subdivisions:
10.2.1. The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare; and the plan terminates, or the plan ceases to provide substantially all supplemental health benefits to the individual;
10.2.2. The individual is enrolled with a Medicare Advantage organization under a Medicare Advantage plan under Part C of Medicare, and any of the following circumstances apply, or the individual is 65 years of age or older and is enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider under Section 1894 of the Social Security Act, and there are circumstances similar to those described below that would permit discontinuance of the individual’s enrollment with the provider if the individual were enrolled in a Medicare Advantage plan:
10.2.2.a. The certification of the organization or plan has been terminated;
10.2.2.b. The organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides;
10.2.2.c. The individual is no longer eligible to elect the plan because of a change in the individual’s place of residence or other change in circumstances specified by the Secretary, but not including termination of the individual’s enrollment on the basis described in Section 1851(g)(3)(B) of the federal Social Security Act (where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under Section 1856), or the plan is terminated for all individuals within a residence area;
10.2.2.d. The individual demonstrates, in accordance with guidelines established by the Secretary, that:
10.2.2.d.1. The organization offering the plan substantially violated a material provision of the organization’s contract under this series in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide the covered care in accordance with applicable quality standards; or
10.2.2.d.2. The organization or agent or other entity acting on the organization’s behalf, materially misrepresented the plan’s provisions in marketing the plan to the individual; or
10.2.2.e. The individual meets other exceptional conditions as the Secretary may provide. 10.2.3.
10.2.3.a. The individual is enrolled with:
10.2.3.a.1. An eligible organization under a contract under Section 1876 of the Social Security Act (Medicare cost);
10.2.3.a.2. A similar organization operating under demonstration project authority, effective for periods before April 1, 1999;
10.2.3.a.3. An organization under an agreement under Section 1833(a)(1)(A) of the Social Security Act (health care prepayment plan); or
10.2.3.a.4. An organization under a Medicare Select policy; and
10.2.3.b. The enrollment ceases under the same circumstances that would permit discontinuance of an individual’s election of coverage under subdivision 2 of subsection 10.2 of this section.
10.2.4. The individual is enrolled under a Medicare supplement policy and the enrollment ceases because:
10.2.4.a. Of the insolvency of the issuer or bankruptcy of the non-issuer organization or of other involuntary termination of coverage or enrollment under the policy;
10.2.4.b. The issuer of the policy substantially violated a material provision of the policy; or
10.2.4.c. The issuer, or an agent or other entity acting on the issuer’s behalf, materially misrepresented the policy’s provisions in marketing the policy to the individual. 10.2.5.
10.2.5.a. The individual was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time, with any Medicare Advantage organization under a Medicare Advantage plan under Part C of Medicare, any eligible organization under a contract under Section 1876 of the Social Security Act (Medicare cost), any similar organization operating under demonstration project authority, any PACE provider under Section 1894 of the Social Security Act or a Medicare Select policy; and
10.2.5.b. The subsequent enrollment under paragraph 1 of this subdivision is terminated by the enrollee during any period within the first twelve (12) months of subsequent enrollment (during which the enrollee is permitted to terminate subsequent enrollment under Section 1851(e) of the federal Social Security Act); or
10.2.6. The individual, upon first becoming eligible for benefits under Part A of Medicare at age 65, enrolls in a Medicare Advantage plan under Part C of Medicare, or with a PACE provider under Section 1894 of the Social Security Act, and disenrolls from the plan or program by not later than twelve (12) months after the effective date of enrollment.
10.2.7. The individual enrolls in a Medicare Part D plan during the initial enrollment period and, at the time of enrollment in Part D, was enrolled under a Medicare supplement policy that covers outpatient prescription drugs and the individual terminates enrollment in the Medicare supplement policy and submits evidence of enrollment in Medicare Part D along with the application for a policy described in subdivision 4, subsection 10.5 of this section.
10.3. Guaranteed Issue Time Periods
10.3.1. In the case of an individual described in subdivision 1, subsection 10.2 of this section, the guaranteed issue period begins on the later of: (i) the date the individual receives a notice of termination or cessation of all supplemental health benefits (or, if a notice is not received, notice that a claim has been denied because of a termination or cessation); or (ii) the date that the applicable coverage terminates or ceases; and ends sixty-three (63) days thereafter;
10.3.2. In the case of an individual described in subdivisions 2, 3, 5 or 6, subsection 10.2 of this section whose enrollment is terminated involuntarily, the guaranteed issue period begins on the date that the individual receives a notice of termination and ends sixty-three (63) days after the date the applicable coverage is terminated;
10.3.3. In the case of an individual described in paragraph a, subdivision 4, subsection 10.2 of this section, the guaranteed issue period begins on the earlier of: (i) the date that the individual receives a notice of termination, a notice of the issuer’s bankruptcy or insolvency, or other similar notice if any, and (ii) the date that the applicable coverage is terminated, and ends on the date that is sixty-three (63) days after the date the coverage is terminated;
10.3.4. In the case of an individual described in subdivision 2; paragraphs b and c of subdivision 4; subdivision 5; or subdivision 6 of subsection 10.2 of this section who disenrolls voluntarily, the guaranteed issue period begins on the date that is sixty (60) days before the effective date of the disenrollment and ends on the date that is sixty-three (63) days after the effective date;
10.3.5. In the case of an individual described in subdivision 7, subsection 10.2 of this section, the guaranteed issue period begins on the date the individual receives notice pursuant to Section 1882(v)(2)(B) of the Social Security Act from the Medicare supplement issuer during the sixty-day period immediately preceding the initial Part D enrollment period and ends on the date that is sixty-three (63) days after the effective date of the individual’s coverage under Medicare Part D; and
10.3.6. In the case of an individual described in subsection 10.2 of this section but not described in the preceding provisions of this subsection, the guaranteed issue period begins on the effective date of disenrollment and ends on the date that is sixty-three (63) days after the effective date.
10.4. Extended Medigap Access for Interrupted Trial Periods
10.4.1. In the case of an individual described in subdivision 5, subsection 10.2 of this section (or deemed to be so described, pursuant to this subdivision) whose enrollment with an organization or provider described in paragraph a, subdivision 5, subsection 10.2 of this section is involuntarily terminated within the first twelve (12) months of enrollment, and who, without an intervening enrollment, enrolls with another organization or provider, the subsequent enrollment shall be deemed to be an initial enrollment described in subdivision 5, subsection 10.2 of this section;
10.4.2. In the case of an individual described in subdivision 6, subsection 10.2 of this section (or deemed to be so described, pursuant to this subdivision) whose enrollment with a plan or in a program described in subdivision 6, subsection 10.2 of this section is involuntarily terminated within the first twelve (12) months of enrollment, and who, without an intervening enrollment, enrolls in another plan or program, the subsequent enrollment shall be deemed to be an initial enrollment described in subdivision 6, subsection 10.2 of this section; and
10.4.3. For purposes of subdivisions 5 and 6, subsection 10.2 of this section, no enrollment of an individual with an organization or provider described in paragraph a, subdivision 5, subsection 10.2 of this section, or with a plan or in a program described in subdivision 6, subsection 10.2 of this section, may be deemed to be an initial enrollment under this paragraph after the two-year period beginning on the date on which the individual first enrolled with an organization, provider, plan or program.
10.5. The Medicare supplement policy to which eligible persons are entitled under:
10.5.1. Subdivisions 1, 2, 3, and 4, subsection 10.2 of this section is a Medicare supplement policy which has a benefit package classified as Plan A, B, C, F (including F with a high deductible), K or L offered by any insurer. 10.5.2.
10.5.2.a. Subject to paragraph b of this subdivision, subdivision 5, subsection 10.2 of this section is the same Medicare supplement policy in which the individual was most recently previously enrolled, if available from the same issuer, or, if not so available, a policy described in subdivision 1 of this subsection.
10.5.2.b. After December 31, 2005, if the individual was most recently enrolled in a Medicare supplement policy with an outpatient prescription drug benefit, a Medicare supplement policy described in this paragraph is:
10.5.2.b.1. The policy available from the same issuer but modified to remove outpatient prescription drug coverage; or
10.5.2.b.2. At the election of the policyholder, an A, B, C, F (including F with a high deductible), K or L policy that is offered by any issuer;
10.5.3. Subdivision 6, subsection 10.2 of this section shall include any Medicare supplement policy offer by any issuer;
10.5.4. Subdivision 7, subsection 10.2 of this section is a Medicare supplement policy that has a benefit package classified as Plan A, B, C, F (including F with a high deductible), K or L, and that is offered and is available for issuance to new enrollees by the same issuer that issued the individual’s Medicare supplement policy with outpatient prescription drug coverage.
10.6. Notification provisions are as follows:
10.6.1. At the time of an event described in subsection 10.2 of this section because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement policies under subsection 10.1 of this section. The notice shall be communicated contemporaneously with the notification of termination.
10.6.2. At the time of an event described in subsection 10.2 of this section because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement policies under subsection 10.1 of this section. The notice shall be communicated within ten (10) working days of the issuer receiving notification of disenrollment.
W. Va. Code R. § 114-24-11 Standards for Claims Payment
11.1. An issuer shall comply with Section 1882(c)(3) of the Social Security Act (as enacted by Section 4081(b)(2)(C) of the Omnibus Budget Reconciliation Act of 1987 (OBRA) 1987, Pub. L. No. 100-203) by:
11.1.1. Accepting a notice from a Medicare carrier on dually assigned claims submitted by participating physicians and suppliers as a claim for benefits in place of any other claim form otherwise required and making a payment determination on the basis of the information contained in that notice;
11.1.2. Notifying the participating physician or supplier and the beneficiary of the payment determination;
11.1.3. Paying the participating physician or supplier directly;
11.1.4. Furnishing, at the time of enrollment, each enrollee with a card listing the policy name, number, and a central mailing address to which notices from a Medicare carrier may be sent;
11.1.5. Paying user fees for claim notices that are transmitted electronically or otherwise; and
11.1.6. Providing to the Secretary of Health and Human Services, at least annually, a central mailing address to which all claims may be sent by Medicare carriers.
11.2. Compliance with the requirements set forth in subsection 11.1 of this section shall be certified on the Medicare supplement insurance experience reporting form.
W. Va. Code R. § 114-24-12 Loss Ratio Standards and Refund or Credit of Premium
12.1. Loss Ratio Standards.
12.1.1. A Medicare supplement policy form or certificate form shall not be delivered or issued for delivery unless:
12.1.1.a. The policy form or certificate form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificate holders in the form of aggregate benefits (not including anticipated refunds or credits) provided under the policy form or certificate form:
12.1.1.a.1. At least seventy-five percent (75%) of the aggregate amount of premiums earned in the case of group policies, or
12.1.1.a.2. At least sixty-five percent (65%) of the aggregate amount of premiums earned in the case of individual policies;
12.1.1.b. Calculated on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis and earned premiums for the period and in accordance with accepted actuarial principles and practices. Incurred health care expenses where coverage is provided by a health maintenance organization shall not include:
12.1.1.b.1. Home office and overhead costs;
12.1.1.b.2. Advertising costs;
12.1.1.b.3. Commissions and other acquisition costs;
12.1.1.b.4. Taxes;
12.1.1.b.5. Capital costs;
12.1.1.b.6. Administrative costs; and
12.1.1.b.7. Claims processing costs.
12.1.2. All filings of rates and rating schedules shall demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Filings of rate revisions shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards.
12.1.3. For policies issued prior to April 28, 1996, expected claims in relation to premiums shall meet:
12.1.3.a. The originally filed anticipated loss ratio when combined with the actual experience since inception;
12.1.3.b. The appropriate loss ratio requirement from subparagraphs 1 and 2, paragraph a, subdivision 1 of this subsection when combined with actual experience beginning April 28, 1996; and
12.1.3.c. The appropriate loss ratio requirement from subparagraphs 1 and 2, paragraph a, subdivision 1 of this subsection over the entire future period for which the rates are computed to provide coverage.
12.2. Refund or Credit Calculation.
12.2.1. An issuer shall collect and file with the Commissioner by May 31 of each year the data contained in the applicable reporting form contained in Appendix A for each type in a standard Medicare supplement benefit plan. Appendix A, which is hereby incorporated into this rule by reference, is annexed hereto and entitled “Reporting Form for Calculation of Loss Ratios.”
12.2.2. If on the basis of the experience as reported the benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation shall be done on a statewide basis for each type in a standard Medicare supplement benefit plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded.
12.2.3. For the purposes of this section, policies or certificates issued prior to April 28, 1996, the issuer shall make the refund or credit calculation separately for all individual policies (including all group policies subject to an individual loss ratio standard when issued) combined and all other group policies combined for experience after April 28, 1996. The first report shall be due by May 31, 1998.
12.2.4. A refund or credit shall be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimis level. The refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the Secretary of Health and Human Services, but in no event shall it be less than the average rate of interest for 13-week Treasury notes. A refund or credit against premiums due shall be made by September 30 following the experience year upon which the refund or credit is based.
12.3. Annual Filing of Premium Rates.
12.3.1. An issuer of Medicare supplement policies and certificates issued before or after the effective date of these “Permanent Regulations on Medicare Supplement Insurance” in this state shall file annually its rates, rating schedule and supporting documentation including ratios of incurred losses to earned premiums by policy duration for approval by the Commissioner in accordance with the filing requirements and procedures prescribed by the Commissioner. The supporting documentation shall also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. The demonstration shall exclude active life reserves. An expected third-year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than three (3) years.
12.3.2. As soon as practicable, but prior to the effective date of enhancements in Medicare benefits, every issuer of Medicare supplement policies or certificates in this state shall file with the Commissioner, in accordance with the applicable filing procedures of this state:
12.3.2.a. Appropriate premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or certificates. The supporting documents as necessary to justify the adjustment shall accompany the filing.
12.3.2.a.1. An issuer shall make premium adjustments as are necessary to produce an expected loss ratio under the policy or certificate as will conform with minimum loss ratio standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for such Medicare supplement insurance policies or certificates. No premium adjustment which would modify the loss ratio experience under the policy other than the adjustments described herein should be made with respect to a policy at any time other than upon its renewal date or anniversary date.
12.3.2.a.2. If an issuer fails to make premium adjustments acceptable to the Commissioner, the Commissioner may order premium adjustments, refunds or premium credits deemed necessary to achieve the loss ratio required by this section.
12.3.2.b. Any appropriate riders, endorsements or policy forms needed to accomplish the Medicare supplement policy or certificate modifications necessary to eliminate benefit duplications with Medicare. The riders, endorsements or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or certificate.
12.4. Public Hearings.
12.4.1. The Commissioner may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate for a policy form or certificate form issued before or after the effective date of this rule if the experience of the form for the previous reporting period is not in compliance with the applicable loss ratio standard. The determination of compliance is made without consideration of any refund or credit for the reporting period. Public notice of the hearing shall be furnished in a manner consistent with the provisions of W. Va. Code §§33-2-12 and 33-2-13. Nothing in this subsection shall be construed so as to limit the authority of the Commissioner to conduct hearings regarding rates, to the extent that the laws of this state grant authority.
W. Va. Code R. § 114-24-13 Filing and Approval of Policies and Certificates and Premium Rates
13.1. An issuer shall not deliver or issue for delivery a policy or certificate to a resident of this state unless the policy form or certificate form has been filed with and approved by the Commissioner in accordance with filing requirements and procedures prescribed by the Commissioner.
13.2. An issuer shall file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 only with the commissioner in the state in which the policy or certificate was issued.
13.3. An issuer shall not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule and supporting documentation have been filed with and approved by the Commissioner in accordance with the filing requirements and procedures prescribed by the Commissioner.
13.4. Except as provided in subdivision 1 of this subsection, an issuer shall not file for approval more than one form of a policy or certificate of each type for each standard Medicare supplement benefit plan.
13.4.1. An issuer may offer, with the approval of the Commissioner, up to four additional policy forms or certificate forms of the same type for the same standard Medicare supplement benefit plan, one for each of the following cases:
13.4.1.a. The inclusion of new or innovative benefits;
13.4.1.b. The addition of either direct response or agent marketing methods;
13.4.1.c. The addition of either guaranteed issue or underwritten coverage;
13.4.1.d. The offering of coverage to individuals eligible for Medicare by reason of disability.
13.4.2. For the purposes of this section, a “type” means an individual policy, a group policy, an individual Medicare Select policy, or a group Medicare Select policy.
13.5. Except as provided in paragraph a of subdivision 1 of this subsection, an issuer shall continue to make available for purchase any policy form or certificate form issued after the effective date of this rule that has been approved by the Commissioner.
13.5.1. A policy form or certificate form shall not be considered to be available for purchase unless the issuer has actively offered it for sale in the previous twelve months.
13.5.1.a. An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the Commissioner in writing its decision at least thirty (30) days prior to discontinuing the availability of the form of the policy or certificate. After receipt of the notice by the Commissioner, the issuer shall no longer offer for sale the policy form or certificate form in this state.
13.5.1.b. An issuer that discontinues the availability of a policy form or certificate form pursuant to paragraph 1 of subdivision a of this subsection shall not file for approval a new policy form or certificate form of the same type for the same standard Medicare supplement benefit plan as the discontinued form for a period of five (5) years after the issuer provides notice to the Commissioner of the discontinuance. The period of discontinuance may be reduced if the Commissioner determines that a shorter period is appropriate.
13.5.2. The sale or other transfer of Medicare supplement business to another issuer shall be considered a discontinuance for the purposes of this subsection.
13.5.3. A change in the rating structure or methodology shall be considered a discontinuance under this subsection unless the issuer complies with the following requirements:
13.5.3.a. The issuer provides an actuarial memorandum, in a form and manner prescribed by the Commissioner, describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and existing rates.
13.5.3.b. The issuer does not subsequently put into effect a change of rates or rating factors that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change. The Commissioner may approve a change to the differential which is in the public interest.
13.6. Refund or Credit Calculation.
13.6.1. Except as provided in subdivision 2 of this subsection, the experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or credit calculation prescribed in section 12 of this rule.
13.6.2. Forms assumed under an assumption reinsurance agreement shall not be combined with the experience of other forms for purposes of the refund or credit calculation.
13.7. An issuer shall not present for filing or approval a rate structure for its Medicare supplement policies or certificates issued after the effective date of the amendment of this rule based upon a structure or methodology with any groupings of attained ages greater than one year. The ratio between rates for successive ages shall increase smoothly as age increases. For any insurer that rates Medicare supplement policies or certificates under multiple-year age banding at the time of the effective date of this subsection, the insurer may transition to one-year age bands over a period of five (5) years or less. Nothing herein shall prohibit an insurer from applying a maximum rate based upon the attainment of a specific age.
W. Va. Code R. § 114-24-14 Permitted Compensation Arrangements
14.1. An issuer or other entity may provide commission or other compensation to an agent or other representative for the sale of a Medicare supplement policy or certificate only if the first year commission or other first year compensation is no greater than two hundred percent (200%) of the commission or other compensation paid for selling or servicing the policy or certificate in the second year or period.
14.2. The commission or other compensation provided in subsequent (renewal) years must be the same as that provided in the second year or period and must be provided for no fewer than five (5) renewal years.
14.3. No issuer or other entity shall provide compensation to its agents or other producers and no agent or producer shall receive compensation greater than the renewal compensation payable by the replacing issuer on renewal policies or certificates if an existing policy or certificate is replaced.
14.4. For purposes of this section, “compensation” includes pecuniary or non-pecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including but not limited to bonuses, gifts, prizes, awards and finder’s fees.
W. Va. Code R. § 114-24-15 Required Disclosure Provisions
15.1. General Rules.
15.1.1. Medicare supplement policies and certificates shall include a renewal or continuation provision. The language or specifications of the provision must be consistent with the type of contract issued. The provision shall be appropriately captioned and shall appear on the first page of the policy, and shall include any reservation by the issuer of the right to change premiums and any automatic renewal premium increases based on the policyholder’s age.
15.1.2. Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured, exercises a specifically reserved right under a Medicare supplement policy, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after the date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require a signed acceptance by the insured. After the date of policy or certificate issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term shall be agreed to in writing signed by the insured, unless the benefits are required by the minimum standards for Medicare supplement policies, or if the increased benefits or coverage is required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy.
15.1.3. Medicare supplement policies or certificates shall not provide for the payment of benefits based on standards described as “usual and customary,” “reasonable and customary” or words of similar import.
15.1.4. If a Medicare supplement policy or certificate contains any limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy, be labeled as “Preexisting Condition Limitations,” and be placed on the first page of the policy.
15.1.5. Medicare supplement policies and certificates shall have a notice prominently printed on the first page of the policy or certificate or attached thereto stating in substance that the policyholder or certificate holder shall have the right to return the policy or certificate within thirty (30) days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the insured person is not satisfied for any reason.
15.1.6. Issuers of accident and sickness policies or certificates which provide hospital or medical expense coverage on an expense incurred or indemnity basis to a person(s) eligible for Medicare shall provide to those applicants a Guide to Health Insurance for People with Medicare in the form developed jointly by the National Association of Insurance Commissioners and CMS and in a type size no smaller than 12 point type. For purposes of this section, “form” means the language, format, type size, promotional spacing, bold character, and line spacing. Delivery of the Guide shall be made whether or not the policies or certificates are advertised, solicited or issued as Medicare supplement policies or certificates as defined in this rule. Except in the case of direct response issuers, delivery of the Guide shall be made to the applicant at the time of application and acknowledgment of receipt of the Guide shall be obtained by the issuer. Direct response issuers shall deliver the Guide to the applicant upon request but not later than at the time the policy is delivered.
15.2. Notice Requirements.
15.2.1. As soon as practicable, but no later than thirty (30) days prior to the annual effective date of any Medicare benefit changes, an issuer shall notify its policyholders and certificate holders of modifications it has made to Medicare supplement insurance policies or certificates in a format acceptable to the Commissioner. The notice shall:
15.2.1.a. Include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement policy or certificate, and
15.2.1.b. Inform each policyholder or certificate holder as to when any premium adjustment is to be made due to changes in Medicare.
15.2.2. The notice of benefit modifications and any premium adjustments shall be in outline form and in clear and simple terms so as to facilitate comprehension.
15.2.3. The notices shall not contain or be accompanied by any solicitation.
15.3. MMA Notice Requirements. Issuers shall comply with the notice requirements of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
15.4. Outline of Coverage Requirements for Medicare Supplement Policies.
15.4.1. Issuers shall provide an outline of coverage to all applicants at the time application is presented to the prospective applicant and, except for direct response policies, shall obtain an acknowledgment of receipt of the outline from the applicant; and
15.4.2. If an outline of coverage is provided at the time of application and the Medicare supplement policy or certificate is issued on a basis which would require revision of the outline, a substitute outline of coverage properly describing the policy or certificate shall accompany the policy or certificate when it is delivered and contain the following statement, in no less than twelve (12) point type, immediately above the company name:
“NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued.”
15.4.3. The outline of coverage provided to applicants pursuant to this section consists of four parts: a cover page, premium information, disclosure pages, and charts displaying the features of each benefit plan offered by the issuer. The outline of coverage shall be in the language and format prescribed below in no less than twelve (12) point type. All Medicare Supplement Benefit Plans shall be shown on the cover page, and the plan(s) that are offered by the issuer shall be prominently identified. Premium information for plans that are offered shall be shown on the cover page or immediately following the cover page and shall be prominently displayed. The premium and mode shall be stated for all plans that are offered to the prospective applicant. All possible premiums for the prospective applicant shall be illustrated.
15.4.4. The following items shall be included in the outline of coverage in the order prescribed in Appendix E at the end of this rule. Appendix B, entitled "Outline of Medicare Supplement Coverage--Cover Page," which is incorporated into this rule by reference and annexed hereto, prescribes the information to be contained on the cover page. The required premium information and disclosure pages are in Appendix E of this rule. Examples of charts displaying the features of each Medicare supplement benefit plan offered by the issuer is contained in Appendix C, which is annexed hereto and incorporated herein by reference.
15.5. Notice Regarding Policies or Certificates Which Are Not Medicare Supplement Policies.
15.5.1. Any accident and sickness insurance policy or certificate, other than a Medicare supplement policy a policy issued pursuant to a contract under Section 1876 of the federal Social Security Act (42 U.S.C. §1395 et seq.); disability income policy; or other policy identified in subdivision 3 of subsection 1.5 of this rule, issued for delivery in this state to persons eligible for Medicare shall notify insureds under the policy that the policy is not a Medicare supplement policy or certificate. The notice shall either be printed or attached to the first page of the outline of coverage delivered to insureds under the policy, or if no outline of coverage is delivered, to the first page of the policy or certificate delivered to insureds. The notice shall be in no less than twelve (12) point type and shall contain the following language:
“THIS [POLICY OR CERTIFICATE] IS NOT A MEDICARE SUPPLEMENT [POLICY OR CONTRACT]. If you are eligible for Medicare, review the Guide to Health Insurance for People with Medicare available from the company.”
15.5.2. Applications provided to persons eligible for Medicare for the health insurance policies or certificates described in subdivision 1 of this subsection shall disclose, using the applicable statement in Appendix C, the extent to which the policy duplicates Medicare. The disclosure statement shall be provided as a part of, or together with, the application for the policy or certificate.
W. Va. Code R. § 114-24-16 Requirements for Application Forms and Replacement Coverage
16.1. Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant currently has Medicare supplement, Medicare Advantage, Medicaid coverage, or another health insurance policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and agent containing these questions and statements may be used.
16.1.1. Statements:
16.1.1.a. You do not need more than one Medicare supplement policy.
16.1.1.b. If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need multiple coverages.
16.1.1.c. You may be eligible for benefits under Medicaid and may not need a Medicare supplement policy.
16.1.1.d. If, after purchasing this policy, you become eligible for Medicaid, the benefits and premiums under your Medicare supplement policy can be suspended if requested during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within ninety (90) days of becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within ninety (90) days of losing Medicaid eligibility. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.
16.1.1.e. If you are eligible for, and have enrolled in a Medicare supplement policy by reason of disability and you later become covered by an employer or union-based group health plan, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, while you are covered under the employer or union-based group health plan. If you suspend your Medicare supplement policy under these circumstances, and later lose your employer or union-based group health plan, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within ninety (90) days of losing your employer or union-based group health plan. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.
16.1.1.f. Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the state Medicaid program, including benefits as a Qualified Medicare Beneficiary (QMB) and a Specified Low-Income Medicare Beneficiary (SLMB).
16.1.2. Questions. If you lost or are losing other health insurance coverage and received a notice from your prior insurer saying you were eligible for guaranteed issue of a Medicare supplement insurance policy, or that you had certain rights to buy a policy, you may be guaranteed acceptance in one or more of our Medicare supplement plans. Please include a copy of the notice from your prior insurer with your application. PLEASE ANSWER ALL QUESTIONS.
16.1.2.a. To the best of your knowledge:
16.1.2.a.1. Did you turn age 65 in the last six (6) months?
16.1.2.a.2. Did you enroll in Medicare Part B in the last six (6) months?
16.1.2.a.2.A. If so, what is the effective date?
16.1.2.a.3. Are you covered for medical assistance through the state Medicaid program? [NOTE TO APPLICANT: If you are participating in a “Spend-Down Program” and have not met your “Share of Cost,” please answer NO to this question.]
16.1.2.a.3.A. If so, will Medicaid pay your premiums for the Medicare supplement policy?
16.1.2.a.3.B. Do you receive any benefits from Medicaid OTHER THAN payments toward your Medicare Part B premium?
16.1.2.a.4. If you had coverage from any Medicare plan other than original Medicare within the past sixty-three (63) days (for example, a Medicare Advantage plan, or a Medicare HMO or PPO), what are your start and end dates? If you are still covered under the plan, disregard end date.
16.1.2.a.5. If you are still covered under the Medicare plan, do you intend to replace your current coverage with this new Medicare supplement policy?
16.1.2.a.6. Was this your first time in this type of Medicare plan?
16.1.2.a.7. Did you drop a Medicare supplement policy to enroll in the Medicare plan?
16.1.2.a.8. Do you have another Medicare supplement policy in force?
16.1.2.a.8.A. If so, with what company, and what plan do you have [optional for Direct Mailers]?
16.1.2.a.8.B. If so, do you intend to replace your current Medicare supplement policy with this policy?
16.1.2.a.9. Have you had coverage under any other health insurance within the past sixty-three (63) days? (For example, an employer, union, or individual plan.)
16.1.2.a.9.A. If so, with what company and what kind of policy?
16.1.2.a.9.B. What are your dates of coverage under the other policy? (If you are still covered under the other policy, disregard end date.)
16.2. Agents shall list any other health insurance policies they have sold to the applicant.
16.2.1. List policies sold which are still in force.
16.2.2. List policies sold in the past five (5) years which are no longer in force.
16.3. In the case of a direct response issuer, a copy of the application or supplemental form, signed by the applicant, and acknowledged by the insurer, shall be returned to the applicant by the insurer upon delivery of the policy.
16.4. Upon determining that a sale will involve replacement of Medicare supplement coverage, any issuer, other than a direct response issuer, or its agent, shall furnish the applicant, prior to issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of Medicare supplement coverage. One (1) copy of the notice signed by the applicant and the agent, except where the coverage is sold without an agent, shall be provided to the applicant and an additional signed copy shall be retained by the issuer. A direct response issuer shall deliver to the applicant, at the time of the issuance of the policy, the notice regarding replacement of Medicare supplement coverage.
16.5. The notice required by subsection 16.4 of this section for an issuer shall be provided in substantially the form at the end of this rule (Appendix F) in no less than twelve (12) point type.
16.6. Paragraphs 1 and 2 of the replacement notice (applicable to preexisting conditions) may be deleted by an issuer if the replacement does not involve application of a new preexisting condition limitation.
W. Va. Code R. § 114-24-17 Filing Requirements for Advertising
An issuer shall provide a copy of any Medicare supplement advertisement intended for use in this state whether through written, radio or television medium to the Commissioner for review. The advertisement shall comply with all laws of this state, including, when applicable, the provisions of W. Va. Code §§33-6-8(e), 33-6-35, and 33-11-4(2).
W. Va. Code R. § 114-24-18 Standards for Marketing
18.1. An issuer, directly or through its producers, shall:
18.1.1. Establish marketing procedures to assure that any comparison of policies by its agents or other producers will be fair and accurate.
18.1.2. Establish marketing procedures to assure excessive insurance is not sold or issued.
18.1.3. Display prominently by type, stamp or other appropriate means, on the first page of the policy the following:
“Notice to buyer: This policy may not cover all of your medical expenses.”
18.1.4. Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for Medicare supplement insurance already has accident and sickness insurance and the types and amounts of the insurance.
18.1.5. Establish auditable procedures for verifying compliance with this subsection.
18.2. In addition to the practices prohibited in this state’s Unfair Trade Practices Act [W. Va. Code §33-11-1 et seq.], the following acts and practices are prohibited:
18.2.1. Twisting. -- Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer.
18.2.2. High pressure tactics. -- Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance.
18.2.3. Cold lead advertising. -- Making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.
18.3. The terms “Medicare Supplement,” “Medigap,” “Medicare Wrap-Around” and words of similar import shall not be used unless the policy is issued in compliance with this rule.
W. Va. Code R. § 114-24-19 Appropriateness of Recommended Purchase and Excessive Insurance
19.1. In recommending the purchase or replacement of any Medicare supplement policy or certificate an agent shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.
19.2. Any sale of a Medicare supplement policy or certificate that will provide an individual more than one Medicare supplement policy or certificate is prohibited.
19.3. An issuer shall not issue a Medicare supplement policy or certificate to an individual enrolled in Medicare Part C unless the effective date of the coverage is after the termination date of the individual’s Part C coverage.
W. Va. Code R. § 114-24-20 Reporting of Multiple Policies
20.1. On or before March 1 of each year, an issuer shall report the following information for every individual resident of this state for whom the issuer has in force more than one Medicare supplement policy or certificate:
20.1.1. Policy and certificate number, and
20.1.2. Date of issuance.
20.2. The items set forth above must be grouped by individual policyholder.
20.3. To comply with this section, an issuer shall use the form incorporated herein by reference and annexed hereto as Appendix D, entitled “Form for Reporting Duplicate Policies.”
W. Va. Code R. § 114-24-21 Prohibition Against Preexisting Conditions, Waiting Periods, Elimination Periods and Probationary Periods in Replacement Policies or Certificates
21.1. If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate, the replacing issuer shall waive any time periods applicable to preexisting conditions, waiting periods, elimination periods and probationary periods in the new Medicare supplement policy or certificate to the extent the time was spent under the original policy.
21.2. If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate which has been in effect for at least six (6) months, the replacing policy shall not provide any time period applicable to preexisting conditions, waiting periods, elimination periods and probationary periods.
W. Va. Code R. § 114-24-22 Prohibition Against Use of Genetic Information and Requests for Genetic Testing
22.1. This section applies to all policies with policy years beginning on or after May 21, 2009.
22.2. An issuer of a Medicare supplement policy or certificate;
22.2.1. Shall not deny or condition the issuance or effectiveness of the policy or certificate (including the imposition of any exclusion of benefits under the policy based on a pre-existing condition) on the basis of the genetic information with respect to the individual; and
22.2.2. Shall not discriminate in the pricing of the policy or certificate (including the adjustment of premium rates) of an individual on the basis of the genetic information with respect to the individual.
22.3. Nothing in subsection 22.2 of this section shall be construed to limit the ability of an issuer, to the extent otherwise permitted by law, from:
22.3.1. Denying or conditioning the issuance or effectiveness of the policy or certificate or increasing the premium for a group based on the manifestation of a disease or disorder of an insured or applicant; or
22.3.2. Increasing the premium for any policy issued to an individual based on the manifestation of a disease or disorder of an individual who is covered under the policy (in such case, the manifestation of a disease or disorder in one individual cannot also be used as genetic information about other group members and to further increase the premium for the group).
22.4. An issuer of a Medicare supplement policy or certificate shall not request or require an individual or a family member of the individual to undergo a genetic test.
22.5. Subsection 22.4 of this section shall not be construed to preclude an issuer of a Medicare supplement policy or certificate from obtaining and using the results of a genetic test in making a determination regarding payment (as defined for the purposes of applying the regulations promulgated under Part C of Title XI and Section 264 of the Health Insurance Portability and Accountability Act of 1996, as may be revised from time to time) and consistent with subsection 22.2 of this section.
22.6. For purposes of carrying out subsection 22.5 of this section, an issuer of a Medicare supplement policy or certificate may request only the minimum amount of information necessary to accomplish the intended purpose.
22.7. Notwithstanding subsection 22.4 of this section, an issuer of a Medicare supplement policy may request, but not require, that an individual or a family member of the individual undergo a genetic test if each of the following conditions is met:
22.7.1. The request is made pursuant to research that complies with Part 46 of Title 45, Code of Federal Regulations, or equivalent Federal regulations, and any applicable State or local law or regulations for the protection of human subjects in research.
22.7.2. The issuer clearly indicates to each individual, or in the case of a minor child, to the legal guardian of the child, to whom the request is made that:
22.7.2.a. Compliance with the request is voluntary; and
22.7.2.b. Non-compliance will have no effect on enrollment status or premium or contribution amounts.
22.7.3. No genetic information collected or acquired under this subsection shall be used for underwriting, determination of eligibility to enroll or maintain enrollment status, premium rates, or the issuance, renewal, or replacement of a policy or certificate.
22.7.4. The issuer notifies the Secretary in writing that the issuer is conducting activities pursuant to the exception provided for under this subsection, including a description of the activities conducted.
22.7.5. The issuer complies with other conditions as the Secretary may by regulation require for activities conducted under this subsection.
22.8. An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information for underwriting purposes.
22.9. An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information with respect to any individual prior to the individual’s enrollment under the policy in connection with the enrollment.
22.10. If an issuer of a Medicare supplement policy or certificate obtains genetic information incidental to the requesting, requiring, or purchasing of other information concerning any individual, the request, requirement, or purchase shall not be considered a violation of subsection 22.9 of this section if the request, requirement, or purchase is not in violation of subsection 22.8 of this section.
22.11. For the purposes of this section only:
22.11.1. “Family member” means, with respect to an individual, any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of the individual.
22.11.2. “Genetic information” means, with respect to any individual, information about the individual’s genetic tests, the genetic tests of family members of the individual and the manifestation of a disease or disorder in family members of the individual. The term includes, with respect to any individual, any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by the individual or any family member of the individual. Any reference to genetic information concerning an individual or family member of an individual who is a pregnant woman, includes genetic information of any fetus carried by a pregnant woman, or with respect to an individual or family member utilizing reproductive technology, includes genetic information of any embryo legally held by an individual or family member. The term “genetic information” does not include information about the sex or age of any individual.
22.11.3. “Genetic services” means a genetic test, genetic counseling (including obtaining, interpreting, or assessing genetic information), or genetic education.
22.11.4. “Genetic test” means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detect genotypes, mutations, or chromosomal changes. The term “genetic test” does not mean an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved.
22.11.5. “Issuer of a Medicare supplement policy or certificate” includes third-party administrator or other person acting for or on behalf of the issuer.
22.11.6. “Underwriting purposes” means,
22.11.6.a. Rules for, or determination of, eligibility (including enrollment and continued eligibility) for benefits under the policy;
22.11.6.b. The computation of premium or contribution amounts under the policy;
22.11.6.c. The application of any pre-existing condition exclusion under the policy; and
22.11.6.d. Other activities related to the creation, renewal or replacement of a contract of health insurance or health benefits.
APPENDIX A
MEDICARE SUPPLEMENT REFUND CALCULATION FORM
FOR CALENDAR YEAR ___________
TYPE ______________________________ SMSBP_________________________________
For the State of _______________________ Company Name__________________________ NAIC Group Code_____________________ NAIC Company Code_____________________ Address______________________________ Person Completing Exhibit_________________ Title_________________________________ Telephone Number________________________ (a) (b)
Earned Incurred Premium Claims Line 1. Current Year's Experience.
a. Total (all policy years) _________ _________ b. Current year's issues _________ _________ c. Net (for reporting purposes=1a-1b) _________ _________ 2. Past Years' Experience (all policy years) _________ _________ 3. Total Experience (Net Current Year + Past Year) _________ _________ 4. Refunds Last Year (Excluding Interest) _________ 5. Previous Since Inception (Excluding Interest) _________ 6. Refunds Since Inception (Excluding Interest) _________ 7. Benchmark Ratio Since Inception (SEE WORKSHEET FOR RATIO 1) _________ 8. Experienced Ratio Since Inception Total Actual Incurred Claims (line 3, col. b) = Ratio 2/ Total Earned Prem. (line 3, col. a) - Refunds Since Inception (line 6) _________ 9. Life Years Exposed Since Inception If the Experienced Ratio is less than the Benchmark Ratio, and there are more than 500 life years exposure, then proceed to calculation of refund. _________ 10. Tolerance Permitted (obtained from Credibility Table) _________ Medicare Supplement Credibility Table Life Years Exposed Since Inception Tolerance 10,000 + 0.0% 5,000 - 9,999 5.0% 2,500 - 4,999 7.5% 1,000 - 2,499 10.0% 500 - 999 15.0% If less than 500, no credibility.
MEDICARE SUPPLEMENT REFUND CALCULATION FORM
FOR CALENDAR YEAR ___________
TYPE________________________________ SMSBP________________________________
For the State of ________________________ Company Name_________________________ NAIC Group Code______________________ NAIC Company Code____________________ Address_______________________________ Person Completing Exhibit________________ Title__________________________________ Telephone Number_______________________ 11. Adjustment to Incurred Claims for Credibility Ratio 3 = Ratio 2 + Tolerance ___________ If Ratio 3 is more than Benchmark Ratio (Ratio 1), a refund or credit to premium is not required.
If Ratio 3 is less than the Benchmark Ratio, then proceed.
- Adjusted Incurred Claims [Total Earned Premiums (line 3, col. a) - Refunds since Inception (line 6)] x Ratio 3 (line 11) ___________ 13. Refund = Total Earned Premiums (line 3, col. a) - Refunds Since Inception (line 6) - [Adjusted Incurred Claims (line 12)/Benchmark Ratio (Ratio 1)] ___________ If the amount on line 13 is less than .005 times the annualized premium in force as of December 31 of the reporting year, then no refund is made. Otherwise, the amount on line 13 is to be refunded or credited, and a description of the refund and/or credit against premiums to be used must be attached to this form.
I certify that the above information and calculations are true and accurate to the best of my knowledge and belief. ____________________________ Signature ____________________________ Name - Please Type ____________________________ Title - Please Type ____________________________ Date REPORTING FORM FOR THE CALCULATION OF BENCHMARK RATIO SINCE INCEPTION FOR INDIVIDUAL POLICIES FOR CALENDAR YEAR ___________ TYPE ________________________________ SMSBP_____________________________ For the State of ________________________ Company Name_______________________ NAIC Group Code______________________ NAIC Company Code__________________ Address_______________________________ Person Completing Exhibit______________ Title__________________________________ Telephone Number_____________________ (a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(o)
Year Earned Premium Factor (b)x(c)
Cumulative Loss Ratio (d)x(e)
Factor (b)x(g)
Cumulative Loss Ratio (h)x(i)
Policy Year Loss Ratio 2.770 0.442 0.40 0.55 1.194 0.659 0.65 2.245 0.669 0.67 3.170 0.678 0.69 3.998 0.686 0.71 4.754 0.695 0.73 5.445 0.702 0.75 6.075 0.708 0.76 6.650 0.713 0.76 7.176 0.717 0.76 7.655 0.720 8.093 0.723 8.493 0.725 15+ 8.684 0.725 Total:
(k):
(l):
(m):
(n):
Benchmark Ratio Since Inception: (l+n)/(k+m): ________ REPORTING FORM FOR THE CALCULATION OF BENCHMARK RATIO SINCE INCEPTION FOR GROUP POLICIES FOR CALENDAR YEAR _________ TYPE _______________________________ SMSBP_____________________________ For the State of ________________________ Company Name_______________________ NAIC Group Code______________________ NAIC Company Code__________________ Address_______________________________ Person Completing Exhibit______________ Title__________________________________ Telephone Number_____________________ (a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(o)
Year Earned Premium Factor (b)x(c)
Cumulative Loss Ratio (d)x(e)
Factor (b)x(g)
Cumulative Loss Ratio (h)x(i)
Policy Year Loss Ratio 2.770 0.507 0.46 0.63 1.194 0.759 0.75 2.245 0.771 3.170 0.782 0.80 3.998 0.792 0.82 4.754 0.802 0.84 5.445 0.811 0.87 6.075 0.818 0.88 6.650 0.824 0.88 7.176 0.828 0.88 7.655 0.831 0.88 8.093 0.834 0.89 8.493 0.837 0.89 15+ 8.684 0.838 0.89 Total:
(k):
(l):
(m):
(n):
Benchmark Ratio Since Inception: (l+n)/(k+m): ________
APPENDIX B [COMPANY NAME]
OUTLINE OF MEDICARE SUPPLEMENT COVERAGE
Benefit Chart of Medicare Supplement Plans Sold for Effective Dates on or After June 1, 2010 This chart shows the benefits included in each of the standard Medicare supplement plans. Every company must make Plan "A" available. Some plans may not be available in your state.
See Outlines of Coverage sections for details about ALL plans BASIC BENEFITS: Basic Benefits for Plans K and L include similar services as plans A-J, but cost-sharing for the basic benefits is at different levels.
Hospitalization: Part A coinsurance plus coverage for 365 additional days after Medicare benefits end.
Medical Expenses: Part B coinsurance (generally 20% of Medicare-approved expenses) or co-payments, for hospital outpatient services. Plans K, L and N require insureds to pay a portion of Part B coinsurance or co-payments.
Blood: First three pints of blood each year.
Hospice: Part A coinsurance A B C D F F* G Basic, including 100% Part B coinsurance*
Part B Deductible
Part B Deductible
Part B Excess (100%)
Part B Excess (100%) * Plan F also has an option called a high deductible Plan F. This high deductible plan pays the same benefits as Plan F after one has paid a calendar year [$2240] deductible. Benefits from high deductible Plan F will not begin until out-of-pocket expenses exceed [$2240]. Out-of-pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. These expenses include the Medicare deductibles for Part A and Part B, but do not include the plan’s separate foreign travel emergency deductible.
K L M
N Hospitalization and preventive care paid at 100%; other basic benefits paid at 50% Hospitalization and preventive care paid at 100%; other basic benefits paid at 75% Basic, including 100% Part B coinsurance, except up to $20 co-payment for office visit and up to $50 co-payment for ER 50% Skilled Nursing Facility Coinsurance 75% Skilled Nursing Facility Coinsurance 50% Part A Deductible 75% Part A Deductible 50% Part A Deductible Out-of-Pocket limit $[5240]; paid at 100% after limit reached Out-of-Pocket limit $[2620]; paid at 100% after limit reached
APPENDIX C
MEDICARE SUPPLEMENT BENEFIT PLANS
PLAN A *A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the Additional 365 days 100% of Medicare Eligible Expenses $[1340] (Part A deductible)
You must meet Medicare's requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care **NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN A *Once you have been billed [$183] of Medicare-Approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician's services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment (Above Medicare Approved Amount(s))
HOME HEALTH CARE MEDICARE APPROVED SERVICES
- First $[183] of Medicare Approved Amounts* - Remainder of Medicare Approved Amounts PLAN B *A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days $[1340] (Part A deductible)
You must meet Medicare's requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care **NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN B *Once you have been billed $[183] of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.
IN OR OUT OF THE HOSPITAL AND
OUTPATIENT HOSPITAL TREATMENT, such as physician 's services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment First $[183] of Medicare Approved Amounts* Remainder of Medicare Approved Amounts - First $[183] of Medicare Approved Amounts* - Remainder of Medicare Approved Amounts PLAN C *A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days $[1340] (Part A deductible) 100% of Medicare Eligible Expenses You must meet Medicare's requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care **NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN C *Once you have been billed $[183] of Medicare-Approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician's services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment PLAN C OTHER BENEFITS -- NOT COVERED BY MEDICARE FOREIGN TRAVEL -- NOT COVERED BY MEDICARE Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA PLAN D *A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days $[1340] (Part A deductible) 100% of Medicare Eligible Expenses You must meet Medicare's requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care **NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN D *Once you have been billed $[183] of Medicare-Approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the Calendar Year.
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician's services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic test, durable medical equipment - First $[183] of Medicare Approved Amounts* - Remainder of Medicare Approved Amounts PLAN D MEDICARE (PARTS A & B) - (continued)
OTHER BENEFITS -- NOT COVERED BY MEDICARE
FOREIGN TRAVEL -- NOT COVERED BY MEDICARE
Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA PLAN F or HIGH DEDUCTIBLE PLAN F *A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row. [**This high deductible plan pays the same benefits as Plan F after one has paid a calendar year [$2240] deductible. Benefits from the high deductible Plan F will not begin until out-of-pocket expenses are [$2240]. Out-of pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. This includes the Medicare deductibles for Part A and Part B, but does not include the plan’s separate foreign travel emergency deductible.]
[AFTER YOU PAY
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days $[1340] (Part A Deductible) 100% of Medicare Eligible Expenses $0*** SKILLED NURSING FACILITY CARE* You must meet Medicare's requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital PLAN F or HIGH DEDUCTIBLE PLAN F MEDICARE (PART A) -- HOSPITAL SERVICES -- PER BENEFIT PERIOD -- (continued)
[AFTER YOU PAY
You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care ***NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN F or HIGH DEDUCTIBLE PLAN F *Once you have been billed $[183] of Medicare-Approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year. [**This high deductible plan pays the same or offers the same benefits as Plan F after one has paid a calendar year [$2240] deductible. Benefits from the high deductible Plan F will not begin until out-of-pocket expenses are [$2240]. Out-of-pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. This includes the Medicare deductibles for Part A and Part B, but does not include the plan’s separate foreign travel emergency deductible.]
[AFTER YOU PAY
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician's services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment $[183] (Part B deductible - First $[183] of Medicare Approved Amounts* - Remainder of Medicare Approved Amounts PLAN F or HIGH DEDUCTIBLE PLAN F MEDICARE (PART B) -- MEDICAL SERVICES -- PER CALENDAR YEAR -- (continued)
OTHER BENEFITS -- NOT COVERED BY MEDICARE
[AFTER YOU PAY
[IN ADDITION TO $[2240] DEDUCTIBLE,**]
FOREIGN TRAVEL -- NOT COVERED BY MEDICARE
Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA First $250 each calendar year PLAN G or HIGH DEDUCTIBLE PLAN G *A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row. [**This high deductible plan pays the same benefits as Plan G after you have paid a calendar year [$2240] deductible. Benefits from the high deductible Plan G will not begin until out-of-pocket expenses are [$2240]. Out-of-pocket expenses for this deductible include expenses for the Medicare Part B deductible, and expenses that would ordinarily be paid by the policy. This does not include the plan’s separate foreign travel emergency deductible.]
[AFTER YOU PAY $[2240] $[2240]
DEDUCTIBLE**]
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days All but $670] a day $[1340] (Part A Deductible) 100% of Medicare Eligible Expenses $0*** You must meet Medicare's requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care ***NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN G or HIGH DEDUCTIBLE PLAN G *Once you have been billed $[183] of Medicare-Approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year. [**This high deductible plan pays the same benefits as Plan G after you have paid a calendar year [$2240] deductible. Benefits from the high deductible Plan G will not begin until out-of-pocket expenses are [$2240]. Out-of-pocket expenses for this deductible include expenses for the Medicare Part B deductible, and expenses that would ordinarily be paid by the policy. This does not include the plan’s separate foreign travel emergency deductible.]
[AFTER YOU PAY $[2240] $[2240]
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician's services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic test, durable medical equipment $[183] (Unless Part B deductible has been met) $[183] (Unless Part B deductible has been met)
- First $[183] of Medicare Approved Amounts* - Remainder of Medicare Approved Amounts $[183] (Unless Part B deductible has been met)
PLAN G or HIGH DEDUCTIBLE PLAN G MEDICARE (PARTS A & B) -- (continued)
OTHER BENEFITS - NOT COVERED BY MEDICARE
[AFTER YOU PAY $[2240] $[2240]
FOREIGN TRAVEL -- NOT COVERED BY MEDICARE
Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA PLAN K * You will pay half the cost-sharing of some covered services until you reach the annual out-of-pocket limit of $[5240] each calendar year. The amounts that count toward your annual limit are noted with diamonds (♦) in the chart below. Once you reach the annual limit, the plan pays 100% of your Medicare copayment and coinsurance for the rest of the calendar year. However, this limit does NOT include charges from your provider that exceed Medicare-approved amounts (these are called “Excess Charges”) and you will be responsible for paying this difference in the amount charged by your provider and the amount paid by Medicare for the item or service. ** A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.
HOSPITALIZATION**
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days $[670] (50% of Part A deductible) $[670] (50% of Part A deductible)♦ $0*** SKILLED NURSING FACILITY CARE** You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital Up to $[83.75] a day (50% of Part A Coinsurance)
Up to $[83.75] a day (50% of Part A Coinsurance)♦ 50%♦ You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care 50% of co-payment/coinsurance 50% of Medicare co-payment/coinsurance♦ *** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN K **** Once you have been billed $[183] of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment First $[183] of Medicare Approved Amounts**** Preventive Benefits for Medicare covered services Remainder of Medicare Approved Amounts Generally 80% or more of Medicare approved amounts Remainder of Medicare approved amounts Generally 10% $[183] (Part B deductible)**** ♦ All costs above Medicare approved amounts Generally 10% ♦ All costs (and they do not count toward annual out-of-pocket limit of [$5240])* Next $[183] of Medicare Approved Amounts**** Remainder of Medicare Approved Amounts Generally 10% 50%♦ $[183] (Part B deductible)**** ♦ Generally 10% ♦ CLINICAL LABORATORY SERVICES -- TESTS FOR DIAGNOSTIC SERVICES * This plan limits your annual out-of-pocket payments for Medicare-approved amounts to $[5240] per year. However, this limit does NOT include charges from your provider that exceed Medicare-approved amounts (these are called “Excess Charges”) and you will be responsible for paying this difference in the amount charged by your provider and the amount paid by Medicare for the item or service.
PLAN K
- First $[183] of Medicare Approved Amounts***** - Remainder of Medicare Approved Amounts 10% $[183] (Part B deductible) ♦ 10%♦ *****Medicare benefits are subject to change. Please consult the latest Guide to Health Insurance for People with Medicare.
PLAN L * You will pay one-fourth of the cost-sharing of some covered services until you reach the annual out-of-pocket limit of $[2620] each calendar year. The amounts that count toward your annual limit are noted with diamonds (♦) in the chart below. Once you reach the annual limit, the plan pays 100% of your Medicare copayment and coinsurance for the rest of the calendar year. However, this limit does NOT include charges from your provider that exceed Medicare-approved amounts (these are called “Excess Charges”) and you will be responsible for paying this difference in the amount charged by your provider and the amount paid by Medicare for the item or service.
MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD ** A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.
HOSPITALIZATION**
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days $[1005] (75% of Part A deductible) $[335] (25% of Part A deductible)♦ $0*** SKILLED NURSING FACILITY CARE** You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital All but $[167.50] a day Up to $[125.63] a day (75% of Part A Coinsurance)
Up to $[41.88] a day (25% of Part A Coinsurance)♦ 25%♦ You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care 75% of coinsurance or co-payments 25% of coinsurance or co-payments ♦ *** NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN L **** Once you have been billed $[183] of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.
MEDICAL EXPENSES—
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment First $[183] of Medicare Approved Amounts**** Preventive Benefits for Medicare covered services Generally 80% or more of Medicare approved amounts Remainder of Medicare approved amounts Generally 15% $[183] (Part B deductible)**** ♦ All costs above Medicare approved amounts Generally 5% ♦ All costs (and they do not count toward annual out-of-pocket limit of [$2620])* Next $[183] of Medicare Approved Amounts**** Generally 15% 25%♦ $[183] (Part B deductible) ♦ Generally 5%♦ CLINICAL LABORATORY SERVICES --TESTS FOR DIAGNOSTIC SERVICES * This plan limits your annual out-of-pocket payments for Medicare-approved amounts to $[2620] per year. However, this limit does NOT include charges from your provider that exceed Medicare-approved amounts (these are called “Excess Charges”) and you will be responsible for paying this difference in the amount charged by your provider and the amount paid by Medicare for the item or service.
PLAN L
- First $[183] of Medicare Approved Amounts***** - Remainder of Medicare Approved Amounts 15% $[183] (Part B deductible) ♦ 5% ♦ *****Medicare benefits are subject to change. Please consult the latest Guide to Health Insurance for People with Medicare.
PLAN M *A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days - Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days $[670] (50% of Part A deductible) $[670] (50% of Part A deductible)
You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care **NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN M *Once you have been billed $[183] of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment CLINICAL LABORATORY SERVICES -- TESTS FOR DIAGNOSTIC SERVICES -First $[183] of Medicare Approved Amounts* -Remainder of Medicare Approved Amounts PLAN M OTHER BENEFITS - NOT COVERED BY MEDICARE FOREIGN TRAVEL -- NOT COVERED BY MEDICARE Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA PLAN N *A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital and have not received skilled care in any other facility for 60 days in a row.
Semiprivate room and board, general nursing and miscellaneous services and supplies - While using 60 lifetime reserve days Once lifetime reserve days are used:
- Additional 365 days - Beyond the additional 365 days $[1340 (Part A deductible)
You must meet Medicare’s requirements, including having been in a hospital for at least 3 days and entered a Medicare-approved facility within 30 days after leaving the hospital You must meet Medicare’s requirements, including a doctor’s certification of terminal illness All but very limited co-payment or coinsurance for out-patient drugs and inpatient respite care **NOTICE: When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days as provided in the policy’s “Core Benefits.” During this time the hospital is prohibited from billing you for the balance based on any difference between its billed charges and the amount Medicare would have paid.
PLAN N *Once you have been billed $[183] of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deductible will have been met for the calendar year.
MEDICAL EXPENSES—
IN OR OUT OF THE HOSPITAL AND OUTPATIENT HOSPITAL TREATMENT, such as physician’s services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment, Balance, other than up to [$20] per office visit and up to [$50] per emergency room visit. The co-payment of up to [$50] is waived if the insured is admitted to any hospital and the emergency visit is covered as a Medicare Part A expense Up to [$20] per office visit and up to [$50] per emergency room visit. The co-payment of up to [$50] is waived if the insured is admitted to any hospital and the emergency visit is covered as a Medicare Part A expense CLINICAL LABORATORY SERVICES --TESTS FOR DIAGNOSTIC SERVICES (Continued)
PLAN N
- First $[183] of Medicare Approved Amounts* - Remainder of Medicare Approved Amounts PLAN N OTHER BENEFITS - NOT COVERED BY MEDICARE FOREIGN TRAVEL -- NOT COVERED BY MEDICARE Medically necessary emergency care services beginning during the first 60 days of each trip outside the USA
APPENDIX D
FORM FOR REPORTING
MEDICARE SUPPLEMENT POLICIES
Company Name:
Address:
Phone Number:
Due: March 1, annually The purpose of this form is to report the following information on each resident of this state who has in force more than one Medicare supplement policy or certificate. The information is to be grouped by individual policyholder.
Policy and Certificate # Date of Issuance _________________________________ Signature _________________________________ Name and Title (Please Type) _________________________________ Date
APPENDIX E
[COMPANY NAME]
OUTLINE OF MEDICARE
SUPPLEMENT COVERAGE
AND PREMIUM INFORMATION
PREMIUM INFORMATION [Boldface Type]
We [insert issuer's name] can only raise your premium if we raise the premium for all policies like yours in this State. [If the premium is based on the increasing age of the insured, include information specifying when premiums will change.]
READ YOUR POLICY VERY CAREFULLY [Boldface Type]
This is only an outline, describing your policy's most important features. The policy is your insurance contract. You must read the policy itself to understand all of the rights and duties of both you and your insurance company.
RIGHT TO RETURN POLICY [Boldface Type]
If you find that you are not satisfied with your policy, you may return it to [insert issuer's address]. If you send the policy back to us within thirty (30) days after you receive it, we will treat the policy as if it had never been issued and return all of your payments.
POLICY REPLACEMENT [Boldface Type]
If you are replacing another health insurance policy, do NOT cancel it until you have actually received your new policy and are sure you want to keep it.
NOTICE [Boldface Type]
This policy may not fully cover all of your medical costs. [for agents:]
Neither [insert company's name] nor its agents are connected with Medicare. [for direct responses:] [insert company's name] is not connected with Medicare.
This outline of coverage does not give all the details of Medicare coverage. Contact your local Social Security Office or consult Medicare & You for more details.
COMPLETE ANSWERS ARE VERY IMPORTANT [Boldface Type]
When you fill out the application for the new policy, be sure to answer truthfully and completely all questions about your medical and health history. The company may cancel your policy and refuse to pay any claims if you leave out or falsify important medical information. [If the policy or certificate is guaranteed issue, this paragraph need not appear.]
Review the application carefully before you sign it. Be certain that all information has been properly recorded. [Include for each plan prominently identified in the cover page, a chart showing the services, Medicare payments, plan payments and insured payments for each plan, using the same language, in the same order, using uniform layout and format as shown in the charts below. No more than four plans may be shown on one chart. For purposes of illustration, charts for each plan are incorporated into this regulation by reference and annexed hereto collectively as Appendix C, “Medicare Supplement Benefits Plans." An issuer may use additional benefit plan designations on these charts pursuant to subsection 7.4 of this rule.] [Include an explanation of any innovative benefits on the cover page and in the chart, in a manner approved by the Commissioner.
Benefit Chart of Medicare Supplement Plans Sold on or after January 1, 2020 This chart shows the benefits included in each of the standard Medicare supplement plans. Some plans may not be available. Only applicants’ first eligible for Medicare before 2020 may purchase Plans C, F, and high deductible F.
Note: A ✔means 100% of the benefit is paid.
Benefits Plans Available to All Applicants Medicare first eligible before 2020 only A B D G1 K L M N C F1 Medicare Part A coinsurance and hospital coverage (up to an additional 365 days after Medicare benefits are used up)
Medicare Part B coinsurance or Copayment copays apply3 Blood (first three pints)
Part A hospice care coinsurance or copayment Skilled nursing facility coinsurance Medicare Part A deductible Medicare Part B deductible Medicare Part B excess charges Foreign travel emergency (up to plan limits)
Out-of-pocket limit in [2018]2 [$5240]2 [$2620]2 1 Plans F and G also have a high deductible option which require first paying a plan deductible of [$2240] before the plan begins to pay. Once the plan deductible is met, the plan pays 100% of covered services for the rest of the calendar year. High deductible plan G does not cover the Medicare Part B deductible. However, high deductible plans F and G count your payment of the Medicare Part B deductible toward meeting the plan deductible. 2 Plans K and L pay 100% of covered services for the rest of the calendar year once you meet the out-of-pocket yearly limit. 3 Plan N pays 100% of the Part B coinsurance, except for a co-payment of up to $20 for some office visits and up to a $50 co-payment for emergency room visits that do not result in an inpatient admission.
APPENDIX F
NOTICE TO APPLICANT REGARDING REPLACEMENT
OF MEDICARE SUPPLEMENT INSURANCE
OR MEDICARE ADVANTAGE
(Insurance company's name and address)
SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
According to [your application] [information you have furnished], you intend to terminate existing Medicare supplement or Medicare Advantage insurance and replace it with a policy to be issued by [Company Name] Insurance Company. Your new policy will provide thirty (30) days within which you may decide without cost whether you desire to keep the policy.
You should review this new coverage carefully. Compare it with all accident and sickness coverage you now have. If after due consideration, you find that purchase of this Medicare supplement coverage is a wise decision, you should terminate your present Medicare supplement or Medicare Advantage coverage. You should evaluate the need for other accident and sickness coverage you have that may duplicate this policy.
STATEMENT TO APPLICANT BY ISSUER, AGENT [BROKER OR OTHER REPRESENTATIVE]:
I have reviewed your current medical or health insurance coverage. To the best of my knowledge, this Medicare supplement policy will not duplicate your existing Medicare supplement or, if applicable, Medicare Advantage coverage because you intend to terminate your existing Medicare supplement coverage or leave your Medicare Advantage plan. The replacement policy is being purchased for the following reason (check one): ____ Additional benefits ____ No change in benefits, but lower premiums. ____ Fewer benefits and lower premiums. ____ My plan has outpatient drug coverage and I am enrolling in Part D. ____ Disenrollment from a Medicare Advantage plan. Please explain reason for disenrollment. [optional only for Direct Mailers.] ____ Other. (please specify)
-
Note: If the issuer of the Medicare supplement policy being applied for does not, or is otherwise prohibited from imposing pre-existing condition limitations, please skip to statement 2 below. Health conditions which you may presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy.
-
State law provides that your replacement policy or certificate may not contain new preexisting conditions, waiting periods, elimination periods or probationary periods. The insurer will waive any time periods applicable to preexisting conditions, waiting periods, elimination periods or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.
-
If you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical and health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, review it carefully to be certain that all information has been properly recorded. [If the policy or certificate is guaranteed issue, this paragraph need not appear.]
Do not cancel your present policy until you have received your new policy and are sure that you want to keep it. __________________________________________ (Signature of Agent, Broker or Other Representative)* _______________________________________________ [Typed Name and Address of Issuer, Agent or Broker] _______________________________________________ (Applicant's Signature) _______________________________________________ (Date) *Signature not required for direct response sales.
APPENDIX G
DISCLOSURE STATEMENTS
Instructions for Use of the Disclosure Statements for Health Insurance Policies Sold to Medicare Beneficiaries that Duplicate Medicare 1. Section 1882(d) of the federal Social Security Act [42U.S.C. 1395ss], prohibits the sale of a health insurance policy (the term policy or policies includes certificates) to Medicare beneficiaries that duplicate Medicare benefits unless it will pay benefits without regard to a beneficiary’s other health coverage and it includes the prescribed disclosure statement on or together with the application for the policy.
-
All types of health insurance policies that duplicate Medicare shall include one of the attached disclosure statements, according to the particular policy type involved, on the application or together with the application. The disclosure statement may not vary from the attached statements in terms of language or format (type size, type proportional spacing, bold character, line spacing, and usage of boxes around text).
-
State and federal law prohibits insurers from selling a Medicare supplement policy to a person that already has a Medicare supplement policy except as a replacement policy.
-
Property/casualty and life insurance policies are not considered health insurance.
-
Disability income policies are not considered to provide benefits that duplicate Medicare.
-
Long-term care insurance policies that coordinate with Medicare and other health insurance are not considered to provide benefits that duplicate Medicare.
-
The federal law does not preempt state laws that are more stringent than the federal requirements.
-
The federal law does not preempt existing state form filing requirements.
-
Section 1882 of the federal Social Security Act was amended in Subsection (d)(3)(A) to allow for alternative disclosure statements. The disclosure statements already in Appendix G remain. Carriers may use either disclosure statement with the requisite insurance product. However, carriers should use either the original disclosure statements or the alternative disclosure statements and not use both simultaneously. [Original disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only]
This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses that result from accidental injury. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
This insurance duplicates Medicare benefits when it pays: ● Hospital or medical expenses up to the maximum stated in the policy Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include: ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Original disclosure statement for policies that provide benefits for specified limited services]
This insurance provides limited benefits, if you meet the policy conditions, for expenses relating to the specific services listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
This insurance duplicates Medicare benefits when: ● any of the services covered by the policy are also covered by Medicare Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include: ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Original disclosure statement for policies that reimburse expenses incurred for specified disease(s) or other specified impairment(s). This includes expense incurred cancer, specified disease and other types of health insurance policies that limit reimbursement to named medical conditions.]
This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses only when you are treated for one of the specific diseases or health conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
This insurance duplicates Medicare benefits when it pays: ● hospital or medical expenses up to the maximum stated in the policy Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include: ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Original disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.]
This insurance pays a fixed amount, regardless of your expenses, if you meet the policy conditions, for one of the specific diseases or health conditions named in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
This insurance duplicates Medicare benefits because Medicare generally pays for most of the expenses for the diagnosis and treatment of the specific conditions or diagnoses named in the policy.
Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include: ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Original disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies.]
This insurance pays a fixed dollar amount, regardless of your expenses, for each day you meet the policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
This insurance duplicates Medicare benefits when: ● any expenses or services covered by the policy are also covered by Medicare Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include: ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Original disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis.]
This insurance pays limited reimbursement for expenses if you meet the conditions listed in the policy. It also pays a fixed amount, regardless of your expenses, if you meet other policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
This insurance duplicates Medicare benefits when: ● any expenses or services covered by the policy are also covered by Medicare; or ● it pays the fixed dollar amount stated in the policy and Medicare covers the same event Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include: ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Original disclosure statement for other health insurance policies not specifically identified in the preceeding statements]
This insurance provides limited benefits if you meet the conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
This insurance duplicates Medicare benefits when it pays: ● the benefits stated in the policy and coverage for the same event is provided by Medicare Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include: ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Alternative disclosure statement for policies that provide benefits for specified limited services.]
Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.
This insurance provides limited benefits, if you meet the policy conditions, for expenses relating to the specific services listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:
This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance. ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Alternative disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only.]
Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.
This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses that result from accidental injury. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:
This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance. ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Alternative disclosure statement for policies that reimburse expenses incurred for specified diseases or other specified impairments. This includes expense-incurred cancer, specified disease and other types of health insurance policies that limit reimbursement to named medical conditions.]
Some health care services paid for by Medicare may also trigger the payment of benefits from this policy. Medicare generally pays for most of these expenses.
This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses only when you are treated for one of the specific diseases or health conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:
This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance. ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Alternative disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.]
Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.
This insurance provides a fixed amount, regardless of your expenses, if you meet the policy conditions, for one of the specific diseases or health conditions named in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:
This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance. ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Alternative disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies.]
Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.
This insurance pays a fixed dollar amount, regardless of your expenses, for each day you meet the policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:
This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.
Before You Buy This Insurance ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Alternative disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis.]
Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.
This insurance provides limited reimbursement for expenses if you meet the policy conditions listed in the policy. It also pays a fixed amount, regardless of your expenses, if your meet other policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:
This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance. ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP]. [Alternative disclosure statement for other health insurance policies not specifically identified in the preceding statements.]
Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.
This insurance provides limited benefits if you meet the conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.
Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include: ● hospice This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance. ✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance for People with Medicare, available from the insurance company. ✔ For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].
Individual Group, Individual Medicare Select, or Group Medicare Select Only.
"SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for prestandardized plans.
Includes Modal Loadings and Fees Charged.
Excludes Active Life Reserves.
This is to be used as "Issue Year Earned Premium" for Year 1 of next year's "Worksheet for Calculation of Benchmark Ratios."
Individual Group, Individual Medicare Select, or Group Medicare Select Only.
"SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for prestandardized plans.
Individual, Group, Individual Medicare Select, or Group Medicare Select Only.
“ SMSBP” = Standardized Medicare Supplement Benefit Plan - Use “P” for pre-standardized plans.
Year 1 is the current calendar year - 1. Year 2 is the current calendar year - 2 (etc.) (Example: If the current year is 1991, then: Year 1 is 1990; Year 2 is 1989, etc.)
For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.
These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.
To include the earned premium for all years prior to as well as the 15th year prior to the current year.
Individual, Group, Individual Medicare Select, or Group Medicare Select Only.
“SMSBP” = Standardized Medicare Supplement Benefit Plan - Use “P” for pre-standardized plans.
Year 1 is the current calendar year - 1. Year 2 is the current calendar year - 2 (etc.) (Example: If the current year is 1991, then: Year 1 is 1990; Year 2 is 1989, etc.)
For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.
These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.
To include the earned premium for all years prior to as well as the 15th year prior to the current year.
Series 25 Insurance Adjusters
W. Va. Code R. § 114-25-1 General
W. Va. Code R. § 114-25-2 Definitions
W. Va. Code R. § 114-25-3 License Requirements
W. Va. Code R. § 114-25-4 Emergency Adjuster Licensing
W. Va. Code R. § 114-25-5 Types of Licenses and Lines of Authority
W. Va. Code R. § 114-25-6 Qualifications
W. Va. Code R. § 114-25-7 Application for Licensure
W. Va. Code R. § 114-25-8 Public Adjuster Records Maintenance
W. Va. Code R. § 114-25-9 Standards of Conduct of Company and Independent Adjusters
W. Va. Code R. § 114-25-10 Standards of Conduct of Public Adjusters
W. Va. Code R. § 114-25-11 Contract Between Public Adjuster and Insured
W. Va. Code R. § 114-25-12 Public Adjuster Fees
W. Va. Code R. § 114-25-13 Public Adjuster Escrow or Trust Accounts
W. Va. Code R. § 114-25-14 Assumed Names
W. Va. Code R. § 114-25-15 Public Adjuster Prohibited Practices; Voidable Contracts
W. Va. Code R. § 114-25-16 Address of Adjusters; Filing
W. Va. Code R. § 114-25-17 Changes of Address; Notice
W. Va. Code R. § 114-25-18 Licensing of Nonresident Adjusters
W. Va. Code R. § 114-25-19 Expiration of License; Renewal
W. Va. Code R. § 114-25-20 Revocation, Suspension, Refusal to Renew or Issue License, Penalty in Lieu Thereof
TITLE 114
LEGISLATIVE RULE
INSURANCE COMMISSIONER
SERIES 25
INSURANCE ADJUSTERS
W. Va. Code R. § 114-25-1 General
1.1. Scope. -- This rule establishes standards for licensing and regulation of insurance adjusters. It is based on the National Association of Insurance Commissioners’ “Public Adjusters Licensing Model Act (Model 228)” and “Independent Adjusters Licensing Model Guideline (Guideline 1224),” and the West Virginia Code.
1.2. Authority. -- W.Va. Code §§33-12B-12 and 33-2-10.
1.3. Filing Date. -- April 8, 2026.
1.4. Effective Date. -- April 8, 2026.
1.5. Sunset Date. -- This rule shall terminate and have no further force or effect upon August 1, 2036.
W. Va. Code R. § 114-25-2 Definitions
2.1. “Adjuster” means any individual who investigates, negotiates or settles insurance claims. As used in this rule, the term “adjuster” includes public adjusters, company adjusters, and independent adjusters, unless specified otherwise.
2.2. “Code” means the W. Va. Code.
2.3. “Commissioner” means the West Virginia Insurance Commissioner.
2.4. “Company adjuster” means an adjuster who is a staff employee of an insurance company, who is paid by the insurance company, and who investigates, negotiates, or settles claims.
2.5. “Emergency adjuster” means a person who is authorized by the Commissioner to perform adjusting activities in West Virginia during an insurance emergency.
2.6. “Home state” means the District of Columbia or any state or territory of the United States in which an adjuster maintains his or her principal place of residence or business and in which he or she is licensed to act as a resident adjuster: Provided, That if a person’s principal place of residence or business does not license adjusters for the type of adjuster license sought in this state, he or she shall designate as his or her home state any state in which he or she has such a license.
2.7. “Independent adjuster” means an individual, a business entity, an independent contractor, or an employee of a contractor, who contracts for compensation with insurers or self-insurers; is one whom the insurer’s or self-insurer’s tax treatment of the individual is consistent with that of an independent contractor, rather than as an employee, as defined in the Internal Revenue Code; and investigates, negotiates, or settles property, casualty, or workers’ compensation claims for insurers or self-insurers.
2.8. “Insurance emergency” means a temporary situation declared by the Commissioner pursuant to W. Va. Code §§ 33-2-10a and/or 33-12B-11a when he or she finds that there is an inadequate number of licensed adjusters to meet the demands of the public.
2.9. “Licensed adjuster” means a person with a valid West Virginia resident or non-resident adjuster license or an emergency license.
2.10. “Public adjuster” means:
2.10.1. Any person who, for compensation or any other thing of value and solely in relation to first party claims arising under insurance contracts that insure the real or personal property of the insured, acts on behalf of the insured in negotiating for, or effecting the settlement of a claim for loss or damage covered by an insurance contract.
2.10.2. A person who advertises for employment as a public adjuster of insurance claims or solicits business or represents himself or herself to the public as a public adjuster of first party insurance claims for losses or damages arising out of policies of insurance that insure real or personal property.
2.10.3. A person who directly or indirectly solicits business, investigates or adjusts losses, or advises an insured about first party claims for losses or damages arising out of policies of insurance that insure real or personal property for another person engaged in the business of adjusting losses or damages covered by an insurance policy on behalf of the insured.
W. Va. Code R. § 114-25-3 License Requirements
3.1. No person shall in West Virginia act as or hold himself to be an adjuster unless licensed by the Commissioner.
3.2. Notwithstanding any other provisions of this rule, a company adjuster’s license or independent adjuster’s license shall not be required of, the following:
3.2.1. An attorney-at-law admitted to practice in this state, when acting in their professional capacity as an attorney;
3.2.2. A person employed solely to obtain facts surrounding a claim or to furnish technical assistance to a licensed company or independent adjuster;
3.2.3. An individual who is employed to investigate suspected fraudulent insurance claims but who does not adjust losses, investigate or determine coverage, or determine claims payments;
3.2.4. A person who solely performs executive, administrative, managerial or clerical duties or any combination thereof and who does not investigate, negotiate or settle claims with policyholders, claimants or their legal representative;
3.2.5. A licensed health care provider or its employee who provides managed care services so long as the services do not include the determination of compensability;
3.2.6. A managed care organization or any of its employees or an employee of any organization providing managed care services so long as the services do not include the determination of compensability;
3.2.7. A person who settles only reinsurance or subrogation claims;
3.2.8. An officer, director or manager of an authorized insurer or surplus lines insurer or a risk retention group or of a related holding company or an affiliated insurer, in the state, whether an individual or a business entity, or an attorney-in-fact of a reciprocal insurer;
3.2.9. A U.S. Manager of the United States branch of an alien insurer;
3.2.10. A person who investigates, negotiates or settles life, accident and sickness, annuity or disability insurance claims;
3.2.11. An individual employee, under a self-insured arrangement, who adjusts claims on behalf of his or her employer;
3.2.12. A licensed insurance producer, attorney-in-fact of a reciprocal insurer or managing general agent of the insurer to whom claim authority has been granted by the insurer;
3.2.13. A person who adjusts claims for licensed farmers’ mutual fire insurance companies;
3.2.14. A business entity licensed under the authority of W.Va. Code §33-46-1 et seq. of this code;
3.2.15. An individual who collects claims information from, or furnishes claim information to, insureds or claimants and who conducts data entry, including data into an automated claims adjudication system, so long as the individual is under the supervision of a licensed adjuster or producer and, further, that the licensed adjuster or licensed producer supervises no more than 25 unlicensed persons; or
3.2.16. A company adjuster employed by an insurer outside of the state of West Virginia who adjusts claims solely by telephone, fax, United States mail, and electronic mail, and who does not physically enter this state in the course of adjusting such claims.
3.3. Notwithstanding any other provisions of this rule, a public adjuster’s license shall not be required of the following:
3.3.1. An attorney-at-law admitted to practice in this state, when acting in their professional capacity as an attorney;
3.3.2. A person who negotiates or settles claims arising under a life of health insurance policy or annuity contract;
3.3.3. A person employed only for the purpose of obtaining facts surrounding a loss or furnishing technical assistance to a licensed public adjuster;
3.3.4. A licensed health care provider, or employee of a licensed health care provider, who prepares or files a health claim form on behalf of a patients; or
3.3.5. A person who settles subrogation claims between insurers.
3.4. Claims arising out of a particular loss of unique or unusual character may be adjusted by a non-licensed adjuster upon registration with the Commissioner as long as the work of the non-licensed person is supervised by either an adjuster licensed in this state or an insurance company authorized to do business in this state; Provided, That the authority to work granted as provided herein to unlicensed persons is limited to three losses within any twelve month period.
3.5. A company adjuster who is exempt from licensing requirements pursuant to subdivision 3.2.16 of this rule and W.Va. Code §33-12B-3(a)(15) is subject to the jurisdiction of, and regulation by, the Commissioner in regard to his or her adjustment of West Virginia claims. The Commissioner may require such exempt adjusters to complete continuing education courses, not to exceed 24 hours per biennium, to address any deficiencies with respect to his or her claims handling practices.
W. Va. Code R. § 114-25-4 Emergency Adjuster Licensing
4.1. Upon declaration of an insurance emergency, a licensed insurer may apply to the Commissioner requesting the issuance of emergency licenses to persons designated in the application to act as emergency adjusters. The application shall be in the format on the Commissioner’s website and shall be submitted electronically by the insurer.
4.2. A person who is otherwise qualified to adjust claims, but is not licensed in this state, may act as an emergency company or independent adjuster in this state if, within five days of the declared insurance emergency, the insurer notifies the Commissioner by completing a form on the Commissioner’s website and providing the following information:
4.2.1. Name and address;
4.2.2. National Producer Number, if available;
4.2.3. Name of the insurer the adjuster will represent as an emergency adjuster;
4.2.4. Effective date of the contract between the insurer and independent adjuster, if applicable;
4.2.5. Insurance emergency or loss control number (e.g., Emergency Order 20-01);
4.2.6. Insurance emergency event name (e.g., 2016 flood or 2020 COVID-19 pandemic); and
4.2.7. Any other information the Commissioner deems necessary.
4.3. For purposes of subsection 4.2, the term “otherwise qualified” refers to an adjuster who is not currently licensed in West Virginia, but who is appropriately licensed as an adjuster in another state that has a reciprocal licensing relationship with West Virginia; an adjuster who formerly held a West Virginia adjuster license that was in good standing with the Commissioner, but has since let his or her adjuster license expire; or a licensed adjuster in West Virginia who does not hold the requisite line of authority to adjust the type of claims necessary during the declared insurance emergency.
4.4. A person not otherwise qualified under subsections 4.2 and 4.3 of this rule to adjust claims in West Virginia upon proper notification to the Commissioner during a declared insurance emergency may still apply for an emergency adjuster license pursuant to subsection 4.1 of this rule.
4.5. The Commissioner shall act on a fully completed emergency adjuster application within 24 hours after it has been received in his or her office.
4.6. An emergency license is effective for a period not to exceed ninety (90) days unless extended for an additional period by the Commissioner.
4.7. The Commissioner may, without notice and hearing, revoke the privileges of an individual holding an emergency license on grounds specified by this rule.
4.8. Emergency adjusters must keep in their possession at all times the West Virginia emergency adjuster license in order to be eligible to adjust emergency claims.
4.9. Insurers are responsible for their designated adjusters and will be held accountable for such adjusters’ acts or failures to act.
4.10. The fee of an emergency adjuster application and licensure shall be the same fee as set forth in W.Va. Code §33-12B-8.
W. Va. Code R. § 114-25-5 Types of Licenses and Lines of Authority
5.1. The types of adjuster’s licenses which may be issued are as follows:
5.1.1. Company adjuster.
5.1.2. Public adjuster.
5.1.3. Independent adjuster.
5.2. An individual may be licensed concurrently under separate licenses as a company adjuster, public adjuster and independent adjuster but shall not act as an adjuster representing the interests of the insured and the insurer with respect to the same claim.
5.3. An independent adjuster or company adjuster may qualify for a license in one or more of the following lines of authority:
5.3.1. Property and casualty;
5.3.2. Workers’ compensation; or
5.3.3. Crop.
5.4. A public adjuster may only qualify for a license with a property and casualty line of authority.
5.5. Examinations for adjuster licenses will predominantly test the knowledge of the individual applicant concerning the line or lines of authority for which the application is being made.
5.6. In order to comply with the new adjuster licensing mandates set forth in this rule, beginning on July 1, 2021, a licensed individual adjuster will have one opportunity to request a transition of his or her current adjuster license type to a new adjuster license type, as set forth in subsection 5.1 of this rule, and one opportunity to request assignment of his or her initial line of authority for his or her adjuster license, as set forth in subsection 5.3 of this rule. In order for the adjuster to request this transition and/or assignment, the adjuster must contact the Licensing & Education Division, in writing, on or after July 1, 2021, but prior to the first expiration of the adjuster’s license on or after July 1, 2021, to identify the license type the adjuster wishes to transition to and/or the initial line of authority the adjuster wishes to have assigned to his or her adjuster license. The adjuster must otherwise qualify for the adjuster license type and/or the initial line of authority he or she is requesting.
5.7. If a licensed individual adjuster does not contact the Licensing & Education Division, in writing, prior to the first expiration of the adjuster’s license on or after July 1, 2021, and in accordance with subsection 5.6 of this rule, to identify the new license type the adjuster wishes to transition to and/or the initial line of authority the adjuster wishes to have assigned to his or her adjuster license, the adjuster will automatically be transitioned to the default license type and automatically assigned the default line of authority identified herein below:
5.7.1. An adjuster then licensed as a crop adjuster will be transitioned to a company adjuster license type with a crop line of authority.
5.7.2. An adjuster then licensed as a public adjuster will be transitioned to a public adjuster license type with a property and casualty line of authority.
5.7.3. An adjuster then licensed as a company adjuster will be transitioned to a company adjuster license type with a property and casualty line of authority.
5.8. Once the individual adjuster is transitioned to a new license type or assigned an initial line of authority, on or after July 1, 2021 and in accordance with either subsections 5.6 or 5.7 of this rule, the adjuster will not be able to add an additional license type or additional line of authority to his or her adjuster license without meeting the licensing requirements as set forth in W.Va. Code §33-12B-1 et seq., 114CSR2A, 114CSR42, and this rule.
5.9. An individual adjuster then holding multiple license types at the time of the transition and assignment referred to in subsections 5.6 and 5.7 of this rule will be transitioned to multiple license types in accordance with the default positions in subdivisions 5.7.1, 5.7.2, and 5.7.3 of this rule.
W. Va. Code R. § 114-25-6 Qualifications
6.1. No individual may hold a license as a resident adjuster unless he or she:
6.1.1. Is eighteen years of age or older;
6.1.2. Is a resident of West Virginia or eligible to designate West Virginia as his or her home state;
6.1.3. Satisfies the Commissioner that he or she is trustworthy and competent;
6.1.4. Has a business or mailing address in this state for acceptance of service of process or, if residing outside of this state, acknowledges that by adjusting claims in this state he or she is subject to the state’s long-arm statute and automatically appoints the West Virginia Secretary of State as his or her agent for service of process;
6.1.5. Has not committed any act that is a ground for probation, suspension, revocation, or refusal of an adjuster’s license as set forth in W.Va. Code §33-12B-11;
6.1.6. Has successfully passed the written examination for the line or lines of authority for which the person has applied; and
6.1.7. Has paid the applicable fees.
6.2. Examination
6.2.1. A resident individual applying for an adjuster license shall pass a written examination unless exempt. The examination shall test the knowledge of the individual concerning the line or lines of authority for which the application is being made, the duties and responsibilities of an insurance adjuster, and the insurance laws of rules of West Virginia. In lieu of such examination, an individual applying for an adjuster license with a crop line of authority may instead submit certification that the individual has passed a proficiency examination approved by the United States Department of Agriculture and Risk Management Agency.
6.2.2. Each applicant shall pay a nonrefundable examination fee of $25.
6.2.3. The Commissioner may, at his or her discretion, designate an independent testing service to prepare and administer such examinations subject to the direction and approval by the Commissioner, and examination fees charges by such services shall be paid by the applicant or examinee.
6.2.4. An individual who fails to appear to an examination, as scheduled, or who fails to pass the examination, may reapply for an examination provided that all required fees are paid and all required forms are completed before being rescheduled for another examination.
6.2.5. An individual who initially fails to pass an examination as required by this rule is limited to seven additional attempts to pass the examination. An individual who fails the examination eight times is forever barred from retaking the examination.
6.2.6. The following individuals are exempt from the written examination requirements:
6.2.6.a. An individual who applies for an adjuster license in this state who was previously licensed for the same line or lines of authority in another jurisdiction if:
6.2.6.a.1. The individual is currently licensed in that jurisdiction; or
6.2.6.a.2. The individual applies within 90 days of the cancellation of his or her previous license; and
6.2.6.a.2.A. The prior jurisdiction issues a certification that, at the time of cancellation, the applicant was in good standing; and
6.2.6.a.2.B. The certification must be of a license with the same line or lines of authority for which the individual has applied.
6.2.6.b. An individual licensed and in good standing as an adjuster in another jurisdiction who moves to this state and makes an application within 90 days of establishing legal residency in this state for an adjuster license with the same line or lines of authority.
6.2.7. Examinations required pursuant to this rule that test an applicant’s knowledge concerning a line or lines of authority are applicable for individual adjusters first licensed on or after July 1, 2021, or for individual adjuster who add a lines of authority to an existing adjuster license on or after July 1, 2021.
6.3. The Commissioner is authorized to require fingerprints for a criminal history record check of applicants to determine adjuster licensing eligibility. This process will be established in accordance with W.Va. Code §33-12B-6 and the standards as set forth for producer and adjuster in 114CSR2A.
6.4. A business entity applying for a resident independent or public adjuster license shall make application to the Commissioner and shall declare under penalty of suspension, revocation, or refusal of the license that the statement made in the application are true, correct, and complete to the best of the business entity’s knowledge and belief.
6.4.1. Before approving a business entity’s application for licensure, the Commissioner shall find:
6.4.1.a. The business entity is eligible to designate West Virginia as its home state;
6.4.1.b. Has a business or mailing address in West Virginia for acceptance of service of process;
6.4.1.c. Has designated a licensed adjuster responsible for the business entity’s compliance with insurance laws and rules of this state; and
6.4.1.d. Has not committed an act that is grounds for probation, suspension, revocation, or refusal of an adjuster license as set forth in W.Va. Code §33-12B-11 or section 20 of this rule.
W. Va. Code R. § 114-25-7 Application For Licensure
7.1. Application for a company, public or independent adjuster’s license shall be made to the Commissioner on forms prescribed by him or her and shall contain such information and be accompanied by such supporting documents as the Commissioner may require and, if so required by the Commissioner, shall be made under oath. The application shall provide which line of authority, or lines of authority, the adjuster is seeking to qualify for. The annual fee for an individual adjuster’s license is $25 and shall be submitted with the application. The annual fee for a business entity adjuster’s license is $200 and shall be submitted with the application.
7.2. Willful misrepresentation of any fact in any such application or in any documents in support thereof is a violation of chapter thirty-three of the Code and this rule.
W. Va. Code R. § 114-25-8 Public Adjuster Records Maintenance
8.1. A public adjuster shall maintain a complete record of each transaction as a public adjuster including:
8.1.1. Name of the insured;
8.1.2. Date, location and amount of loss;
8.1.3. Copy of the contract between the public adjuster and the insured;
8.1.4. Name of the insurer, amount, expiration date and number of each policy carried with respect to the loss;
8.1.5. Itemized statement of the insured's recoveries;
8.1.6. Itemized statement of all compensation received by the public adjuster, from any source whatsoever, in connection with the loss;
8.1.7. A register of all monies received, deposited, disbursed, or withdrawn in connection with a transaction with an insured, including fees transfers and disbursements from a trust account and all transactions concerning all interest bearing accounts;
8.1.8. Name of the public adjuster who executed the contract;
8.1.9. Name of the attorney representing the insured, if any, and the name of the claims representatives of the insurance company; and
8.1.10. Evidence of financial responsibility in a format prescribed by the Commissioner.
8.2. Records of public adjusters must be maintained for at least five years after the termination of the transaction with an insured and shall be open to examination by the Commissioner at all times.
8.3. Records submitted to the Commissioner in accordance with this section that contain information determined to be proprietary by the Commissioner shall be treated as confidential by the Commissioner and shall not be subject to the public disclosure provisions of chapter twenty-nine-b of the Code.
W. Va. Code R. § 114-25-9 Standards of Conduct of Company and Independent Adjusters
9.1. The standards of conduct of company and independent adjusters are as follows:
9.1.1. A company or independent adjuster shall not give legal advice, and shall not deal directly with any policyholder or claimant who is represented by legal counsel, without the consent of the legal counsel involved.
9.1.2. A company or independent adjuster shall identify himself or herself as an independent contractor and, if applicable, identify his or her employer when dealing with any policyholder or claimant.
9.1.3. A company or independent adjuster shall identify his or her employer when dealing with any policyholder or claimant.
9.1.4. A company or independent adjuster shall not have any financial interest in any adjustment or acquire for himself or herself any interest or title in salvage, without first receiving written authority from the principal.
W. Va. Code R. § 114-25-10 Standards of Conduct of Public Adjusters
10.1. Public adjusters shall adhere to the following standard of conduct:
10.1.1. A public adjuster is obligated to serve his or her client with objectivity and complete loyalty, and to render to the insured such information, counsel and service, as within the knowledge, understanding and opinion in good faith of the licensee, as will best serve the insured's insurance claim needs and interest;
10.1.2. A public adjuster shall not solicit, or attempt to solicit, an insured during the progress of a loss-producing occurrence, as defined in the insured's insurance contract;
10.1.3. A public adjuster shall not permit an unlicensed employee or representative of the public adjuster to conduct business for which a license is required under this article;
10.1.4. A public adjuster shall not have a direct or indirect financial interest in any aspect of the claim, other than the salary, fee, commission or other consideration established in the written contract with the insured, unless full written disclosure has been made to the insured as set forth in subsection 11.4 of this rule;
10.1.5. A public adjuster shall not acquire any interest in salvage of property subject to the contract with the insured unless the public adjuster obtains written permission from the insured after settlement of the claim with the insurer;
10.1.6. The public adjuster shall not refer or direct the insured to get needed repairs or services in connection with a loss unless the adjuster discloses to the insured whether the adjuster may receive direct or indirect compensation for the referral;
10.1.7. The public adjuster shall disclose to an insured if he or she has any interest or will be compensated by any construction firm, salvage firm, building appraisal firm, motor vehicle repair shop or any other person that performs any work in conjunction with damages caused by the insured loss; and
10.1.8. The source and amount of any compensation or thing of value received by the public adjuster in connection with an insured’s loss shall be disclosed in writing to the insured.
10.2. Public adjusters shall adhere to the following general ethical requirements:
10.2.1. A public adjuster shall not undertake the adjustment of any claim if the public adjuster is not competent and knowledgeable as to the terms and conditions of the insurance coverage, or which otherwise exceeds the public adjuster's current expertise;
10.2.2. A public adjuster shall not knowingly make any oral or written material misrepresentations or statements which are false or maliciously critical and intended to injure any person engaged in the business of insurance to any insured client or potential insured client;
10.2.3. No public adjuster, while so licensed by the Commissioner, may represent or act as a company adjuster or independent adjuster on the same claim;
10.2.4. The contract with the insured shall not be construed to prevent an insured from pursuing any civil remedy after the three-business day revocation or cancellation period;
10.2.5. A public adjuster shall not enter into a contract or accept a power of attorney that vests in the public adjuster the effective authority to choose the persons who shall perform repair work;
10.2.6. A public adjuster shall ensure that all contracts for the public adjuster’s services are in writing and set forth all terms and conditions of the engagement; and
10.2.7. A public adjuster may not agree to any loss settlement without the insured's knowledge and consent.
W. Va. Code R. § 114-25-11 Contract Between Public Adjuster and Insured
11.1. Public adjusters shall ensure that all contracts for their services are in a document entitled “Public Adjuster Contract” containing the following:
11.1.1. Full name of the adjuster signing the contract;
11.1.2. Permanent home state business address and phone number;
11.1.3. License number;
11.1.4. The insured’s full name, street address, insurance company name and policy number;
11.1.5. A description of the loss and its location;
11.1.6. Description of services to be provided to the insured;
11.1.7. Signatures of the public adjuster and the insured and date(s) signed; and
11.1.8. Full salary, fee, commission, compensation or other considerations the public adjuster is to receive for services.
11.2. The contract may specify that the public adjuster shall be named as a co-payee on an insurer’s payment of a claim.
11.2.1. If the compensation is based on a share of the insurance settlement, the exact percentage shall be specified.
11.2.2. Initial expenses to be reimbursed to the public adjuster from the proceeds of the claim payment shall be specified by type, with dollar estimates set forth in the contract and with any additional expenses first approved by the insured.
11.2.3. Compensation provisions in a public adjusting contract shall not be redacted in any copy of the contract provided to the Commissioner.
11.3. If the insurer, no later than seventy-two hours after the date on which the loss is reported to the insurer, either pays or commits in writing to pay to the insured the policy limit of the insurance policy, the public adjuster shall:
11.3.1. Not receive a commission consisting of a percentage of the total amount paid by an insurer to resolve a claim;
11.3.2. Inform the insured that loss recovery amount might not be increased by insurer; and
11.3.3. Be entitled only to reasonable compensation from the insured for services provided by the public adjuster on behalf of the insured, based on the time spent on a claim and expenses incurred by the public adjuster, until the claim is paid or the insured receives a written commitment to pay from the insurer.
11.4. A public adjuster shall provide the insured a written disclosure concerning any direct or indirect financial interest that the public adjuster has with or in any other party who is involved in any aspect of the claim, including but not limited to any ownership of, other than as a minority stockholder, or any compensation expected to be received from, any construction firm, salvage firm, building appraisal firm, motor vehicle repair shop, or any other person that provides estimates for work, or that performs any work in conjunction with damages caused by the insured loss.
11.5. A public adjuster contract may not contain any contract term that:
11.5.1. Allows the public adjuster’s percentage fee to be collected when money is due from an insurance company, but not paid, or that allows a public adjuster to collect the entire fee from the first check issued by an insurance company, rather than as percentage of each check issued by an insurance company;
11.5.2. Requires the insured to authorize an insurance company to issue a check only in the name of the public adjuster;
11.5.3. Imposes collection costs or late fees; or
11.5.4. Precludes an insured from pursuing civil remedies.
11.6. Prior to the signing of the contract, the public adjuster shall provide the insured with a separate disclosure document regarding the claim process that states:
11.6.1. Property insurance policies obligate the insured to present a claim to his or her insurance company for consideration. There are three types of adjusters that could be involved in that process. The definitions of the three types are as follows:
11.6.1.a. “Company adjuster” means an adjuster representing the interests of the insurer, including an independent contractor and a salaried employee of the insurer. The company adjuster should not charge the insured a fee for his or her services.
11.6.1.b. “Independent adjuster” means an adjuster hired on a contract basis by an insurance company to represent the insurance company’s interest in the settlement of the claim. An independent adjuster is paid by the insurance company and should not charge the insured a fee for his or her services.
11.6.1.c. “Public adjuster” means an insurance adjuster who does not work for any insurance company. The public adjuster works for the insured to assist in the preparation, presentation and settlement of the claim. The insured hires the public adjuster by signing a contract agreeing to pay him or her a fee or commission based on a percentage of the settlement, or other method of compensation.
11.6.2. The insured is not required to hire a public adjuster to help the insured meet his or her obligations under the policy, but has the right to do so.
11.6.3. The insured has the right to initiate direct communications with the insured’s attorney, the insurer, the insurer's adjuster, and the insurer's attorney, or any other person regarding the settlement of the insured's claim.
11.6.4. The public adjuster is not a representative or employee of the insurer.
11.6.5. The salary, fee, commission or other consideration paid to a public adjuster is the obligation of the insured, not the insurer.
11.6.6. The contract shall be executed in duplicate to provide an original contract to the public adjuster and an original contract to the insured. The public adjuster's original contract shall be available at all times for inspection without notice by the Commissioner.
11.6.7. The public adjuster shall provide the insurer a notification letter, which has been signed by the insured, authorizing the public adjuster to represent the insured's interest.
11.6.8. The insured has the right to rescind the contract within three business days after the date the contract was signed. The rescission must be in writing and shall be delivered to the public adjuster at the address in the contract within the three business day period: Provided, That a rescission letter postmarked within the three-day rescission period shall be deemed to have been delivered within such period.
11.6.9. If the insured exercises the right to rescind the contract, anything of value given by the insured under the contract will be returned to the insured within fifteen business days following the receipt by the public adjuster of the cancellation notice.
W. Va. Code R. § 114-25-12 Public Adjuster Fees
12.1. Any fee charged by a public adjuster must be reasonable.
12.2. A public adjuster shall not pay a commission, service fee or other valuable consideration to a person for investigating or settling claims in this state if that person is required to be licensed under this article and is not so licensed.
12.3. A person shall not accept a commission, service fee or other valuable consideration for investigating or settling claims in this state if that person is required to be licensed under this article and is not so licensed.
12.4. In the event of a catastrophe, no public adjuster shall charge, agree to or accept as compensation or reimbursement any payment, commission, fee, or other thing of value equal to more than ten percent of any insurance settlement or proceeds. No public adjuster shall require, demand or accept any fee, retainer, compensation, deposit, or other thing of value, prior to settlement of a claim.
W. Va. Code R. § 114-25-13 Public Adjuster Escrow or Trust Accounts
A public adjuster who receives, accepts or holds any funds on behalf of an insured towards the settlement of a claim for loss or damage shall deposit the funds in a non-interest bearing escrow or trust account in a financial institution that is insured by an agency of the federal government in the public adjuster’s home state or where the loss occurred.
W. Va. Code R. § 114-25-14 Assumed Names
An adjuster doing business under any name other than the adjuster’s legal name is required to notify the Commissioner prior to using the assumed name.
W. Va. Code R. § 114-25-15 Public Adjuster Prohibited Practices; Voidable Contracts
15.1. A public adjuster shall not solicit or attempt to solicit employment during progress of a loss-producing occurrence nor while the fire department or its representatives are engaged at the damaged premises.
15.2. A public adjuster shall not collect or attempt to collect a fee or charge from a repair contractor for obtaining repair work for the contractor.
15.3. A public adjuster shall not advance money or any other valuable thing to an insured pending adjustment of a claim.
15.4. A public adjuster shall not provide his or her services to a client until the adjuster has contracted in writing with the insured or his or her authorized representative. A contract which is executed within forty-eight hours after conclusion of the loss producing occurrence shall be voidable at the option of the insured for ten days after execution of the contract. The written contract shall constitute the entire agreement between the adjuster and the insured and shall disclose all fees to be charged the insured by the public adjuster. A copy of the contract shall be given to the insured when the contract is executed.
W. Va. Code R. § 114-25-16 Addresses of Adjusters; Filing
Each adjuster shall file with the Commissioner the complete address of his or her principal place of business and the complete address of his residence including the name and number of the street, or if the street where the business is located is not numbered, the number of the post office box. The Commissioner may require the filing of other information for the purposes of identifying the principal place of business and the place of residence.
W. Va. Code R. § 114-25-17 Change of Address; Notice
Within thirty days of a change of business or residence address by an adjuster the adjuster must file with the Commissioner the current version of such information as is required by Section 16 of this rule. An adjuster's principal place of business may be either a home or a business address, but in either event, the adjuster must maintain such address as a permanent office.
W. Va. Code R. § 114-25-18 Licensing of Nonresident Adjusters
18.1. An individual otherwise complying with the provisions of this rule who is a licensed adjuster in his or her home state, may apply with the Commissioner to become licensed as a nonresident company, public or independent adjuster in this state if his or her home state has established, by law or regulation requirements for the licensing of a resident of this state as a nonresident adjuster and if the applicant’s home state awards nonresident licenses to residents of this state on the same basis. Such an individual is exempt from the examination requirements of W.Va. Code §33-12B-5 if his or her home state required a substantially similar prelicensing examination. A resident of Canada may be licensed as a nonresident adjuster under this section if that person has obtained a resident or home state adjuster license in another United States jurisdiction.
18.2. The Commissioner may issue an adjuster’s license to any applicant who is not a West Virginia resident and who cannot meet the requirements of subsection 18.1 of this rule if the applicant passes a written examination in West Virginia.
18.3. As a condition to the continuation of a nonresident adjuster license, the licensee shall maintain a resident adjuster license in his or her home state.
18.4. An individual who has obtained a nonresident adjuster license and who thereafter establishes legal residency in this state must make application within ninety (90) days to obtain a resident license for the same line of authority; such applicant is exempt from any prelicensing examination requirements.
18.5. An individual who has obtained a nonresident adjuster license and who has thereafter had his or her adjuster license suspended, terminated, or revoked by his or her home state must immediately notify the Commissioner of that regulatory action and, with respect to license terminations or revocations, surrender the nonresident adjuster license to the Commissioner. An individual who has had his or her home state license terminated or revoked is no longer eligible or qualified to continue to hold his or her nonresident adjuster license.
W. Va. Code R. § 114-25-19 Expiration of License; Renewal
19.1. The Commissioner may fix the dates of expiration of respective licenses for all adjusters in any manner as is considered by him or her to be advisable for an efficient distribution of the workload of his or her office. If the expiration date so fixed would upon first occurrence shorten the period for which a license fee has theretofore been paid, no refund shall be made. If the expiration date so fixed would upon first occurrence lengthen the period for which license fee had theretofore been paid, the Commissioner shall charge no additional fee.
19.2. An adjuster who allows his or her license to lapse may have such license reinstated if he or she makes application within twelve months of the expiration date and pays a penalty in the amount of $25 in addition to any other fees.
19.3. The Commissioner may waive renewal requirements for an adjuster who is unable to comply due to military service, long-term disability or other extenuating circumstance.
19.4. Crop Adjusters that are renewing a license must show that they have maintained certification of proficiency issued or approved by the United States Department of Agriculture Risk Management Agency.
W. Va. Code R. § 114-25-20 Revocation, Suspension, Refusal to Renew or Issue License; Penalty in Lieu Thereof
20.1. The Commissioner may examine and investigate the business affairs or conduct of persons applying for or holding an adjuster license to determine whether such person is trustworthy and competent or has been engaged in any violation of the insurance laws or rules of this state or in any unfair or deceptive acts or practices. In the event that the action by the Commissioner is to deny an application for or not renew a license, the Commissioner shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the non-renewal or denial of the applicant’s or licensee’s license. The applicant or licensee may make written demand upon the Commissioner within ten days for a hearing before the Commissioner to determine the reasonableness of the commissioner’s action. The hearing shall be held within forty-five days and shall be held pursuant to section thirteen, article two of chapter thirty-three of the West Virginia Code.
20.2. Whenever, after notice and hearing the Commissioner is satisfied that any adjuster has violated any provision of this rule, or is incompetent or untrustworthy, the Commissioner may place on probation, revoke, suspend, or refuse to issue or, if renewal of license is pending, refuse to renew the license of such adjuster. In addition to placing on probation, revoking, suspending, or refusing to renew such license, the Commissioner may in his or her discretion order such licensee to pay to the State of West Virginia an administrative penalty in a sum not to exceed $1,000 for each violation. Upon failure of the licensee to pay such penalty within 30 days, his or her license will be suspended or revoked by the Commissioner.
20.3. For the purposes of this rule, it is considered to demonstrate lack of trustworthiness or competency if the Commissioner determines such adjuster has:
20.3.1. Provided incorrect, misleading, incomplete, or materially untrue information in the license application;
20.3.2. Violated any insurance law or any lawful rule, regulation, subpoena or order of the Commissioner;
20.3.3. Improperly withheld, misappropriated, or converted to his own use any money received in the course of business and belonging to policyholders, insurers, beneficiaries, or others;
20.3.4. Intentionally misrepresented the terms or benefits of an actual or proposed insurance contract or the eligibility for claims under an insurance contract;
20.3.5. Admitted or been found to have committed any pattern of unfair methods of competition or unfair or deceptive acts or practices or fraud in the business of insurance as defined in W. Va. Code §33-11-1 et seq;
20.3.6. Forged another person's name to any document or fraudulently procured a forged signature to any document, knowing such signature to be forged relating to an insurance transaction;
20.3.7. Knowingly and willfully made or permitted a false or fraudulent statement or misrepresentation in or relative to the adjustment of any claim or using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility, in the conduct of insurance business in this state or elsewhere;
20.3.8. Been convicted of or pleaded nolo contendre to any felony;
20.3.9. Been convicted of or pleaded nolo contendre to a misdemeanor in connection with his activities relating to the business of insurance;
20.3.10. Had an insurance license or its equivalent suspended, revoked or refused in any other state, district or territory of the United States or any province of Canada;
20.3.11. Obtained a license as an agent, broker, or adjuster through misrepresentation, fraud, or any other act for which issuance of the license could have been refused had it been known to the Commissioner at the time of issuance.
20.3.12. Cheated, including improperly using notes, electronic devices or any other reference material, to complete an examination for an insurance license;
20.3.13. Knowingly accepting insurance business from an individual who is not licensed but who is required to be licensed by the Commissioner;
20.3.14. Failed to comply with an administrative or court order imposing a child support obligation;
20.3.15. Failed to pay state income tax or comply with any administrative or court order directing payment of state income tax; or
20.3.16. Committed any other act which inherently demonstrates untrustworthiness or lack of competence.
20.4. The Commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by this rule or W.Va. Code §33-12B-1 et seq. against any person who is under investigation for or charged with a violation of this rule or W.Va. Code §33-12B-1 et seq. even if the person’s license or registration has been surrendered or has lapsed by operation of law.
20.5. Orders issued by the Commissioner pursuant to this section are subject to the judicial review provisions of W.Va. Code §33-2-14.
114CSR25
114CSR25
Series 26 Accident And Sickness Rate Filing
W. Va. Code R. § 114-26-1 General
1.1. Scope. -- This legislative rule establishes requirements for information and data to be provided to the Insurance Commissioner with the filing of rates and rate adjustments for accident and sickness insurance policies. The purpose of this rule is to provide the Insurance Commissioner with the information necessary to ensure that rates for accident and sickness insurance are reasonable in relation to the benefits provided under the policy as required by W. Va. Code §§33-6-9(e) and 33-16B-2. This rule applies to all individual accident and sickness insurance policy forms and all group accident and sickness insurance policy forms which are delivered or issued for delivery in this State which are not negotiated for with the policyholder and experience rated.
1.2. Authority. -- W. Va. Code §§33-2-10, 33-6-9(e), 33-16B-2.
1.3. Filing Date. -- April 16, 2004.
1.4. Effective Date. -- April 16, 2004.
W. Va. Code R. § 114-26-2 Definitions
2.1. A policy or policy form includes the contract effecting insurance, or the certificate thereof, and includes any riders, endorsements or amendments attached to the base contract.
2.2. An experience rated group, for purposes of this rule means a group eligible for group accident and sickness insurance pursuant to W. Va. Code §33-16-2 and whose premium rates are based on the historic and/or projected loss experience of the individual group standing alone.
2.3. A community rated group is a group eligible for group accident and sickness insurance pursuant to W. Va. Code §33-16-2 and whose premium rates are based on the historic and/or projected loss experience of a pool of group policies.
W. Va. Code R. § 114-26-3 Rate Filing Requirements
3.1. General Requirements.
a. Every policy, rider or endorsement form which is submitted to the Commissioner for approval shall be accompanied by a rate filing if such policy, rider, or endorsement form in any way involves a new product which has not been previously approved or in any way effects a rate change. A reduction in benefits while maintaining the same rate shall be considered a rate change. Any subsequent additions to rate schedules or changes in rates applicable to such forms shall also be filed for approval.
b. Each rate filing shall include the appropriate filing fee, filing abstract(s), a cover letter explaining the nature of the filing, and all relevant information describing the basis on which the rates were determined and the calculations of the anticipated loss ratio. Interest, at a rate consistent with that assumed in the determination of premiums, shall be used in the calculation of the loss ratio.
c. Information required pursuant to this rule shall be provided in a format prescribed by the Insurance Commissioner.
3.2. Filing of Rates for a New Policy Form.
All new policy forms shall be accompanied by a rate submission which shall include:
a. The policy form and application;
b. The rate sheets which indicate the rate structures at various benefit levels for the proposed policy form;
c. An actuarial memorandum containing the following information:
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A description of the type of policy and benefits, renewability, general marketing method and issue age limits;
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A description of how rates were determined including all calculations, formulas, and variables used in the determination of the proposed rate and a general description of, and the source of each assumption used;
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The anticipated loss ratio, a description of how it was calculated, and minimum anticipated loss ratio presumed reasonable for this policy form.
d. Any other information relevant to the filing.
3.3. Adjustments to Approved Rates.
All filings for adjustments to approved rates shall include:
a. New rate sheets which provide a comparison of the revised premiums with the current premiums;
b. All current policy forms and related rate structures for policies that would be affected by the rate adjustment submission, along with the date of approval thereof, if the forms have been in effect for two (2) years or more;
c. The number of contracts and persons covered by the applicable policy forms in West Virginia for each of the five (5) years prior to the effective date of new rates that are requested;
d. The proposed effective date for all rate adjustments;
e. A statement of all rate increases, by yearly percentage, which have been received on the rate structure for the applicable policy in each of the five (5) years preceding the proposed effective date of the new rates. Such increases shall be shown both on a countrywide and a West Virginia basis;
f. An all-inclusive description of the benefits provided by the policy that is applicable to the requested rate adjustment. If different benefits are provided at different premium levels the differences should be indicated;
g. If applicable, a full description as to the information and representations, including negotiating procedures, provided to preferred providers which affect the program for which new rates are proposed and how such information and representations will affect the program and rates on an annual basis;
h. A description of the purpose for the rate adjustment and any changes in the text of the policy forms;
i. A breakdown of the losses associated with vintage years of policies. Losses should be separated by those losses associated with policies with a life of 1, 2, 3, 4, and more than four (4) years on a West Virginia and countrywide basis;
j. A breakdown of earned premiums separated in the manner noted in subdivision i of this subsection;
k. A breakdown of written premium separated in the same manner noted in subdivision i of this subsection;
l. All calculations, formulas and variables that were used in the determination of the proposed rates;
m. All data used in the formulation of trended losses;
n. All assumptions, formulas and calculations that were used to formulate trended losses and earned premiums submitted in support of rate adjustments;
o. The weighted average investment income yield earned on reserves of the company for each of the five (5) years prior to the proposed effective date of the new rates;
p. A disclosure as to the loss ratios realized for each of the five (5) years prior to the proposed effective date of new rates on a West Virginia and countrywide basis;
q. A breakdown of the percentage of earned premiums that are associated with administrative costs, taxes, risk retention and profit, and other cost functions that are not loss coverage;
r. A disclosure of whether losses are reported on a policy year basis or a calendar year basis;
s. Any consideration given to mitigating a requested increase through benefit restructuring;
t. A breakdown as to the average age associated with the groups that are covered;
u. A description of the embedded stop loss provisions of the policy;
v. Any other information relevant to the filing.
3.4. Community Rated Groups.
All insurers providing group accident and sickness coverage must file for approval all formulas, indices, factors and any other variables used in calculation of community rated group coverage along with a narrative explanation of how these factors are used and the group rates calculated. Rates currently in effect for all community rated groups must be filed with the Commissioner. Any changes in the insurer's group rating factors or variables used in the community group rating plan must be filed for approval. Rate adjustments for individual groups in the community pool which correspond to approved changes in the rating plan or formula are to be filed for approval only at the request of the Commissioner. Any proposed changes in an approved community rating plan should be filed with all the relevant information required by subsections 3.1 through 3.3. of this rule.
114CSR26
114CSR26
Series 27 Aids Regulations
W. Va. Code R. § 114-27-1 General
1.1. Scope. -- This legislative rule establishes standards for AIDS-related underwriting questions and AIDS testing in connection with applications for life or health insurance policies.
1.2. Authority. -- W. Va. Code §§33-2-10 and 16-3C-2(j).
1.3. Filing Date. -- March 27, 2024.
1.4. Effective Date. -- April 1, 2024.
1.5. Sunset Provision. -- This rule shall terminate and have no further force or effect upon August 1, 2029.
W. Va. Code R. § 114-27-2 Applicability
2.1. Insurers -- All insurers who deliver or issue for delivery in this state any policies for life or accident and sickness insurance are subject to this regulation.
2.2. Service Corporations -- All health service corporations who deliver or issue for delivery in this state any subscriber`s contracts for health insurance are subject to this regulation.
2.3. Health Care Corporations -- All health care corporations who issue to enrollees in this state evidence of health insurance coverage are subject to this regulation.
2.4. Fraternal Benefit Societies:
a. All fraternal benefit societies who deliver or issue for delivery life insurance benefit certificates in this state are subject to this regulation.
b. All domestic, foreign, or alien societies who issue any certificate or other evidence of any contract of accident or sickness insurance in this state are subject to this regulation.
2.5. Health Maintenance Organizations -- All health maintenance organizations who deliver or offer for delivery in this state any evidence of coverage are subject to this regulation.
W. Va. Code R. § 114-27-3 Definitions
3.1. Code -- means the West Virginia Code.
3.2. Commissioner -- means the Insurance Commissioner of the state of West Virginia.
3.3. Acquired Immunodeficiency Syndrome (AIDS) -- means the acquired immuno-deficiency syndrome as may be from time to time defined by the Centers for Disease Control of the United States Public Health Service.
3.4. AIDS Related Complex (ARC) -- means a syndrome in which the individual displays many of the same symptoms of AIDS, including the presence of the HIV antibody.
3.5. Human Immunodeficiency Virus (HIV) means the virus responsible for the potential development of the Acquired Immunodeficiency Syndrome (AIDS).
3.6. Enzyme Linked Immunosorbent Assay (ELISA) -- means a test which has been licensed by the FDA and is used to determine the existence of the HIV antibody.
3.7. Insurer -- includes all entities providing life or accident and sickness coverage.
3.8. Western Blot -- means a test which has been licensed by the FDA and is used to determine the existence of the HIV antibody.
3.9. Health Care Professional or Health Care Provider -- means any physician, nurse, physician’s assistant, or any other person providing medical, dental, nursing or other health care services of any kind.
3.10. FDA -- means the United States Food and Drug Administration.
W. Va. Code R. § 114-27-4 Medical/Lifestyle Applications Questions and Underwriting Guidelines
4.1. General Propositions:
a. No inquiry in an application for health accident and sickness or life insurance coverage, or in an investigation conducted by an insurer or an insurance support organization on its behalf in connection with an application for such coverage shall be directed toward determining the proposed insured’s sexual orientation.
b. Sexual orientation may not be used in the underwriting process or in the determination of insurability.
c. Insurance support organizations shall be directed by insurers not to investigate, directly or indirectly, the sexual orientation of a proposed insured or beneficiary.
4.2. Medical/Lifestyle Applications Questions and Underwriting Standards.
a. No question shall be used which is designed to establish the sexual orientation of the proposed insured.
b. Questions relating to the proposed insured having or having been diagnosed as having AIDS or ARC are permissible if they are factual and designed to establish the existence of the condition.
For Example: Insurers should not ask "do you believe you may have . . .?", but rather "do you know or have reasons to know . . .?"
c. Questions inquiring as to whether the proposed insured has ever tested positive for the presence of the HIV virus or HIV virus antibodies are permissible; however, questions inquiring as to whether the proposed insured has ever been tested for the presence of the HIV virus or HIV antibodies are prohibited.
d. Questions relating to medical and other factual matters intending to reveal the possible existence of a medical condition are permissible if they are not used as a proxy to establish the sexual orientation of the proposed insured, and the proposed insured has been given an opportunity to provide an explanation for any affirmative answers given in the application.
For Example: "Have you had chronic cough, significant weight loss, chronic fatigue, diarrhea, enlarged glands, . . .?" would be permissible. These questions must relate to a definite time period immediately preceding the application and must be specific. The proposed insured shall be given the opportunity to explain the described symptoms.
e. Questions relating to the proposed insured’s having or having been advised to seek treatment by a medical doctor, health nurse or other medical professional for a sexually transmitted disease are permissible.
f. Neither the marital status, the "living arrangements," the occupation, the gender, the medical history, the beneficiary designation, nor the zip code or other territorial classification of a proposed insured may be used to establish, or aid in establishing, the proposed insured’s sexual orientation.
g. For purposes of rating a proposed insured for health and life insurance, an insurer may impose territorial rates, but only if the rates are based on sound actuarial principles and are related to actual or reasonably anticipated experience.
For Example: If a particular territory demonstrates a general propensity for high risk, an insurer may impose a rate higher for that territory than for similar risks located in other territories.
h. No questions shall seek to determine if the proposed insured has demonstrated AIDS-related concerns or has sought AIDS-related counseling.
i. No adverse underwriting decision shall be made because medical records or a report from an insurance support organization show(s) that the proposed insured has demonstrated AIDS-related concerns or has sought counseling. This subsection does not apply to a proposed insured seeking treatment and/or diagnosis.
W. Va. Code R. § 114-27-5 Testing
5.1. AIDS- related testing in connection with the application for group life or accident and sickness insurance is prohibited; provided that an insurer may conduct such testing in relation to the application for group life and accident and sickness insurance when the insurance applied for is individually underwritten and evidence of insurability is required by the insurer because the proposed insured is either a late entrant, is applying for supplemental group life coverage, or is applying for small group insurance where the group consists of less than twenty-five members.
5.2. Whenever a proposed insured is requested to take an AIDS-related test in connection with an application for insurance, the use of such a test must be revealed to the proposed insured and his or her written, informed consent obtained.
5.3. The proposed insured should demonstrate an understanding that the test is being performed, of the nature of the test, of the persons to whom the results of that test may be disclosed, of the purpose for which test results may be used, of any limitations on the accuracy and meaning of the test results, and of any foreseeable risks and benefits resulting from the test.
5.4. The person requesting the test, and not the individual or individual’s health care provider, must underwrite the cost of the test.
5.5. The individual undergoing the test has a choice to receive the test result directly or to designate in writing, prior to the administration of the test, any other person, such as a health care professional or clergyman, who may receive the results.
5.6. The testing must be performed by an individual who is properly trained in the administration of the test; holds an appropriate medical license, if state or federal law requires licensure in order to perform the testing procedure; and is properly supervised in accordance with state and federal law and FDA approval requirements.
5.7. The insurer and its agents shall not release or disclose either that a HIV test has been conducted or the test results to any other party except under the following limited circumstances:
a. Negative test results only may be disclosed to a reinsurer where either:
- The reinsurer is to reinsure a portion of the risk on a facultative basis; or 2. The reinsurer is to reinsure a portion of a block of business on a treaty basis and where the release of HIV test information is disclosed by the ceding insurer only to the extent that the reinsurer is permitted to perform limited underwriting audits of the ceding insurer’s underwriting files to verify that proper HIV underwriting has occurred.
b. Positive test results only may be disclosed to the Medical Information Bureau (MIB) provided that such information release is limited to a coded report identified only as a nonspecific abnormal blood, urine or oral fluid test code.
c. To the extent necessary to allow them to properly perform the functions for which their services were contracted by the insurer, an insurer may disclose HIV test information to certain contractors of the insurer such as audit firms, third party underwriters and claims adjusting firms. No person receiving HIV test information shall transmit information further, and each person shall maintain strict confidentiality.
d. To the extent that they are otherwise entitled to access to the insurer’s files, government agencies may be permitted access to files containing HIV test information: Provided that confidentiality is maintained and the HIV test information is not shared with other persons.
5.8. Upon written request by the individual undergoing the test the insurer must provide within 30 days, a written list of all persons or entities to whom test information has been released or caused to be released by the insurer.
5.9. The testing is required to be administered on a nondiscriminatory basis for all individuals in the same underwriting class. No proposed insured may be denied coverage or rated a substandard risk on the basis of HIV testing unless acceptable testing protocol is followed including the use of FDA-licensed tests.
5.10. If any confirmatory test produces a negative result, the testing ceases and the proposed insured cannot be denied coverage based on AIDS-related testing.
5.11. News of a positive test result could result in serious emotional trauma to the proposed insured. For this reason, it is recommended that the insurer recommend to the proposed insured that positive results be communicated to the proposed insured face to face by a qualified health care professional who could provide AIDS counseling.
W. Va. Code R. § 114-27-6 Notice and Consent Form
6.1. A notice and consent form must be executed by each proposed insured before AIDS-related testing is performed as to such proposed insured on behalf of any insurer.
6.2. The notice and consent form required by subsection 6.1 shall be as is set out in Appendix A attached hereto unless an alternative form is approved by the commissioner in writing.
APPENDIX A
Examiner_____________________Insured___________________________________________ Address_____________________Address _______________________________________ NOTICE AND CONSENT FOR BLOOD, URINE, OR ORAL FLUID TESTING WHICH MAY INCLUDE AIDS VIRUS (HIV) ANTIBODY/ANTIGEN TESTING To determine your insurability, the insurer named above (the Insurer) has requested that you provide a sample of your blood, urine, or oral fluids for testing and analysis. All tests will be performed by a licensed laboratory.
Tests may be performed to determine the presence of antibodies or antigens to the Human Immunodeficiency Virus (HIV), also known as the AIDS Virus. The HIV antibody test that we perform is actually a series of tests done by a medically accepted procedure. The HIV antigen test directly identifies AIDS viral particles. This series of tests is extremely reliable. Other tests which may be performed include determinations of blood cholesterol and related lipids (fats) and screening for liver or kidney disorders, diabetes, and immune disorders.
All test results will be treated confidentially. They will be reported by the laboratory to the Insurer. When necessary for business reasons in connection with insurance you have or have applied for with the Insurer, the Insurer may disclose test results to others such as its reinsurers, employees, or contractors. If the Insurer is a member of the Medical Information Bureau (MIB, Inc.), and if the test results for HIV antibodies/antigens are other than normal, the Insurer will report to the MIB, Inc. a generic code which signifies only a non-specific test abnormality. If your HIV test is normal, no report will be made about it to the MIB, Inc. Other test results may be reported to the MIB, Inc. in a more specific manner. The organizations described in this paragraph may maintain the test results in a file or data bank. There will be no other disclosure of test results or even that the tests have been done except as may be required or permitted by law or as authorized by you. If you desire, you have the right to request a complete list of the parties to whom the insurer has released test information.
You should also be aware that the person who performs the blood, urine or oral fluid testing is subject to W. Va. Code §§16-3C-3 and 16-3C-4 which authorize that they may disclose test results to certain limited individuals under certain limited circumstances [these relate primarily to (1) persons you authorize to see the test results, (2) health care providers who may come into contact with you or specimens obtained from you, (3) the United States centers for disease control, (4) a court order to release the results, and (5) identified sex partners and persons sharing needles.] These persons are required by W. Va. Code §§16-3C-3 and 16-3C-4 to keep test information confidential.
You may direct that test results be disclosed directly to you or if you prefer to your personal physician or other health care professional. It is strongly suggested that you designate a physician or health care professional to receive your test results so that they may properly explain the results to you.
APPENDIX A
If your HIV test results are normal, no routine notification will be sent to you. If the HIV test results are other than normal, the Insurer will contact you. The Insurer may also contact you if there are other abnormal test results which, in the Insurer’s opinion, are significant. If you have not already indicated one, the Insurer may ask you at that time for the name of a physician or other health care provider to whom you may authorize disclosure and with whom you may wish to discuss the results.
Positive HIV antibody/antigen test results do not mean that you have AIDS, but that you are at significantly increased risk of developing AIDS or AIDS-related conditions. Federal authorities say that persons who are HIV antibody/antigen positive should be considered infected with the AIDS virus and capable of infecting others.
Positive HIV antibody or antigen test results or other significant abnormalities discovered in the body fluid sample tested for the presence of HIV will adversely affect your application for insurance. This means that your application may be declined, that an increased premium may be charged, or that other policy changes may be necessary.
APPENDIX A
I wish my test results to be released to:
(Check Please) _____Myself only. _____My physician, health care provider, or other person indicated below. _____Both myself and my physician, health care provider or other person indicated below.
Physician, Health Care Provider, or other person.
Name:___________________________ Address:__________________________ _________________________________ I have read and I understand this Notice and Consent For Blood, Urine or Oral Fluid Testing Which May Include AIDS Virus HIV Antibody/Antigen Testing. I voluntarily consent to give a urine or oral fluid specimen and/or to the withdrawal of blood from me, the testing of that urine and/or blood or oral fluid, and the disclosure of the test results as described.
I understand that I have the right to request and receive a copy of this authorization. A photocopy of this form will be as valid as the original. ______________________________________ Proposed Insured Date of Birth___________________________ ______________________________________ ___________ ________________________ Signature of Proposed Insured Date State of Residence or Parent/Guardian THIS AUTHORIZATION EXPIRES AFTER 60 DAYS 114CSR27 114CSR27 114CSR27
Series 28 Coordination Of Health Benefits
W. Va. Code R. § 114-28-1 General
1.1. Scope. -- This rule is applicable to every insurance contract which provides health care benefits and which is issued on or after January 21, 2011. Insurance contracts which provide health care benefits and which were issued before January 21, 2011 shall be brought into compliance by the later of the next anniversary date or renewal date of the contract or the expiration of any applicable collectively bargained contract pursuant to which it was written. This rule is based on the "Coordination of Benefits Model Regulation (Model 120)" adopted by the National Association of Insurance Commissioners, as amended in 2005.
1.2. Authority. -- W. Va. Code §§33-2-10,
1.3. Filing Date. -- April 14, 2010.
1.4. Effective Date. -- April 14, 2010.
1.5. Purpose. -- The purpose of this rule is to:
1.5.a. Establish a uniform order of benefit determination under which plans pay claims;
1.5.b. Reduce duplication of benefits by permitting a reduction of the benefits paid by a plan that, pursuant to this rule, does not have to pay its benefits first; and
1.5.c. Provide greater efficiency in the processing of claims when a person is covered under more than one plan.
W. Va. Code R. § 114-28-2 Definitions
The following words and terms, when used in this rule shall have the following meanings unless the context clearly indicates otherwise:
2.1. Allowable Expenses.
2.1.a. "Allowable Expense" means the necessary, reasonable and customary item of expense for health care when the item of expense is covered at least in part under any of the plans involved, except where a statute requires a different definition, including coinsurance or copayments and without reduction for any applicable deductible.
2.1.b. If a plan is advised by a covered person that all plans covering the person are high-deductible health plans and the person intends to contribute to a health savings account established in accordance with section 223 of the Internal Revenue Code of 1986, as amended, the primary high-deductible health plan’s deductible is not an allowable expense, except for any health care expense incurred that may not be subject to the deductible as described in section 223 (c)(2)(C) of the Internal Revenue Code of 1986, as amended.
2.1.c. An expense or a portion of an expense that is not covered by any of the plans is not an allowable expense.
2.1.d. Any expense that a provider by law or in accordance with a contractual agreement is prohibited from charging a covered person is not an allowable expense.
2.1.e. The following are examples of expenses that are not allowable expenses:
2.1.e.1. If a person is confined in a private hospital room, the difference between the cost of a semi-private room in the hospital and the private room is not an allowable expense, unless one of the plans provides coverage for private hospital room expenses;
2.1.e.2. If a person is covered by two (2) or more plans that compute their benefit payments on the basis of usual and customary fees or relative value schedule reimbursement or other similar reimbursement methodology, any amount charged by the provider in excess of the highest reimbursement amount for a specified benefit is not an allowable expense;
2.1.e.3. If a person is covered by two (2) or more plans that provide benefits or services on the basis of negotiated fees, any amount in excess of the highest of the negotiated fees is not an allowable expense;
2.1.e.4. If a person is covered by one plan that calculates its benefits or services on the basis of usual and customary fees or relative value schedule reimbursement or other similar reimbursement methodology and another plan that provides it benefits or services on the basis of negotiated fees, the primary plan’s payment arrangement shall be the allowable expense for all plans. However, if the provider has contracted with the secondary plan to provide the benefit or service for a specific negotiated fee or payment amount that is different than the primary plan’s payment arrangement and if the provider’s contract permits, that negotiated fee or payment shall be the allowable expense used by the secondary plan to determine its benefits.
2.1.f. The definition of "allowable expense" may exclude certain types of coverage or benefits such as dental care, vision care, prescription drug or hearing aids. A plan that limits the application of Coordination of Benefits (COB) to certain coverages or benefits may limit the definition of allowable expense in its contract to expenses that are similar to the expenses that it provides. When COB is restricted to specific coverages or benefits in a contract, the definition of allowable expense shall include similar expenses to which COB applies.
2.1.g. When a plan provides benefits in the form of services, the reasonable cash value of each service will be considered an allowable expense and a benefit paid.
2.1.h. The amount of the reduction may be excluded from allowable expense when a covered person’s benefits are reduced under a primary plan:
2.1.h.1. Because the covered person does not comply with the plan provisions concerning second surgical opinions or precertification of admissions or services; or
2.1.h.2. Because the covered person has a lower benefit because the covered person did not use a preferred provider.
2.2. "Birthday" refers only to month and day in a calendar year and does not include the year in which the individual is born.
2.3. "Claim" means a request that benefits of a plan be provided or paid. The benefits claimed may be in the form of:
2.3.a. Services (including supplies);
2.3.b. Payment for all or a portion of the expenses incurred;
2.3.c. A combination of subdivision a and b of this subsection; or
2.3.d. An indemnification.
2.4. "Closed panel plan" means a plan that provides health benefits to covered persons primarily in the form of services through a panel of providers that have contracted with or are employed by the plan, and that excludes benefits for services provided by other providers, except in cases of emergency or referral by a panel member.
2.5. "Consolidated Omnibus Budget Reconciliation Act of 1985" or "COBRA" means coverage provided under a right of continuation pursuant to federal law.
2.6. "Coordination of Benefits" or "COB" means a provision establishing an order in which plans pay their claims, permitting secondary plans to reduce their benefits so that the combined benefits of all plans do not exceed total allowable expenses.
2.7. "Custodial parent" means:
2.7.a. The parent awarded custody of a child by a court decree; or
2.7.b. In the absence of a court decree, the parent with when the child resides more than one half of the calendar year without regard to any temporary visitation. 2.8.
2.8.a. "Group-type contract" means a contract that is not available to the general public and is obtained and maintained only because of membership in or a connection with a particular organization or group, including blanket coverage.
2.8.b. "Group-type contract" does not include an individually underwritten and issued guaranteed renewable policy even if the policy is purchased through payroll deduction at a premium savings to the insured since the insured would have the right to maintain or renew the policy independently of continued employment with the employer.
2.9. "High-deductible health plan" has the meaning given to the term under section 223 of the Internal Revenue Code of 1986, as amended by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
2.10. "Hospital Indemnity Benefits” means benefits not related to expenses incurred. The term does not include reimbursement-type benefits even if they are designed or administered to give the insured the right to elect indemnity-type benefits at the time of claim. 2.11.
2.11.a. "Plan" means a form of coverage with which coordination is allowed. Separate parts of a plan for members of a group that are provided through alternative contracts that are intended to be part of a coordinated package of benefits are considered one plan and there is no COB among the separate parts of the plan.
2.11.b. If a plan coordinates benefits, its contract shall state the types of coverage that will be considered in applying the COB provision of that contract. Whether the contract uses the term "plan" or some other term such as "program," the contractual definition may be no broader than the definition of "plan" in this subdivision. The definition of "Plan" in the Model COB Provision, in Appendix A, is an example of what may be used.
2.11.c. "Plan" includes:
2.11.c.1. Group and nongroup insurance contracts and subscriber contracts;
2.11.c.2. Uninsured arrangements of group or group-type coverage;
2.11.c.3. Group and nongroup coverage through closed panel plans;
2.11.c.4. Group-type contracts.
2.11.c.5. The medical care components of long-term care contracts, such as skilled nursing care;
2.11.c.6. The medical benefits coverage in automobile "no fault" and traditional automobile "fault" type contracts; and
2.11.c.7. Medicare or other governmental benefits, except as provided in paragraph 8, subdivision d of this subsection. That part of the definition of "Plan" may be limited to the hospital, medical and surgical benefits of the governmental program.
2.11.d. "Plan" shall not include:
2.11.d.1. Hospital indemnity coverage benefits or other fixed indemnity coverage;
2.11.d.2. Accident only coverage;
2.11.d.3. Specified disease or specified accident coverage;
2.11.d.4. Limited benefit health coverage;
2.11.d.5. Benefits provided in long-term care insurance policies for non-medical services, for example, personal care, adult day care, homemaker services, assistance with activities of daily living, respite care and custodial care for contracts that pay a fixed daily benefit without regard to expenses incurred or the receipt of services;
2.11.d.6. School accident-type coverages that cover grammar, high school and college students for accidents only, including athletic injuries, either on a twenty-four (24) hour basis or on a "to and from school" basis;
2.11.d.7. Medicare supplement policies;
2.11.d.8. A State plan under Medicaid; and
2.11.d.9. A governmental plan, which, by law, provides benefits that are in excess of those of any private insurance plan or other non-governmental plan.
2.12. "Policyholder" means the primary insured named in a nongroup insurance policy.
2.13. "Primary Plan" means a plan whose benefits for a person's health care coverage must be determined without taking the existence of any other plan into consideration. A plan is a primary plan if:
2.13.a. The plan either has no order of benefit determination rules, or it has rules which differ from those permitted by this rule; or
2.13.b. All plans that cover the person use the order of benefit determination rules required by this rule, and under those rules the plan determines its benefits first.
2.14. "Secondary Plan" means a plan which is not a Primary Plan.
W. Va. Code R. § 114-28-3 Model COB Contract Provision
3.1. Appendix A contains a model COB provision for use in contracts. That use is subject to the provisions of subsections 3.2, 3.3 and 3.4 of this section and to the provisions of Section 5 of this rule.
3.2. Appendix B is a plain language description of the COB process that explains to the covered person how health plans will implement coordination of benefits. It is not intended to replace or change the provisions that are set forth in the contract. Its purpose is to explain the process by which the two (2) or more plans will pay for or provide benefits.
3.3. The COB provision contained in Appendix A and the plain language explanation in Appendix B do not have to use the specific words and format shown in Appendix A or Appendix B. Changes may be made to fit the language and style of the rest of the group contract or to reflect the difference among plans which provide services, which pay benefits for expenses incurred, and which indemnify. No other substantive changes are allowed.
3.4. A COB provision may not be used that permits a plan to reduce its benefits on the basis that:
3.4.a. Another plan exists and the covered person did not enroll in that plan;
3.4.b. A person is or could have been covered under another plan, except with respect to Part B of Medicare; or
3.4.c. A person has elected an option under another plan providing a lower level of benefits than another option which could have been elected.
3.5. No plan may contain a provision that its benefits are "always excess" or "always secondary" except in accordance with this rule.
3.6. Under the terms of a closed panel plan, benefits are not payable if the covered person does not use the services of a closed panel provider. In most instances, COB does not occur if a covered person is enrolled in two (2) or more closed panel plans and obtains services from a provider in one of the closed panel plans because the other closed panel plan (the one whose providers were not used) has no liability. However, COB may occur during the plan year when the covered person receives emergency services that would have been covered by both plans. Then the secondary plan shall use the provisions of section 7 of this rule to determine the amount it should pay for the benefit.
3.7. No plan may use a COB provision, or any other provision that allows it to reduce its benefits with respect to any other coverage its insured may have that does not meet the definition of plan under subdivision c, subsection 2.11 of this rule.
W. Va. Code R. § 114-28-4 Rules for Coordination of Benefits
When a person is covered by two (2) or more plans, the rules for determining the order of benefit payments are as follows: 4.1.
4.1.a. The Primary Plan must pay or provide its benefits as if the Secondary Plan or Plans did not exist. .
4.1.b. If the Primary Plan is a closed panel plan and the Secondary Plan is not a closed planel plan, the Secondary Plan shall pay or provide benefits as if it were the Primary Plan when a covered person uses a non-panel provider, except for emergency services or authorized referrals that are paid or provided by the primary plan.
4.1.c. When multiple contracts providing coordinated coverage are treated as a single plan under this rule, this section applies only to the plan as a whole, and coordination among the component contracts is governed by the terms of the contracts. If more than one carrier pays or provides benefits under the plan, the carrier designated as primary within the plan shall be responsible for the plan’s compliance with this rule.
4.1.d. If a person is covered by more than one secondary plan, the order of benefit determination rules of this rule decide the order in which secondary plans benefits are determined in relation to each other. Each secondary plan shall take into consideration the benefits of the primary plan or plans and the benefits of any other plan, which, under the rules of this rule, has its benefits determined before those of that secondary plan. 4.2.
4.2.a. Except as provided in subdivision b of this subsection, a plan that does not contain an order of benefit determination provisions that are consistent with this rule is always the primary plan unless the provisions of both plans, regardless of the provisions of this paragraph, state that the complying plan is primary.
4.2.b. Coverage that is obtained by virtue of membership in a group and designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance type coverages that are written in connection with a closed panel plan to provide out-of-network benefits.
4.3. A plan may take into consideration the benefits paid or provided by another plan only when, under this rule, it is secondary to that other plan.
4.4. Order of Benefit Determination. Each plan determines its order of benefits using the first of the following rules that applies:
4.4.a. Non-Dependent or Dependent
4.4.a.1. Subject to paragraph 2 of this subdivision, the plan that covers the person other than as a dependent, for example as an employee, member or subscriber, policyholder or retiree, is the primary plan and the plan that covers the person as a dependent is the secondary plan. 4.4.a.2.
4.4.a.2.A. If the person is a Medicare beneficiary, and, as a result of the provisions of Title XVIII of the Social Security Act and implementing rules, Medicare is:
4.4.a.2.A.1. Secondary to the plan covering the person as a dependent; and
4.4.a.2.A.2. Primary to the plan covering the person as other than a dependent (e.g. a retired employee).
4.4.a.2.B. Then the order of benefits is reversed so that the plan covering the person as an employee member, subscriber, policyholder or retiree is the secondary plan and the other plan covering the person as a dependent is the primary plan.
4.4.b. Dependent Child Covered Under More Than One Plan. Unless there is a court decree stating otherwise, plans covering a dependent child shall determine the order of benefits as follows:
4.4.b.1. For a dependent child whose parents are married or are living together, whether or not they have ever been married:
4.4.b.1.A. The of the parent whose birthday falls earlier in a calendar year is the primary plan; or
4.4.b.1.B. If both parents have the same birthday, the plan that has covered the parent longest is the primary plan.
4.4.b.2. For a dependent child whose parents are divorced or separated or are not living together, whether or not they have ever been married:
4.4.b.2.A. If a court decree states that one of the parents is responsible for the dependent child’s health care expenses or health care coverage and the plan of that parent has actual knowledge of those terms, that plan is primary. If the parent with responsibility has no health care coverage for the dependent child’s health care expenses, but that parent’s spouse does, that parent’s spouse’s plan is the primary plan. This item shall not apply with respect to any plan year during which benefits are paid or provided before the entity has actual knowledge of this court decree provision;
4.4.b.2.B. If a court decree states that both parents are responsible for the dependent child’s health care expenses or health care coverage, the provisions of subparagraph A of this paragraph shall determine the order of benefits;
4.4.b.2.C. If a court decree states that the parents have joint custody without specifying that one parent has responsibility for the health care expenses or health care coverage of the dependent, the provisions of subparagraph A of this paragraph shall determine the order of benefits; or
4.4.b.2.D. If there is no court decree allocating responsibility for the child’s health care expenses or health care coverage, the order of benefits are as follows:
4.4.b.2.D.1. The plan covering the parent with custody of the child;
4.4.b.2.D.2. The plan covering the spouse of the parent with the custody of the child;
4.4.b.2.D.3. The plan covering the parent not having custody of the child; and
4.4.b.2.D.4. The plan covering the spouse of the parent not having custody of the child.
4.4.c. Active Employee or Retired or Laid-Off Employee. The plan that covers a person as an active employee who is neither laid off nor retired (or as that employee's dependent) is the primary plan. The plan covering that same person as a retired or laid-off employee or as a dependent of a retired or laid-off employee is the secondary plan. If the other plan does not have this rule; and as a result, the plans do not agree on the order of benefits, this rule is ignored. This rule does not apply if the rule in subdivision a of this subsection can determine the order of benefits.
4.4.d. COBRA or State Continuation Coverage
4.4.d.1. If a person whose coverage is provided pursuant to COBRA or under a right of continuation pursuant to state or other federal law is covered under another plan, the plan covering the person as an employee, member, subscriber or retiree or covering the person as a dependent of an employee, member, subscriber or retiree is the primary plan and the plan covering that same person pursuant to COBRA or under a right of continuation pursuant to state or other federal law is the secondary plan.
4.4.d.2. If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this rule is ignored.
4.4.d.3. This rule does not apply if the rule in paragraph 1 can determine the order of benefits.
4.4.e. Longer or Shorter Length of Coverage.
4.4.e.1. If the preceding rules do not determine the order of benefits, the plan which covered the person for the longer period of time is the primary plan and the plan which covered the person for the shorter period of time is the secondary plan.
4.4.e.2. To determine the length of time a person has been covered under a plan, two successive plans shall be treated as one if the covered person was eligible under the second within twenty-four (24) hours after coverage under the first plan ended.
4.4.e.3. The start of a new plan does not include:
4.4.e.3.A. A change in the amount or scope of a plan's benefits;
4.4.e.3.B. A change in the entity that pays, provides or administers the plan's benefits; or
4.4.e.3.C. A change from one type of plan to another (such as, from a single employer plan to that of a multiple employer plan).
4.4.e.4. The person’s length of time covered under a plan is measured from the person’s first date of coverage under that plan. If that date is not readily available for a group plan, the date the person first became a member of the group shall be used as the date from which to determine the length of time the person’s coverage under the present plan has been in force.
4.4.f. If none of the preceding rules determines the order of benefits, the allowable expenses shall be shared equally between the plans.
W. Va. Code R. § 114-28-5 Procedure to be Followed by Secondary Plan to Calculate Benefits and Pay a Claim
5.1. In determining the amount to be paid by the secondary plan on a claim, should the plan wish to coordinate benefits, the secondary plan shall calculate the benefits it would have paid on the claim in the absence of other health care coverage and apply that calculated amount to any allowable expense under its plan that is unpaid by the primary plan. The secondary plan may reduce its payment by the amount so that, when combined with the amount paid by the primary plan, the total benefits paid or provided by all plans for the claim do not exceed one-hundred percent (100%) of the total allowable expense for that claim. In addition, the secondary plan shall credit to its plan deductible any amounts it would have credited to its deductible in the absence of other health care coverage.
W. Va. Code R. § 114-28-6 Notice to Covered Persons
6.1. A plan shall in its explanation of benefits provided to covered persons, include the following language: "If you are covered by more than one health benefit plan, you should file all your claims with each plan." Upon request of a plan, the Commissioner may approve an alternative method of communicating this notice to covered persons.
W. Va. Code R. § 114-28-7 Miscellaneous Provisions
7.1. A Secondary Plan that provides benefits in the form of services may recover the reasonable cash value of the services from the Primary Plan, to the extent that benefits for the services are covered by the Primary Plan and have not already been paid or provided by the Primary Plan. Nothing in this provision shall be interpreted to require a plan to reimburse a covered person in cash for the value of services provided by a plan which provides benefits in the form of services. 7.2.
7.2.a. A plan with order of benefit determination rules that comply with this rule (Complying Plan) may coordinate its benefits with a plan that is "excess" or "always secondary" or that uses order of benefit determination rules that are inconsistent with those contained in this rule (Noncomplying Plan) on the following basis:
7.2.a.1. If the Complying Plan is the Primary Plan, it shall pay or provide its benefits first;
7.2.a.2. If the Complying Plan is the Secondary Plan, it shall pay or provide its benefits first, but the amount of the benefits payable shall be determined as if the Complying Plan were the Secondary Plan. In such a situation, the payment shall be the limit of the Complying Plan's liability; and
7.2.a.3. If the Noncomplying Plan does not provide the information needed by the Complying Plan to determine its benefits within a reasonable time after it is requested to do so, the Complying Plan shall assume that the benefits of the Noncomplying Plan are identical to its own, and shall pay its benefits accordingly. If, within two (2) years of payment, the complying plan receives information as to the actual benefits of the non-complying plan, it shall adjust payments accordingly.
7.2.b. If the Noncomplying Plan reduces its benefits so that the covered person receives less in benefits than the covered person would have received had the Complying Plan paid or provided its benefits as the Secondary Plan and the Noncomplying Plan paid or provided its benefits as the Primary Plan, and governing State law allows the right of subrogation set forth below, then the Complying Plan shall advance to the covered person or on behalf of the covered person an amount equal to the difference.
7.2.c. In no event shall the Complying Plan advance more than the Complying Plan would have paid had it been the Primary Plan less any amount it previously paid for the same expense or service. In consideration of the advance, the Complying Plan shall be subrogated to all rights of the covered person against the Noncomplying Plan. The advance by the Complying Plan shall also be without prejudice to any claim it may have against the Noncomplying Plan in the absence of such subrogation.
7.3. COB differs from that of subrogation. Provisions for one may be included in health care benefits contracts without compelling the inclusion or exclusion of the other.
7.4. If the plans cannot agree on the order of benefits within thirty (30) calendar days after the plans have received all of the information needed to pay the claim, the plans shall immediately pay the claim in equal shares and determine their relative liabilities following payment, except that no plan shall be required to pay more than it would have paid had it been the primary plan.
APPENDIX A
MODEL COB PROVISIONS
COORDINATION OF THIS CONTRACT'S BENEFITS WITH OTHER BENEFITS
I. APPLICABILITY
A. The Coordination of Benefits ("COB") provision applies when a person has health care coverage under more than one plan. "Plan" is defined below.
B. The order of benefit determination rules govern the order in which each plan will pay a claim for benefits. The plan that pays first is called the primary plan. The primary plan must pay benefits in accordance with its policy terms without regard to the possibility that another plan may cover some expenses. The plan that pays after the primary plan is the secondary plan. The secondary plan may reduce the benefits it pays so that payments from all plans do not exceed one-hundred percent (100%) of the total allowable expense.
II. DEFINITIONS
A. "Plan" is any of these which provides benefits or services for, medical or dental care or treatment. If separate contracts are used to provide coordinated coverage for members of a group, the separate contracts are considered parts of the same plan and there is no COB among those separate contracts:
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"Plan" includes group and nongroup insurance contracts, health maintenance organization (HMO) contracts, closed panel plans or other forms of group or group-type coverage, whether insured or uninsured. "Plan" also includes medical care components of long-term care contracts, such as skilled nursing care, medical benefits under group or individual automobile contracts and Medicare or any other federal governmental plan, as permitted by law.
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"Plan" does not include hospital indemnity coverage or other fixed indemnity coverage, accident only coverage, specified disease or specified accident coverage, limited benefit health coverage, school accident type coverage, benefits for non-medical components of long-term care policies, Medicare supplement policies, Medicaid policies, or coverage under other federal governmental plans, unless permitted by law.
B. "This Plan" means, in a COB provision, the part of the contract providing the health care benefits to which the COB provision applies and which may be reduced because of the benefits of other plans. Any other part of the contract providing health care benefits is separate from this plan. A contract may apply one COB provision to certain benefits, such as dental benefits, coordinating only with similar benefits, and may apply another COB provision to coordinate other benefits.
C. The order of benefit determination rules state whether this plan is a primary plan or a secondary plan when the person has health care coverage under more than one plan.
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When this plan is a primary plan, its benefits are determined before those of the other plan and without considering the other plan's benefits.
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When this plan is a secondary plan, its benefits are determined after those of the other plan and may be reduced because of the other plan's benefits and may reduce the benefits it pays so that all plan benefits do not exceed one-hundred percent (100%) of the total allowable expense.
D. "Allowable Expense" is a health care expense, including deductibles, coinsurance and copayments, that is covered at least in part by a plan covering the person. When a plan provides benefits in the form of services, the reasonable cash value of each service will be considered an allowable expense and a benefit paid. An expense that is not covered by any plan covering the person is not an allowable expense. In addition, any expense that a provider by law or in accordance with a contractual agreement is prohibited from charging a covered person is not an allowable expense.
- The following are examples of expenses that are not allowable expenses:
(a) The difference between the cost of a private hospital room and the cost of a semi-private hospital room is not an allowable expense unless one of the plans provides coverage for private hospital room expenses.
(b) If a person is covered by two (2) or more plans that compute their benefit payments on the basis of usual and customary fees or relative value schedule reimbursement methodology or other similar reimbursement methodology, any amount in excess of the highest reimbursement amount for a specific benefit is not an allowable expense.
(c) If a person is covered by two (2) or more plans that provide benefit payment on the basis of negotiated fees, an amount in excess of the highest of the negotiated fees is not an allowable expense.
(d) If a person is covered by one plan that calculates its benefits or services on the basis of usual and customary fees or relative value schedule reimbursement methodology or other similar reimbursement methodology and another plan that provides its benefits or services on the basis of negotiated fees, the primary plan’s payment arrangement shall be the allowable expense for all plans. However, if the provider has contracted with the secondary plan to provide the benefit or service for a specific negotiated fee or payment amount that is different than the primary plan’s payment arrangement and if the provider’s contract permits, the negotiated fee or payment shall be the allowable expense used by the secondary plan to determine its benefits.
(e) The amount of any benefit reduction by the primary plan because a covered person has failed to comply with the plan provisions is not an allowable expense. Examples of these types of plan provisions include second surgical opinions, precertification of admissions, and preferred provider arrangements.
E. "Closed Panel Plan" is a plan that provides health care benefits to covered persons primarily in the form of services through a panel of providers that have contracted with or are employed by the plan, and that excludes coverage for services provided by other providers, except in cases of emergency or referral by a panel member.
F. "Custodial parent" is the parent awarded custody by a court decree or, in the absence of a court decree, is the parent with whom the child resides more than one half of the calendar year excluding any temporary visitation.
III. ORDER OF BENEFIT DETERMINATION RULES
When a person is covered by two or more plans, the rules for determining the order of benefit payments are as follows:
A. The primary plan pays or provides its benefits according to its terms of coverage and without regard to the benefits under any other plan.
B.
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Except as provided in paragraph (2) below, a plan that does not contain a coordination of benefits that is consistent with this rule is always primary unless the provisions of both plans state that the complying plan is primary.
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Coverage that is obtained by virtue of membership in a group that is designed to supplement a part of a basic package of benefits and provides that this supplementary coverage shall be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance type coverage that are written in connection with a closed panel plan to provide out-of-network benefits.
C. A plan may consider the benefits paid or provided by another plan in calculation payment of its benefits only with it is secondary to that other plan.
D. Each plan determines its order of benefits using the first of the following rules that apply:
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Non-Dependent/Dependent. The plan which covers the person other than as dependent, for example as an employee, member, policyholder, subscriber or retiree is the primary plan and the plan that covers the person as a dependent is the secondary plan. However, if the person is a Medicare beneficiary and, as a result of federal law, Medicare is secondary to the plan covering the person as a dependent; and primary to the plan covering the person as other than a dependent (e.g. a retired employee); then the order of benefits between the two plans is reversed so that the plan covering the person as an employee, member, policyholder, subscriber or retiree is the secondary plan and the other plan is the primary plan.
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Dependent Child Covered Under More Than One Plan. Unless there is a court decree stating otherwise, when a dependent child is covered by more than one plan the order of benefits is determined as follows:
(a) For a dependent child whose parents are married or are living together, whether or not they have ever been married:
(1) The plan of the parent whose birthday falls earlier in a calendar year is the primary plan; or (2) If both parents have the same birthday, the plan that has covered the parent longest is the primary plan.
(b) For a dependent child whose parents are divorced or separated or not living together, whether or not they have ever been married:
(1) If there is no court decree allocating responsibility for the dependent child’s health care expenses or health care coverage, the order of benefits for the child are as follows:
(i) The plan of the parent with custody of the child;
(ii) The plan of the spouse of the parent with the custody of the child;
(iii) The plan of the parent not having custody of the child; and (iv) The plan of the spouse of the parent not having custody of the child;
(2) If the specific terms of a court decree state that one of the parents is responsible for the health care expenses of the dependent child, and the plan of that parent has actual knowledge of those terms, that plan is primary. This rule applies to plan years commencing after the plan is given notice of the court decree;
(3) If a court decree states that both parents are responsible for the dependent child’s health care expenses or health care coverage, the provisions of (a) above shall determine the order of benefits.
(4) If the court decree states that the parents have joint custody, without stating that one of the parents is responsible for the health care expenses of the dependent child, the provisions of (a) above shall determine the order of benefits.
(c) For a dependent child covered under more than one plan of individuals who are not the parents of the child, the provisions of (a) or (b) above shall determine the order of benefits as if those individuals were the parents of the child.
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Active Employees or Retired or Laid-Off Employee. The plan that covers a person as an active employee, that is, an employee who is neither laid off nor retired is the primary plan. The plan covering that same person as a retired or laid-off employee is the secondary plan. The same would hold true if a person is a dependent of an active employee and that same person is a dependent of a retired or laid-off employee. If the other plan does not have this rule, and as a result, the plans do not agree this rule is ignored. This rule does not apply if the rule labeled D(1) of this section can determine the order of benefits.
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COBRA or State Continuation Coverage. If a person whose coverage is provided pursuant to COBRA or under a right of continuation provided by state or other federal law is covered under another plan, the plan covering the person as an employee, member, subscriber or retiree or covering the person as a dependent of an employee member, subscriber or retiree is the primary plan and the COBRA or state or other federal continuation coverage is the secondary plan. If the other plans do not have this rule, and as a result, the plans do not agree on the order of benefits this rule is ignored. This rule does not apply if the rule labeled D(1) of this section can determine the order of benefits.
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Longer or Shorter Length of Coverage. The plan which that covered a person as an employee, member, subscriber or retiree longer is the primary plan and the plan which covered that person for the shorter period of time is the secondary plan.
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If the preceding rules do not determine the order of benefits, the allowable expenses shall be shared equally between the plans meeting the definition of plan. In addition, this plan will not pay more than it would have paid had it been the primary plan.
IV. EFFECT ON THE BENEFITS OF THIS PLAN
When this plan is secondary, it may reduce its benefits so that the total benefits paid or provided by all plans during a plan year are not more than the total allowable expenses. In determining the amount to be paid for any claim, the secondary plan will calculate the benefits it would have paid in the absence of another health care coverage and apply that calculated amount to any allowable expense under its plan that is unpaid by the primary plan. The secondary plan may then reduce its payment by the amount so that, when combined with the amount paid by the primary plan, the total benefits paid or provided by all plans for the claim do not exceed the total allowable expense for that claim. It addition, the secondary plan shall credit to its plan deductible any amounts it would have credited to its deductible in the absence of other health care coverage.
V. RIGHT TO RECEIVE AND RELEASE NEEDED INFORMATION
Certain facts about health care coverage are needed to apply these COB rules and to determine benefits payable under this plan and other plans. [Organization responsible for COB administration] may get needed facts from or give them to any other organization or person to the extent reasonably necessary to apply these rules and to determine benefits payable under this plan and other plans covering the person claiming benefits. [Organization responsible for COB administration] need not tell, or get the consent of, any person to do this. Each person claiming benefits under this plan must give [Organization responsible for COB administration] any facts it needs to apply those rules and determine benefits payable.
VI. FACILITY OF PAYMENT
A payment made under another plan may include an amount that should have been paid under this plan. If it does, [Organization responsible for COB administration] may pay that amount to the organization that made that payment. That amount will then be treated as though it were a benefit paid under this plan. [Organization responsible for COB administration] will not have to pay that amount again. The term "payment made" includes providing benefits in the form of services, in which case "payment made" means reasonable cash value of the benefits provided in the form of services.
VII. RIGHT OF RECOVERY
If the amount of the payments made by [Organization responsible for COB administration] is more than it should have paid under this COB provision, it may recover the excess from one or more of the persons it has paid or for whom it has paid; or any other person or organization that may be responsible for the benefits or services provided for the covered person.
The "amount of the payments made" includes the reasonable cash value of any benefits provided in the form of services.
APPENDIX B
CONSUMER EXPLANATORY BOOKLET
COORDINATION OF BENEFITS
IMPORTANT NOTICE
This is a summary of only a few of the provisions of your health plan to help you understand coordination of benefits, which can be very complicated. This is not a complete description of all of the coordination rules and procedures, and does not change or replace the language contained in your insurance contract, which determines your benefits.
Double Coverage It is common for family members to be covered by more than one health care plan. This happens, for example, when a husband and wife both work and choose to have family coverage through both employers.
When you are covered by more than one health plan, state law permits your insurers to follow a procedure called "coordination of benefits" to determine how much each should pay when you have a claim. The goal is to make sure that the combined payments of all plans do not add up to more than your covered health care expenses.
Coordination of benefits (COB) is complicated, and covers a wide variety of circumstances. This is only an outline of some of the most common ones. If your situation is not described, read your evidence of coverage or contact your state insurance department.
Primary or Secondary?
You will be asked to identify all the plans that cover members of your family. We need this information to determine whether we are the "primary" or "secondary" benefit payer. The primary plan always pays first when you have a claim.
Any plan that does not contain your state’s COB rules will always be primary.
When This Plan is Primary If you or a family member are covered under another plan in addition to this one, we will be primary when:
Your Own Expenses The claim is for your own health care expenses, unless you are covered by Medicare and both you and your spouse are retired.
Your Spouse’s Expenses The claim is for your spouse, who is covered by Medicare, and you are not both retired.
Your Child’s Expenses The claim is for the health care expenses of your child who is covered by this plan and You are married and your birthday is earlier in the year than your spouse’s or you are living with another individual, regardless of whether or not you have ever been married to that individual, and your birthday is earlier than that other individual’s birthday. This is known as the "birthday rule"; or You are separated or divorced and you have informed us of a court decree that makes you responsible for the child’s health care expenses; or There is no court decree, but you have custody of the child.
Other Situations We will be primary when any other provisions of state or federal law require us to be.
How We Pay Claims When We Are Primary When we are the primary plan, we will pay the benefits in accordance with the terms of your contract, just as if you had no other health care coverage under any other plan.
How We Pay Claims When We Are Secondary We will be secondary whenever the rules do not require us to be primary.
How We Pay Claims When We Are Secondary When we are the secondary plan, we do not pay until after the primary plan has paid its benefits. We will then pay part or all of the allowable expenses left unpaid, as explained below. An "allowable expense" is a health care expense covered by one of the plans, including copayments, coinsurance and deductibles.
If there is a difference between the amount the plans allow, we will base our payment on the higher amount. However, if the primary plan has a contract with the provider, our combined payments will not be more than the amount called for in our contract or the amount called for in the contract of the primary plan, whichever is higher. Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) usually have contracts with their providers.
We will determine our payment by subtracting the amount the primary plan paid from the amount we would have paid if we had been primary. We may reduce our payment by any amount so that, when combined with the amount paid by the primary plan, the total benefits paid do not exceed the total allowable expense for your claim. We will credit any amount we would have paid in the absence of your other health care coverage toward our own plan deductible.
If the primary plan covers similar kinds of health care expenses, but allows expenses that we do not cover, we may pay for those expenses.
We will not pay an amount the primary plan did not cover because you did not follow its rules and procedures. For example, if your plan has reduced its benefit because you did not obtain pre-certification, as required by that plan, we will not pay the amount of the reduction, because it is not an allowable expense.
Questions About Coordination of Benefits?
Contact Your State Insurance Department 114CSR28 114CSR28
Series 30 "Tail" Malpractice Insurance Covering Certain Medical And Allied Health Care Providers
W. Va. Code R. § 114-30-1 General
1.1. Scope. -- This legislative rule provides for premium payment amortization, under certain circumstances specified in the rule, for "tail" professional malpractice insurance covering medical physicians, osteopathic physicians, podiatrists, chiropractors, dentists, midwives nurse practitioners and hospitals.
1.2. Authority. -- W. Va. Code §§33-20D-4, 33-2-10.
1.3. Filing Date. -- April 3, 2003.
1.4. Effective Date. -- April 3, 2003.
W. Va. Code R. § 114-30-2 Definitions
As used in this legislative rule:
2.1. "'Claims made' malpractice insurance" means a policy which covers claims which are reported during the policy period, meet the provisions specified by the policy, and are for an incident which occurred during the policy period, or occurred prior to the policy period, as is specified by the policy.
2.2. "Commissioner" means the Insurance Commissioner of the State of West Virginia.
2.3. "'Tail' insurance" means insurance which covers a professional insured once a "claims made" malpractice insurance policy is cancelled, not renewed or terminated and covers claims made after such cancellation or termination for acts occurring during the period the prior malpractice insurance was in effect.
W. Va. Code R. § 114-30-3 Applicability
This rule applies to premium payment amortization for "tail" malpractice insurance offered to the medical and allied health care providers enumerated in subsection 1.1 herein whose prior "claims made" malpractice insurance policy had been in effect for at least sixty (60) days: Provided, That each quarterly amortized premium paid pursuant to this rule shall not be less than seven hundred fifty dollars ($750.00).
W. Va. Code R. § 114-30-4 "Tail" Insurance Offer Mandated
4.1. Upon cancellation, nonrenewal or termination of any "claims made" professional malpractice insurance policy to which this rule is applicable as set forth in section 3 herein, the insurer shall offer to the insured "tail" insurance coverage.
4.2. Such offer of "tail" insurance shall expire forty-five (45) days after the cancellation, nonrenewal, expiration or other termination of the insured's "claims made" professional malpractice insurance policy, unless the "tail" insurance offer is accepted sooner, in writing, by the insured.
W. Va. Code R. § 114-30-5 Premium Payment Amortization
5.1. Upon cancellation, nonrenewal or termination of any "claims made" professional malpractice insurance policy to which this rule is applicable, the insurer shall offer to any eligible professional who is licensed and practicing in the state of West Virginia, or who, prior to retirement, last practiced in the state of West Virginia, the opportunity to amortize the payment of quarterly premiums for "tail" insurance over twelve (12), twenty-four (24) or thirty-six (36) months.
5.2. Such quarterly premium payments for "tail" insurance shall be amortized at a per annum rate of interest equal to two (2) percentage points above the prime interest rate reported in the Wall Street Journal on the date when the insurer or its agent receives the insured's written request to purchase "tail" insurance, or on the next publication date of the Wall Street Journal following the effective date of the "tail" insurance policy if the Wall Street Journal is not published on the date when the insurer or its agent receives the insured's written request to purchase "tail" insurance.
5.3. The insured shall not be entitled to pay amortized premiums pursuant to this rule unless each quarterly premium payment, as computed applying the amortization rate set forth in subsection 5.2, equals at least seven hundred fifty dollars ($750.00).
W. Va. Code R. § 114-30-6 Premium Due Dates; Acceleration of Premium Due upon Payment Default
6.1. The first quarterly payment due for "tail" insurance pursuant to this rule shall be payable contemporaneously with the issuance of the "tail" insurance policy. Subsequent payments shall be due and payable quarterly thereafter.
6.2. In the event of the insured's default in making a premium payment when due, the insurer shall notify the insured by certified mail that the entire balance is due and payable in full within 30 days of receipt of said notice. If the entire balance is not timely paid in full, the "tail" insurance coverage limits shall be determined in accordance with the plan filed by the carrier and approved by the commissioner.
W. Va. Code R. § 114-30-7 Penalty for Insurer's Non-Compliance
Any professional malpractice insurer subject to the provisions of this rule that fails to offer "tail" insurance to an eligible insured, or that violates in any way the provisions of article 20D, chapter 33 of the West Virginia code, shall be assessed a penalty by the commissioner equal to the total amount of premium due for the "tail" insurance that the insurer is required to offer.
W. Va. Code R. § 114-30-8 Separability
If any provision of this rule or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of such provisions to other persons or circumstances shall not be affected thereby.
114CSR30
114CSR30
Series 32 Long-Term Care Insurance
W. Va. Code R. § 114-32-1 General
1.1. Scope. -- The purpose of this rule is to implement W. Va. Code §33-15A-1 et seq., to promote the public interest, to promote the availability of long-term care insurance coverage, to protect applicants for long-term care insurance, as defined, from unfair or deceptive sales or enrollment practices, to facilitate public understanding and comparison of long-term care insurance coverages, and to facilitate flexibility and innovation in the development of long-term care insurance. This rule is based on the National Association of Insurance Commissioners’ (“NAIC”) “Long-Term Care Insurance Model Regulation” (Model 641), as amended in 2009.
Except as otherwise specifically provided, this rule applies to all long-term care insurance policies including qualified long-term care contracts and life insurance policies that accelerate benefits for long-term care delivered or issued for delivery in this state on or after the effective date hereof, by insurers; fraternal benefit societies; nonprofit health, hospital and medical service corporations; prepaid health plans; health maintenance organizations and all similar organizations. Certain provisions of this rule apply only to qualified long-term care insurance contracts as noted.
Additionally, this rule is intended to apply to policies having indemnity benefits that are triggered by activities of daily living and sold as disability income insurance, if:
1.1.a. The benefits of the disability income policy are dependent upon or vary in amount based on the receipt of long-term care services;
1.1.b. The disability income policy is advertised, marketed or offered as insurance for long-term care services; or
1.1.c. Benefits under the policy may commence after the policyholder has reached Social Security's normal retirement age unless benefits are designed to replace lost income or pay for specific expenses other than long-term care services.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-15A-6.
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- July 1, 2011.
W. Va. Code R. § 114-32-2 Definitions
For the purpose of this rule the terms “long-term care insurance,” “qualified long-term care insurance,” “group long-term care insurance,” “Commissioner,” “applicant,” “policy” and “certificate” shall have the meanings set forth in W. Va. Code §33-15A-4. In addition, the following definitions apply.
2.1. “Benefit trigger”, for the purposes of independent review, means a contractual provision in the insured's policy of long-term care insurance conditioning the payment of benefits on a determination of the insured's ability to perform activities of daily living and on cognitive impairment. For purposes of a tax-qualified long-term care insurance contract, as defined in section 7702B of the Internal Revenue Code of 1986, as amended, "benefit trigger" shall include a determination by a licensed health care practitioner that an insured is a chronically ill individual.
2.2. “Exceptional increase” means only those increases filed by an insurer as exceptional for which the Commissioner determines the need for the premium rate increase is justified:
2.2.a. Due to changes in laws or regulations applicable to long-term care coverage in this state; or
2.2.b. Due to increased and unexpected utilization that affects the majority of insurers of similar products.
2.3. “Incidental,” as used in subsection 18.10 of this rule, means that the value of the long-term care benefits provided is less than ten percent (10%) of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue.
2.4. “Independent review organization” means an organization that conducts independent reviews of long-term care benefit trigger decisions.
2.5. “Licensed health care professional” means an individual qualified by education and experience in an appropriate field, to determine, by record review, an insured's actual functional or cognitive impairment.
2.6. “Qualified actuary” means a member in good standing of the American Academy of Actuaries.
2.7. “Similar policy forms” means all of the long-term care insurance policies and certificates issued by an insurer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in W. Va. Code §33-15A-4(e)(1) are not considered similar to certificates or policies otherwise issued as long-term care insurance, but are similar to other comparable certificates with the same long-term care benefit classifications. For purposes of determining similar policy forms, long-term care benefit classifications are defined as follows: institutional long-term care benefits only, non-institutional long-term care benefits only, or comprehensive long-term care benefits.
W. Va. Code R. § 114-32-3 Policy Definitions
No long-term care insurance policy delivered or issued for delivery in this state shall use the terms set forth below, unless the terms are defined in the policy and the definitions satisfy the following requirements:
3.1. “Activities of daily living” means at least bathing, continence, dressing, eating, toileting and transferring.
3.2. “Acute condition” means that the individual is medically unstable. Such an individual requires frequent monitoring by medical professionals, such as physicians and registered nurses, in order to maintain his or her health status.
3.3. “Adult day care” means a program for six (6) or more individuals, of social and health-related services provided during the day in a community group setting for the purpose of supporting frail, impaired elderly or other disabled adults who can benefit from care in a group setting outside the home.
3.4. “Bathing” means washing oneself by sponge bath; or in either a tub or shower, including the task of getting into or out of the tub or shower.
3.5. “Cognitive impairment” means a deficiency in a person's short or long-term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.
3.6. “Continence” means the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag).
3.7. “Dressing” means putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.
3.8. “Eating” means feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously.
3.9. “Hands-on assistance” means physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activity of daily living.
3.10. “Home health care services” means medical and nonmedical services, provided to ill, disabled or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily living and respite care services.
3.11. “Medicare” means “The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended,” or “Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof,” or words of similar import.
3.12. “Mental or nervous disorder” shall not be defined to include more than neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder.
3.13. “Personal care” means the provision of hands-on services to assist an individual with activities of daily living.
3.14. “Skilled nursing care,” “intermediate care,” “personal care,” “home care,” “specialized care,” “assisted living care” and other services shall be defined in relation to the level of skill required, the nature of the care and the setting in which care must be delivered.
3.15. “Toileting” means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.
3.16. “Transferring” means moving into or out of a bed, chair or wheelchair.
3.17. All providers of services, including but not limited to “skilled nursing facility,” “extended care facility,” “intermediate care facility,” “convalescent nursing home,” “personal care facility,” “specialized care providers,” “assisted living facility,” and “home care agency” shall be defined in relation to the services and facilities required to be available and the licensure certification, registration or degree status of those providing or supervising the services. When the definition requires that the provider be appropriately licensed, certified or registered, it shall also state what requirements a provider must meet in lieu of licensure, certification or registration when the state in which the service is to be furnished does not require a provider of these services to be licensed, certified or registered, or when the state licenses, certifies or registers the provider of services under another name.
W. Va. Code R. § 114-32-4 Policy Practices and Provisions
4.1. Renewability -- The terms “guaranteed renewable” and “noncancellable” shall not be used in any individual long-term care insurance policy without further explanatory language in accordance with the disclosure requirements of section 6 of this rule.
4.1.a. A policy issued to an individual shall not contain renewal provisions other than “guaranteed renewable” or “noncancellable.”
4.1.b. The term “guaranteed renewable” may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and when the insurer has no unilateral right to make any change in any provision of the policy or rider while the insurance is in force, and cannot decline to renew, except that rates may be revised by the insurer on a class basis.
4.1.c. The term “noncancellable” may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the insurer has no right to unilaterally make any change in any provision of the insurance or in the premium rate.
4.1.d. The term “level premium” may only be used when the insurer does not have the right to change the premium.
4.1.e. In addition to the other requirements of this subsection, a qualified long-term care insurance contract shall be guaranteed renewable, within the meaning of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended.
4.2. Limitations and Exclusions. -- A policy may not be delivered or issued for delivery in this state as long-term care insurance if the policy limits or excludes coverage by type of illness, treatment, medical condition or accident, except as follows:
4.2.a. Preexisting conditions or diseases;
4.2.b. Mental or nervous disorders; however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer's disease;
4.2.c. Alcoholism and drug addiction;
4.2.d. Illness, treatment or medical condition arising out of:
4.2.d.1. War or act of war (whether declared or undeclared);
4.2.d.2. Participation in a felony, riot or insurrection;
4.2.d.3. Service in the armed forces or units auxiliary thereto;
4.2.d.4. Suicide (sane or insane), attempted suicide or intentionally self-inflicted injury; or
4.2.d.5. Aviation (this exclusion applies only to non-fare-paying passengers).
4.2.e. Treatment provided in a government facility (unless otherwise required by law), services for which benefits are available under Medicare or other governmental program (except Medicaid), any state or federal workers' compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law, services provided by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance;
4.2.f. Expenses for services or items available or paid under another long-term care insurance or health insurance policy;
4.2.g. In the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act (Medicare) or would be reimbursable but for the application of a deductible or coinsurance amount. 4.2.h.
4.2.h.1. This subsection is not intended to prohibit exclusions and limitations by type of provider. However, no long-term care issuer may deny a claim because services are provided in a state other than the state of policy issued under the following conditions:
4.2.h.1.A. When the state other than the state of policy issue does not have the provider licensing, certification or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification or registration; or
4.2.h.1.B. When the state other than the state of policy issue licenses, certifies or registers the provider under another name.
4.2.h.2. For purposes of this subdivision, “state of policy issue” means the state in which the individual policy or certificate was originally issued.
4.2.i. This subsection is not intended to prohibit territorial limitations.
4.3. Extension of Benefits. -- Termination of long-term care insurance shall be without prejudice to any benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. The extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits and may be subject to any policy waiting period, and all other applicable provisions of the policy.
4.4. Continuation or Conversion.
4.4.a. Group long-term care insurance issued in this state on or after the effective date of this section shall provide covered individuals with a basis for continuation or conversion of coverage.
4.4.b. For the purposes of this section, “a basis for continuation of coverage” means a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate and which is subject only to the continued timely payment of premium when due. Group policies that restrict provision of benefits and services to, or contain incentives to use certain providers or facilities may provide continuation benefits that are substantially equivalent to the benefits of the existing group policy. The Commissioner shall make a determination as to the substantial equivalency of benefits, and in doing so, shall take into consideration the differences between managed care and non-managed care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity.
4.4.c. For the purposes of this section, “a basis for conversion of coverage” means a policy provision that an individual whose coverage under the group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy (and any group policy which it replaced), for at least six (6) months immediately prior to termination, shall be entitled to the issuance of a converted policy by the insurer under whose group policy he or she is covered, without evidence of insurability.
4.4.d. For the purposes of this section, “converted policy” means an individual policy of long-term care insurance providing benefits identical to or benefits determined by the Commissioner to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made. Where the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use certain providers or facilities, the Commissioner, in making a determination as to the substantial equivalency of benefits, shall take into consideration the differences between managed care and non-managed care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity.
4.4.e. Written application for the converted policy shall be made and the first premium due, if any, shall be paid as directed by the insurer not later than thirty-one (31) days after termination of coverage under the group policy. The converted policy shall be issued effective on the day following the termination of coverage under the group policy, and shall be renewable annually.
4.4.f. Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. Where the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy replaced.
4.4.g. Continuation of coverage or issuance of a converted policy shall be mandatory, except where:
4.4.g.1. Termination of group coverage resulted from an individual's failure to make any required payment of premium or contribution when due; or
4.4.g.2. The terminating coverage is replaced not later than thirty-one (31) days after termination, by group coverage effective on the day following the termination of coverage:
4.4.g.2.A. Providing benefits identical to or benefits determined by the Commissioner to be substantially equivalent to or in excess of those provided by the terminating coverage; and
4.4.g.2.B. The premium for which is calculated in a manner consistent with the requirements of subdivision f of this subsection.
4.4.h. Notwithstanding any other provision of this section, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy that provides benefits on the basis of incurred expenses, may contain a provision that results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100 percent (100%) of incurred expenses. The provision shall only be included in the converted policy if the converted policy also provides for a premium decrease or refund which reflects the reduction in benefits payable.
4.4.i. The converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, shall not exceed those that would have been payable had the individual's coverage under the group policy remained in force and effect.
4.4.j. Notwithstanding any other provision of this section, an insured individual whose eligibility for group long-term care coverage is based upon his or her relationship to another person, shall be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage.
4.4.k. For the purposes of this section, a “Managed-Care Plan” is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management or use of specific provider networks.
4.5. Discontinuance and Replacement. -- If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the insurer and premiums charged to persons under the new group policy:
4.5.a. Shall not result in an exclusion for preexisting conditions that would have been covered under the group policy being replaced; and
4.5.b. Shall not vary or otherwise depend on the individual's health or disability status, claim experience or use of long-term care services. 4.6.
4.6.a. The premium charged to an insured shall not increase due to either:
4.6.a.1. The increasing age of the insured at ages beyond sixty-five (65); or
4.6.a.2. The duration the insured has been covered under the policy.
4.6.b. The purchase of additional coverage shall not be considered a premium rate increase, but for purposes of the calculation required under section 24 of this rule, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.
4.6.c. A reduction in benefits shall not be considered a premium change, but for purpose of the calculation required under section 24 of this rule, the initial annual premium shall be based on the reduced benefits.
W. Va. Code R. § 114-32-5 Unintentional Lapse
Each insurer offering long-term care insurance shall, as a protection against unintentional lapse, comply with the following: 5.1.
5.1.a. Notice before lapse or termination. No individual long-term care policy or certificate shall be issued until the insurer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium, or a written waiver dated and signed by the applicant electing not to designate additional persons to receive notice. The applicant has the right to designate at least one person who is to receive the notice of termination, in addition to the insured. Designation shall not constitute acceptance of any liability on the third party for services provided to the insured. The form used for the written designation must provide space clearly designated for listing at least one person. The designation shall include each person's full name and home address. In the case of an applicant who elects not to designate an additional person, the waiver shall state: “Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until thirty (30) days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice.” The insurer shall notify the insured of the right to change this written designation, no less often than once every two (2) years.
5.1.b. When the policyholder or certificate holder pays premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in subdivision a of this subsection need not be met until sixty (60) days after the policyholder or certificate holder is no longer on such a payment plan. The application or enrollment form for such policies or certificates shall clearly indicate the payment plan selected by the applicant.
5.1.c. Lapse or termination for nonpayment of premium. No individual long-term care policy or certificate shall lapse or be terminated for nonpayment of premium unless the insurer, at least thirty (30) days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated pursuant to subdivision a of this subsection, at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice shall be given by first class United States mail, postage prepaid; and notice may not be given until thirty (30) days after a premium is due and unpaid. Notice shall be deemed to have been given as of five (5) days after the date of mailing.
5.2. Reinstatement. In addition to the requirement in subsection 5.1 of this section, a long-term care insurance policy or certificate shall include a provision that provides for reinstatement of coverage, in the event of lapse if the insurer is provided proof that the policyholder or certificate holder was cognitively impaired or had a loss of functional capacity before the grace period contained in the policy expired. This option shall be available to the insured if requested within five (5) months after termination and shall allow for the collection of past due premium, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity contained in the policy and certificate.
W. Va. Code R. § 114-32-6 Required Disclosure Provisions
6.1. Renewability. -- Individual long-term care insurance policies shall contain a renewability provision.
6.1.a. The provision shall be appropriately captioned, shall appear on the first page of the policy, and shall clearly state that the coverage is guaranteed renewable or noncancellable. This provision shall not apply to policies that do not contain a renewability provision, and under which the right to nonrenew is reserved solely to the policyholder.
6.1.b. A long-term care insurance policy or certificate, other than one where the insurer does not have the right to change the premium, shall include a statement that premium rates may change.
6.2. Riders and Endorsements. -- Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after date of issue or at reinstatement or renewal that reduce or eliminate benefits or coverage in the policy shall require signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing signed by the insured, except if the increased benefits or coverage are required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, such premium charge shall be set forth in the policy, rider or endorsement.
6.3. Payment of Benefits. -- A long-term care insurance policy that provides for the payment of benefits based on standards described as “usual and customary,” “reasonable and customary” or words of similar import shall include a definition of these terms and an explanation of the terms in its accompanying outline of coverage.
6.4. Limitations. -- If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy or certificate and shall be labeled as “Preexisting Condition Limitations.”
6.5. Other Limitations or Conditions on Eligibility for Benefits. -- A long-term care insurance policy or certificate containing any limitations or conditions for eligibility other than those prohibited in W. Va. Code §33-15A-6(d) shall set forth a description of the limitations or conditions, including any required number of days of confinement, in a separate paragraph of the policy or certificate and shall label such paragraph “Limitations or Conditions on Eligibility for Benefits.”
6.6. Disclosure of Tax Consequences. -- With regard to life insurance policies that provide an accelerated benefit for long-term care, a disclosure statement is required at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable, and that assistance should be sought from a personal tax advisor. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents. This subsection shall not apply to qualified long-term care insurance contracts.
6.7. Benefit Triggers. Activities of daily living and cognitive impairment shall be used to measure an insured's need for long term care and shall be described in the policy or certificate in a separate paragraph and shall be labeled “Eligibility for the Payment of Benefits.” Any additional benefit triggers shall also be explained in this section. If these triggers differ for different benefits, explanation of the trigger shall accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too shall be specified.
6.8. A qualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage as contained in subsection 29.5 (item 3 “Federal Tax Consequences”) that the policy is intended to be a qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended.
6.9. A nonqualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage as contained in subsection 29.5 (item 3 “Federal Tax Consequences”) that the policy is not intended to be a qualified long-term care insurance contract.
W. Va. Code R. § 114-32-7 Required Disclosure of Rating Practices to Consumers
7.1. This section shall apply as follows:
7.1.a. Except as provided in subdivision b of this subsection, this section applies to any long-term care policy or certificate issued in this state on or after September 1, 2009.
7.1.b. For certificates issued on or after the effective date of this rule amended in 2009 by the seventy-ninth West Virginia Legislature under a group long-term care insurance policy as defined in W. Va Code §33-15A-4, which policy was in force at the time this amended rule became effective, the provisions of this section shall apply on the policy anniversary following April 1, 2010.
7.2. Other than policies for which no applicable premium rate or rate schedule increases can be made, insurers shall provide all of the information listed in this subsection to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time. In such a case, an insurer shall provide all of the information listed in this section to the applicant no later than at the time of delivery of the policy or certificate.
7.2.a. A statement that the policy may be subject to rate increases in the future;
7.2.b. An explanation of potential future premium rate revisions, and the policyholder's or certificate holder's option in the event of a premium rate revision;
7.2.c. The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase;
7.2.d. A general explanation for applying premium rate or rate schedule adjustments that shall include:
7.2.d.1. A description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.); and
7.2.d.2. The right to a revised premium rate or rate schedule as provided in subdivision c of this subsection if the premium rate or rate schedule is changed; 7.2.e.
7.2.e.1. Information regarding each premium rate increase on this policy form or similar policy forms over the past ten (10) years for this state or any other state that, at a minimum, identifies:
7.2.e.1.A. The policy forms for which premium rates have been increased;
7.2.e.1.B. The calendar years when the form was available for purchase; and
7.2.e.1.C. The amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics.
7.2.e.2. The insurer may, in a fair manner, provide additional explanatory information related to the rate increases.
7.2.e.3. An insurer shall have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated insurers or the long-term care policies acquired from other nonaffiliated insurers when those increases occurred prior to the acquisition.
7.2.e.4. If an acquiring insurer files for a rate increase on a long-term care policy form acquired from nonaffiliated insurers or a block of policy forms acquired from nonaffiliated insurers on or before the later of the effective date of this section or the end of a twenty-four-month period following the acquisition of the block or policies, the acquiring insurer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with paragraph 1 of this subdivision.
7.2.e.5. If the acquiring insurer in paragraph 4 of this subdivision files for a subsequent rate increase, even within the twenty-four-month period, on the same policy form acquired from nonaffiliated insurers or block of policy forms acquired from nonaffiliated insurers referenced in paragraph 4 of this subdivision, the acquiring insurer shall make all disclosures required by subdivision e of this subsection, including disclosure of the earlier rate increase referenced in paragraph 4 of this subdivision.
7.3. An applicant shall sign an acknowledgment at the time of application, unless the method of application does not allow for signature at that time, that the insurer made the disclosure required under subdivision a and e, subsection 7.2 of this section. If due to the method of application the applicant cannot sign an acknowledgment at the time of application, the applicant shall sign no later than at the time of delivery of the policy or certificate.
7.4. An insurer shall use the forms in Appendices B and F to comply with the requirements of subsections 7.2 and 7.3 of this section.
7.5. An insurer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificate holders, if applicable, at least [forty-five (45) days] prior to the implementation of the premium rate schedule increase by the insurer. The notice shall include the information required by subsection 7.2 of this section when the rate increase is implemented.
W. Va. Code R. § 114-32-8 Initial Filing Requirements
8.1. This section applies to any long-term care policy issued in this state on or after six (6) months after the effective date of this rule, amended in 2009.
8.2. An insurer shall provide the information listed in this subsection to the Commissioner sixty (60) days prior to making a long-term care insurance form available for sale.
8.2.a. A copy of the disclosure documents required in section 7 of this rule; and
8.2.b. An actuarial certification consisting of at least the following:
8.2.b.1. A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;
8.2.b.2. A statement that the policy design and coverage provided have been reviewed and taken into consideration;
8.2.b.3. A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;
8.2.b.4. A complete description of the basis for contract reserves that are anticipated to be held under the form, to include:
8.2.b.4.A. Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held;
8.2.b.4.B. A statement that the assumptions used for reserves contain reasonable margins for adverse experience;
8.2.b.4.C. A statement that the net valuation premium for renewal years does not increase (except for attained-age rating where permitted); and
8.2.b.4.D. A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or if such a statement cannot be made, a complete description of the situations where this does not occur;
8.2.b.4.D.1. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship;
8.2.b.4.D.2. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the Commissioner may request a demonstration under subsection 8.3 of this section based on a standard age distribution; and 8.2.b.5.
8.2.b.5.A. A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or
8.2.b.5.B. A comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences. 8.3.
8.3.a. The Commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and credible data from other studies, or both.
8.3.b. In the event the Commissioner asks for additional information under this provision, the period in subsection 8.2 of this section does not include the period during which the insurer is preparing the requested information.
W. Va. Code R. § 114-32-9 Prohibition Against Post-Claims Underwriting
9.1. All applications for long-term care insurance policies or certificates except those that are guaranteed issue shall contain clear and unambiguous questions designed to ascertain the health condition of the applicant. 9.2.
9.2.a. If an application for long-term care insurance contains a question that asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the medication that has been prescribed.
9.2.b. If the medications listed in the application were known by the insurer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, then the policy or certificate shall not be rescinded for that condition.
9.3. Except for policies or certificates which are guaranteed issue:
9.3.a. The following language shall be set out conspicuously and in close conjunction with the applicant's signature block on an application for a long-term care insurance policy or certificate:
Caution: If your answers on this application are incorrect or untrue, [company] has the right to deny benefits or rescind your policy.
9.3.b. The following language, or language substantially similar to the following, shall be set out conspicuously on the long-term care insurance policy or certificate at the time of delivery:
Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address].
9.3.c. Prior to issuance of a long-term care policy or certificate to an applicant age eighty (80) or older, the insurer shall obtain one of the following:
9.3.c.1. A report of a physical examination;
9.3.c.2. An assessment of functional capacity;
9.3.c.3. An attending physician's statement; or
9.3.c.4. Copies of medical records.
9.4. A copy of the completed application or enrollment form (whichever is applicable) shall be delivered to the insured no later than at the time of delivery of the policy or certificate unless it was retained by the applicant at the time of application.
9.5. Every insurer or other entity selling or issuing long-term care insurance benefits shall maintain a record of all policy or certificate rescissions, both state and countrywide, except those that the insured voluntarily effectuated and shall annually furnish this information to the Insurance Commissioner in the format prescribed by the National Association of Insurance Commissioners in Appendix A.
W. Va. Code R. § 114-32-10 Minimum Standards for Home Health and Community Care Benefits in Long-Term Care Insurance Policies
10.1. A long-term care insurance policy or certificate shall not, if it provides benefits for home health care or community care services, limit or exclude benefits:
10.1.a. By requiring that the insured or claimant would need care in a skilled nursing facility if home health care services were not provided;
10.1.b. By requiring that the insured or claimant first or simultaneously receive nursing or therapeutic services, or both, in a home, community or institutional setting before home health care services are covered;
10.1.c. By limiting eligible services to services provided by registered nurses or licensed practical nurses;
10.1.d. By requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide, or other licensed or certified home care worker acting within the scope of his or her licensure or certification;
10.1.e. By excluding coverage for personal care services provided by a home health aide;
10.1.f. By requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the eligible service;
10.1.g. By requiring that the insured/claimant have an acute condition before home health care services are covered;
10.1.h. By limiting benefits to services provided by Medicare-certified agencies or providers; or
10.1.i. By excluding coverage for adult day care services.
10.2. A long-term care insurance policy or certificate, if it provides for home health or community care services, shall provide total home health or community care coverage that is a dollar amount equivalent to at least one-half of one year's coverage available for nursing home benefits under the policy or certificate, at the time covered home health or community care services are being received. This requirement shall not apply to policies or certificates issued to residents of continuing care retirement communities.
10.3. Home health care coverage may be applied to the nonhome health care benefits provided in the policy or certificate when determining maximum coverage under the terms of the policy or certificate.
W. Va. Code R. § 114-32-11 Requirement to Offer Inflation Protection
11.1. No insurer may offer a long-term care insurance policy unless the insurer also offers to the policyholder in addition to any other inflation protection the option to purchase a policy that provides for benefit levels to increase with benefit maximums or reasonable durations which are meaningful to account for reasonably anticipated increases in the costs of long-term care services covered by the policy. Insurers must offer to each policyholder, at the time of purchase, the option to purchase a policy with an inflation protection feature no less favorable than one of the following:
11.1.a. Increases benefit levels annually in a manner so that the increases are compounded annually at a rate not less than five percent (5%);
11.1.b. Guarantees the insured individual the right to periodically increase benefit levels without providing evidence of insurability or health status so long as the option for the previous period has not been declined. The amount of the additional benefit shall be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least five percent (5%) for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made; or
11.1.c. Covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount or limit.
11.2. Where the policy is issued to a group, the required offer in subsection 11.1 of this section shall be made to the group policyholder; except, if the policy is issued to a group defined in W. Va. Code §33-15A-4(e)(4) other than to a continuing care retirement community, the offering shall be made to each proposed certificateholder.
11.3. The offer in subsection 11.1 of this section shall not be required of life insurance policies or riders containing accelerated long-term care benefits. 11.4.
11.4.a. Insurers shall include the following information in or with the outline of coverage:
11.4.a.1. A graphic comparison of the benefit levels of a policy that increases benefits over the policy period with a policy that does not increase benefits. The graphic comparison shall show benefit levels over at least a twenty (20) year period.
11.4.a.2. Any expected premium increases or additional premiums to pay for automatic or optional benefit increases.
11.4.b. An insurer may use a reasonable hypothetical, or a graphic demonstration, for the purposes of this disclosure.
11.5. Inflation protection benefit increases under a policy which contains these benefits shall continue without regard to an insured's age, claim status or claim history, or the length of time the person has been insured under the policy.
11.6. An offer of inflation protection that provides for automatic benefit increases shall include an offer of a premium which the insurer expects to remain constant. The offer shall disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.
11.7. Inflation protection as provided in subdivision a, subsection 11.1 of this section shall be included in a long-term care insurance policy unless an insurer obtains a rejection of inflation protection signed by the policyholder as required in this subsection.
11.8. The rejection shall be considered a part of the application and shall state:
I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this policy with and without inflation protection. Specifically, I have reviewed Plans _____________, and I reject inflation protection.
W. Va. Code R. § 114-32-12 Requirements for Application Forms and Replacement Coverage
12.1. Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has another long-term care insurance policy or certificate in force or whether a long-term care policy or certificate is intended to replace any other accident and sickness or long-term care policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and producer, except where the coverage is sold without a producer, containing the questions may be used. With regard to a replacement policy issued to a group defined by W. Va. Code §33-15A-4(e)(1), the following questions may be modified only to the extent necessary to elicit information about health or long-term care insurance policies other than the group policy being replaced; provided, however, that the certificateholder has been notified of the replacement.
12.1.a. Do you have another long-term care insurance policy or certificate in force (including health care service contract, health maintenance organization contract)?
12.1.b. Did you have another long-term care insurance policy or certificate in force during the last twelve (12) months?
12.1.b.1. If so, with which company?
12.1.b.2. If that policy lapsed, when did it lapse?
12.1.c. Are you covered by Medicaid?
12.1.d. Do you intend to replace any of your medical or health insurance coverage with this policy [certificate]?
12.2. Producers shall list any other health insurance policies they have sold to the applicant.
12.2.a. List policies sold that are still in force.
12.2.b. List policies sold in the past five (5) years that are no longer in force.
12.3. Solicitations Other than Direct Response. -- Upon determining that a sale will involve replacement, an insurer; other than an insurer using direct response solicitation methods, or its producer; shall furnish the applicant, prior to issuance or delivery of the individual long-term care insurance policy, a notice regarding replacement of accident and sickness or long-term care coverage. One (1) copy of the notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the insurer. The required notice shall be provided in the following manner:
NOTICE TO APPLICANT REGARDING REPLACEMENT
OF INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE [Insurance company’s name and address]
SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with an individual long-term care insurance policy to be issued by [company name] Insurance Company. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.
You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.
STATEMENT TO APPLICANT BY PRODUCER [BROKER OR OTHER REPRESENTATIVE]:
(Use additional sheets, as necessary.)
I have reviewed your current medical or health insurance coverage. I believe the replacement of insurance involved in this transaction materially improves your position. My conclusion has taken into account the following considerations, which I call to your attention:
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Health conditions that you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.
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State law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. The insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.
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If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present insurer or its producer regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.
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If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before your sign it, reread it carefully to be certain that all information has been properly recorded.
(Signature of Producer, Broker or Other Representative) [Typed Name and Address of Producer or Broker]
The above “Notice to Applicant” was delivered to me on:
(Applicant’s Signature) (Date)
12.4. Direct Response Solicitations. -- Insurers using direct response solicitation methods shall deliver a notice regarding replacement of accident and sickness or long-term care coverage to the applicant upon issuance of the policy. The required notice shall be provided in the following manner:
NOTICE TO APPLICANT REGARDING REPLACEMENT OF
ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE [Insurance company’s name and address]
SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with the long-term care insurance policy delivered herewith issued by [company name] Insurance Company. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.
You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.
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Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.
-
State law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. Your insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.
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If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present insurer or its producer regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.
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[To be included only if the application is attached to the policy.] If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to [company name and address] within thirty (30) days if any information is not correct and complete, or if any past medical history has been left out of the application.
12.5. Where replacement is intended, the replacing insurer shall notify, in writing, the existing insurer of the proposed replacement. The existing policy shall be identified by the insurer, name of the insured and policy number or address including zip code. Such notice shall be made within five (5) working days from the date the application is received by the insurer or the date the policy is issued, whichever is sooner.
12.6. Life Insurance policies that accelerate benefits for long-term care shall comply with this section if the policy being replaced is a long-term care insurance policy. If the policy being replaced is a life insurance policy, the insurer shall comply with the replacement requirements of Series 8 of Title 114, West Virginia Code of State Rules. If a life insurance policy that accelerates benefits for long-term care is replaced by another such policy, the replacing insurer shall comply with both the long-term care and the life insurance replacement requirements.
W. Va. Code R. § 114-32-13 Reporting Requirements
13.1. Every insurer shall maintain records for each producer of that producer’s amount of replacement sales as a percent of the producer’s total annual sales and the amount of lapses of long-term care insurance policies sold by the producer as a percent of the producer’s total annual sales.
13.2. Every insurer shall report annually by June 30 the ten percent (10%) of its producers with the greatest percentages of lapses and replacements as measured by subsection 13.1 of this section. (Appendix G)
13.3. Reported replacement and lapse rates do not alone constitute a violation of insurance laws or necessarily imply wrongdoing. The reports are for the purpose of reviewing more closely producer activities regarding the sale of long-term care insurance.
13.4. Every insurer shall report annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year. (Appendix G)
13.5. Every insurer shall report annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year. (Appendix G)
13.6. Every insurer shall report annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied. (Appendix E)
13.7. For purposes of this section:
13.7.a. “Policy” means only long-term care insurance;
13.7.b. Subject to subdivision c of this subsection, “claim” means a request for payment of benefits under an in force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;
13.7.c. “Denied” means the insurer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition; and
13.7.d. “Report” means on a statewide basis.
13.8. Reports required under this section shall be filed with the Commissioner.
W. Va. Code R. § 114-32-14 Licensing
A producer is not authorized to sell, solicit or negotiate with respect to long-term care insurance except as authorized by W. Va. Code §33-12-1 et seq.
W. Va. Code R. § 114-32-15 Discretionary Powers of Commissioner
15.1. The Commissioner may upon written request and after an administrative hearing, issue an order to modify or suspend a specific provision or provisions of this rule with respect to a specific long-term care insurance policy or certificate upon a written finding that:
15.1.a. The modification or suspension would be in the best interest of the insureds; and
15.1.b. The purposes to be achieved could not be effectively or efficiently achieved without the modification or suspension; and 15.1.c.
15.1.c.1. The modification or suspension is necessary to the development of an innovative and reasonable approach for insuring long-term care; or
15.1.c.2. The policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the modification or suspension is reasonably related to the special needs or nature of such a community; or
15.1.c.3. The modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product.
W. Va. Code R. § 114-32-16 Reserve Standards
16.1. When long-term care benefits are provided through the acceleration of benefits under group or individual life policies or riders to such policies, policy reserves for the benefits shall be determined in accordance with W. Va. Code §33-7-9(3)(a)(A)(vii). Claim reserves shall also be established in the case when the policy or rider is in claim status.
Reserves for policies and riders subject to this subsection should be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event shall the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.
In the development and calculation of reserves for policies and riders subject to this subsection, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures and all other considerations which have an impact on projected claim costs, including, but not limited to, the following:
16.1.a. Definition of insured events;
16.1.b. Covered long-term care facilities;
16.1.c. Existence of home convalescence care coverage;
16.1.d. Definition of facilities;
16.1.e. Existence or absence of barriers to eligibility;
16.1.f. Premium waiver provision;
16.1.g. Renewability;
16.1.h. Ability to raise premiums;
16.1.i. Marketing method;
16.1.j. Underwriting procedures;
16.1.k. Claims adjustment procedures;
16.1.l. Waiting period;
16.1.m. Maximum benefit;
16.1.n. Availability of eligible facilities;
16.1.o. Margins in claim costs;
16.1.p. Optional nature of benefit;
16.1.q. Delay in eligibility for benefit;
16.1.r. Inflation protection provisions; and
16.1.s. Guaranteed insurability option.
Any applicable valuation morbidity table shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.
16.2. When long-term care benefits are provided other than as in subsection 16.1 of this section, reserves shall be determined in accordance with the provisions of Chapter 33, Article 7 of the West Virginia Code relating to accident and sickness insurance policies.
W. Va. Code R. § 114-32-17 Loss Ratio
17.1. This section shall apply to all long-term care insurance policies or certificates except those covered under sections 8 and 18 of this rule.
17.2. Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums provided the expected loss ratio is at least sixty percent (60%), calculated in a manner which provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including:
17.2.a. Statistical credibility of incurred claims experience and earned premiums;
17.2.b. The period for which rates are computed to provide coverage;
17.2.c. Experienced and projected trends;
17.2.d. Concentration of experience within early policy duration;
17.2.e. Expected claim fluctuation;
17.2.f. Experience refunds, adjustments or dividends;
17.2.g. Renewability features;
17.2.h. All appropriate expense factors;
17.2.i. Interest;
17.2.j. Experimental nature of the coverage;
17.2.k. Policy reserves;
17.2.l. Mix of business by risk classification; and
17.2.m. Product features such as long elimination periods, high deductibles and high maximum limits.
17.3. Subsection 17.2 of this section shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:
17.3.a. The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;
17.3.b. The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of W. Va. Code §33-13-30;
17.3.c. The policy meets the disclosure requirements of W. Va. Code §§33-15A-6(i), 6(j), and 6(k) of the NAIC Long-Term Care Insurance Model Act;
17.3.d. Any policy illustration that meets the applicable requirements of Series 11C of Title 114, West Virginia Code of State Rules; and
17.3.e. An actuarial memorandum is filed with the Commissioner that includes:
17.3.e.1. A description of the basis on which the long-term care rates were determined;
17.3.e.2. A description of the basis for the reserves;
17.3.e.3. A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;
17.3.e.4. A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;
17.3.e.5. A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;
17.3.e.6. The estimated average annual premium per policy and the average issue age;
17.3.e.7. A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and
17.3.e.8. A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.
W. Va. Code R. § 114-32-18 Premium Rate Schedule Increases
18.1. This section shall apply as follows:
18.1.a. Except as provided in subdivision b of this subsection, this section applies to any long-term care policy or certificate issued in this state on or after October 1, 2009.
18.1.b. For certificates issued on or after the effective date of this rule, amended in 2009, under a group long-term care insurance policy as defined in W. Va. Code §33-15A-4(e)(1), which policy was in force at the time this amended rule became effective, the provisions of this section shall apply on the policy anniversary following twelve (12) months after the effective date of this amended rule.
18.1.c. Except as provided in this section, exceptional increases are subject to the same requirements as other premium rate schedule increases.
18.1.d. The Commissioner may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase.
18.1.e. The Commissioner, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs.
18.2. An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the Commissioner at least sixty (60) days prior to the notice to the policyholders and shall include:
18.2.a. Information required by section 7 of this rule;
18.2.b. Certification by a qualified actuary that:
18.2.b.1. If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated;
18.2.b.2. The premium rate filing is in compliance with the provisions of this section;
18.2.c. An actuarial memorandum justifying the rate schedule change request that includes:
18.2.c.1. Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;
18.2.c.1.A. Annual values for the five (5) years preceding and the three (3) years following the valuation date shall be provided separately;
18.2.c.1.B. The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;
18.2.c.1.C. The projections shall demonstrate compliance with subsection 18.3 of this section; and
18.2.c.1.D. For exceptional increases,
18.2.c.1.D.1. The projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and
18.2.c.1.D.2. In the event the Commissioner determines as provided in subdivision d, subsection 2.1 of this rule that offsets may exist, the insurer shall use appropriate net projected experience;
18.2.c.2. Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;
18.2.c.3. Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;
18.2.c.4. A statement that policy design, underwriting and claims adjudication practices have been taken into consideration; and
18.2.c.5. In the event that it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer will need to file composite rates reflecting projections of new certificates;
18.2.d. A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the Commissioner; and
18.2.e. Sufficient information for review and approval of the premium rate schedule increase by the Commissioner.
18.3. All premium rate schedule increases shall be determined in accordance with the following requirements:
18.3.a. Exceptional increases shall provide that seventy percent (70%) of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;
18.3.b. Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:
18.3.b.1. The accumulated value of the initial earned premium times fifty-eight percent (58%);
18.3.b.2. Eighty-five percent (85%) of the accumulated value of prior premium rate schedule increases on an earned basis;
18.3.b.3. The present value of future projected initial earned premiums times fifty-eight percent (58%); and
18.3.b.4. Eighty-five percent (85%) of the present value of future projected premiums not in paragraph 3 of this subdivision on an earned basis;
18.3.c. In the event that a policy form has both exceptional and other increases, the values in paragraph 2 and 4, subdivision b of this subsection will also include seventy percent (70%) for exceptional rate increase amounts; and
18.3.d. All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in the 114CSR44, Appendix A, Section IIA. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages.
18.4. For each rate increase that is implemented, the insurer shall file for approval by the Commissioner updated projections, as defined in paragraph 1, subdivision c, subsection 18.2 of this section, annually for the next three (3) years and include a comparison of actual results to projected values. The Commissioner may extend the period to greater than three (3) years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in subsection 18.11 of this section, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the Commissioner.
18.5. If any premium rate in the revised premium rate schedule is greater than 200 percent of the comparable rate in the initial premium schedule, lifetime projections, as defined in paragraph 1, subdivision c, subsection 18.2 of this section, shall be filed for approval by the Commissioner every five (5) years following the end of the required period in subsection 18.4 of this section. For group insurance policies that meet the conditions in subsection 18.11 of this section, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the Commissioner. 18.6.
18.6.a. If the Commissioner has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in subsection 18.3 of this section, the Commissioner may require the insurer to implement any of the following:
18.6.a.1. Premium rate schedule adjustments; or
18.6.a.2. Other measures to reduce the difference between the projected and actual experience.
18.6.b. In determining whether the actual experience adequately matches the projected experience, consideration should be given to paragraph 5, subdivision c, subsection 18.2 of this section, if applicable.
18.7. If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file:
18.7.a. A plan, subject to Commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the Commissioner may impose the condition in subsection 18.8 of this section; and
18.7.b. The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to subsection 18.3 of this section had the greater of the original anticipated lifetime loss ratio or fifty-eight percent (58%) been used in the calculations described in paragraph 1 and 3, subdivision b, subsection 18.3 of this section. 18.8.
18.8.a. For a rate increase filing that meets the following criteria, the Commissioner shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the twelve (12) months following each increase to determine if significant adverse lapsation has occurred or is anticipated:
18.8.a.1. The rate increase is not the first rate increase requested for the specific policy form or forms;
18.8.a.2. The rate increase is not an exceptional increase; and
18.8.a.3. The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse
18.8.b. In the event significant adverse lapsation has occurred, is anticipated in the filing or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the Commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the Commissioner may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates.
18.8.b.1. The offer shall:
18.8.b.1.A. Be subject to the approval of the Commissioner;
18.8.b.1.B. Be based on actuarially sound principles, but not be based on attained age; and
18.8.b.1.C. Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.
18.8.b.2. The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:
18.8.b.2.A. The maximum rate increase determined based on the combined experience; and
18.8.b.2.B. The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent (10%).
18.9. If the Commissioner determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the Commissioner may, in addition to the provisions of subsection 18.8 of this section, prohibit the insurer from either of the following:
18.9.a. Filing and marketing comparable coverage for a period of up to five (5) years; or
18.9.b. Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.
18.10. Subsections 18.1 through 18.9 of this section do not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in subsection 2.2 of this rule, if the policy complies with all of the following provisions:
18.10.a. The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;
18.10.b. The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following:
18.10.b.1. W. Va. Code §33-13-30;
18.10.b.2. W. Va. Code §33-13-30a, and
18.10.b.3. W. Va. Code §33-13A-1 et seq.;
18.10.c. The policy meets the disclosure requirements of W. Va. Code §§33-15A-6(i), 6(j), and 6(k);
18.10.d. The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:
18.10.d.1. Policy illustrations as required by Series 11C of Title 114, West Virginia Code of State Rules;
18.10.d.2. Disclosure requirements in W. Va. Code §33-13-1 et seq.; and
18.10.d.3. Disclosure requirements in W. Va. Code §33-13A-1 et seq.
18.10.e. An actuarial memorandum is filed with the Commissioner that includes:
18.10.e.1. A description of the basis on which the long-term care rates were determined;
18.10.e.2. A description of the basis for the reserves;
18.10.e.3. A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;
18.10.e.4. A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;
18.10.e.5. A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;
18.10.e.6. The estimated average annual premium per policy and the average issue age;
18.10.e.7. A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and
18.10.e.8. A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.
18.11. Subsections 18.6 and 18.8 of this section shall not apply to group insurance policies as defined in W. Va. Code §33-15A-4(e)(1) where:
18.11.a. The policies insure 250 or more persons and the policyholder has 5,000 or more eligible employees of a single employer; or
18.11.b. The policyholder, and not the certificateholders, pays a material portion of the premium, which shall not be less than twenty percent (20%) of the total premium for the group in the calendar year prior to the year a rate increase is filed.
W. Va. Code R. § 114-32-19 Filing Requirement
Prior to an insurer or similar organization offering group long-term care insurance to a resident of this state pursuant to W. Va. Code §33-15A-5, it shall file with the Commissioner evidence that the group policy or certificate thereunder has been approved by a state having statutory or regulatory long-term care insurance requirements substantially similar to those adopted in this state.
W. Va. Code R. § 114-32-20 Filing Requirements for Advertising
20.1. Every insurer, health care service plan or other entity providing long-term care insurance or benefits in this state shall provide a copy of any long-term care insurance advertisement intended for use in this state whether through written, radio or television medium to the Commissioner for review or approval by the Commissioner to the extent it may be required under state law. In addition, all advertisements shall be retained by the insurer, health care service plan or other entity for at least three (3) years from the date the advertisement was first used.
20.2. The Commissioner may exempt from these requirements any advertising form or material when in the Commissioner’s opinion, this requirement may not be reasonably applied.
W. Va. Code R. § 114-32-21 Standards for Marketing
21.1. Every insurer, health care service plan or other entity marketing long-term care insurance coverage in this state, directly or through its producers, shall:
21.1.a. Establish marketing procedures and producer training requirements to assure that:
21.1.a.1. Any marketing activities, including any comparison of policies by its producers or other producers will be fair and accurate; and
21.1.a.2. Excessive insurance is not sold or issued.
21.1.b. Display prominently by type, stamp or other appropriate means, on the first page of the outline of coverage and policy the following:
“Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations.”
21.1.c. Provide copies of the disclosure forms required in subsection 7.3 of this rule (Appendices B and F) to the applicant.
21.1.d. Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of any such insurance, except that in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance is not required.
21.1.e. Every insurer or entity marketing long-term care insurance shall establish auditable procedures for verifying compliance with this Subsection.
21.1.f. If the state in which the policy or certificate is to be delivered or issued for delivery has a senior insurance counseling program approved by the Commissioner, the insurer shall, at solicitation, provide written notice to the prospective policyholder and certificateholder that the program is available and the name, address and telephone number of the program.
21.1.g. For long-term care health insurance policies and certificates, use the terms “noncancellable” or “level premium” only when the policy or certificate conforms to subdivision c, subsection 4.1 of this rule.
21.1.h. Provide an explanation of contingent benefit upon lapse provided for in subdivision c, subsection 26.4 of this rule and, if applicable, the additional contingent benefit upon lapse provided to policies with fixed or limited premium paying periods in subdivision d, subsection 26.4 of this rule.
21.2. In addition to the practices prohibited in this state's Unfair Trade Practices Act [W. Va. Code §33-11-1 et seq.], the following acts and practices are prohibited:
21.2.a. Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on or convert any insurance policy or to take out a policy of insurance with another insurer.
21.2.b. High pressure tactics. -- Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance.
21.2.c. Cold lead advertising. -- Making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance producer or insurance company.
21.2.d. Misrepresentation. Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy. 21.3
21.3.a. With respect to the obligations set forth in this subsection, the primary responsibility of an association, as defined in W. Va. Code §33-15A-4(e)(2), when endorsing or selling long-term care insurance shall be to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by such associations to ensure that members of such associations receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold.
21.3.b. The insurer shall file with the Commissioner the following material:
21.3.b.1. The policy and certificate,
21.3.b.2. A corresponding outline of coverage, and
21.3.b.3. All advertisements requested by the Commissioner.
21.3.c. The association shall disclose in any long-term care insurance solicitation:
21.3.c.1. The specific nature and amount of the compensation arrangements (including all fees, commissions, administrative fees and other forms of financial support) that the association receives from endorsement or sale of the policy or certificate to its members; and
21.3.c.2. A brief description of the process under which the policies and the insurer issuing the policies were selected.
21.3.d. If the association and the insurer have interlocking directorates or trustee arrangements, the association shall disclose that fact to its members.
21.3.e. The board of directors of associations selling or endorsing long-term care insurance policies or certificates shall review and approve the insurance policies as well as the compensation arrangements made with the insurer.
21.3.f. The association shall also:
21.3.f.1. At the time of the association's decision to endorse, engage the services of a person with expertise in long-term care insurance not affiliated with the insurer to conduct an examination of the policies, including its benefits, features, and rates and update the examination thereafter in the event of material change;
21.3.f.2. Actively monitor the marketing efforts of the insurer and its producers; and
21.3.f.3. Review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policies or certificates.
21.3.f.4. Paragraphs 1 through 3 of this subdivision shall not apply to qualified long-term care insurance contracts.
21.3.g. No group long-term care insurance policy or certificate may be issued to an association unless the insurer files the information required in this subsection with the Commissioner.
21.3.h. The insurer shall not issue a long-term care policy or certificate to an association or continue to market such a policy or certificate unless the insurer certifies annually that the association has complied with the requirements set forth in this subsection.
21.3.i. Failure to comply with the filing and certification requirements of this section constitutes an unfair trade practice in violation of this state's Unfair Trade Practices Act [W. Va. Code §33-11-1 et seq.].
W. Va. Code R. § 114-32-22 Appropriateness of Recommended Purchase
22.1. This section shall not apply to life insurance policies that accelerate benefits for long-term care.
22.2. Every insurer, health care service plan or other entity marketing long-term care insurance (the “issuer”) shall:
22.2.a. Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;
22.2.b. Train its producers in the use of its suitability standards; and
22.2.c. Maintain a copy of its suitability standards and make them available for inspection upon request by the Commissioner. 22.3.
22.3.a. To determine whether the applicant meets the standards developed by the issuer, the producer and issuer shall develop procedures that take the following into consideration:
22.3.a.1. The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;
22.3.a.2. The applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and
22.3.a.3. The values, benefits and costs of the applicant's existing insurance, if any, when compared to the values, benefits and costs of the recommended purchase or replacement.
22.3.b. The issuer, and where a producer is involved, the producer shall make reasonable efforts to obtain the information set out in subdivision a of this subsection. The efforts shall include presentation to the applicant, at or prior to application, the “Long-Term Care Insurance Personal Worksheet.” The personal worksheet used by the issuer shall contain, at a minimum, the information in the format contained in Appendix B, in not less than twelve (12) point type. The issuer may request the applicant to provide additional information to comply with its suitability standards. A copy of the issuer's personal worksheet shall be filed with the Commissioner.
22.3.c. A completed personal worksheet shall be returned to the issuer prior to the issuer's consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses.
22.3.d. The sale or dissemination outside the company or agency by the issuer or producer of information obtained through the personal worksheet in Appendix B is prohibited.
22.4. The issuer shall use the suitability standards it has developed pursuant to this section in determining whether issuing long-term care insurance coverage to an applicant is appropriate.
22.5. Producers shall use the suitability standards developed by the issuer in marketing long-term care insurance.
22.6. At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled “Things You Should Know Before You Buy Long-Term Care Insurance” shall be provided. The form shall be in the format contained in Appendix C, in not less than twelve (12) point type.
22.7. If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer shall send the applicant a letter similar to Appendix D. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file.
22.8. The issuer shall report annually to the Commissioner the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter.
W. Va. Code R. § 114-32-23 Prohibition Against Preexisting Conditions and Probationary Periods in Replacement Policies or Certificates
If a long-term care insurance policy or certificate replaces another long-term care policy or certificate, the replacing insurer shall waive any time periods applicable to preexisting conditions and probationary periods in the new long-term care policy for similar benefits to the extent that similar exclusions have been satisfied under the original policy.
W. Va. Code R. § 114-32-24 Availability of New Services or Providers
24.1. An insurer shall notify policyholders of the availability of a new long-term policy series that provides coverage for new long-term care services or providers material in nature and not previously available through the insurer to the general public. The notice shall be provided within twelve (12) months of the date of the new policy series is made available for sale in this state.
24.2. Notwithstanding subsection 24.1 of this section, notification is not required for any policy issued prior to the effective date of this section or to any policyholder or certificateholder who is currently eligible for benefits, within an elimination period or on a claim, or who previously had been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add new services or providers.
24.3. The insurer shall make the new coverage available in one of the following ways:
24.3.a. By adding a rider to the existing policy and charging a separate premium for the new rider based on the insured's attained age;
24.3.b. By exchanging the existing policy or certificate for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate. The premium credits shall be based on premiums paid or reserves held for the prior policy or certificate;
24.3.c. By exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status shall be recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged. The cost for the new policy or certificate may recognize the difference in reserves between the new policy or certificate and the original policy or certificate; or
24.3.d. By an alternative program developed by the insurer that meets the intent of this section if the program is filed with and approved by the Commissioner.
24.4. An insurer is not required to notify policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this subsection, “limited distribution channel” means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public. Policyholders that purchased such a new proprietary policy shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers material in nature is made available to that limited distribution channel.
24.5. Policies issued pursuant to this section shall be considered exchanges and not replacements. These exchanges shall not be subject to sections 12 and 22 of this rule, and the reporting requirements of subsections 13.1 to 13.5 of this rule.
24.6. Where the policy is offered through an employer, labor organization, professional, trade or occupational association, the required notification in subsection 24.1 of this section shall be made to the offering entity. However, if the policy is issued to a group defined in W. Va. Code §33-15A-4(e)(4) the notification shall be made to each certificateholder.
24.7. Nothing in this section shall prohibit an insurer from offering any policy, rider, certificate or coverage change to any policyholder or certificateholder. However, upon request any policyholder may apply for currently available coverage that includes the new services or providers. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.
24.8. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.
24.9. This section shall become effective on the effective date of this rule, amended in 2009.
W. Va. Code R. § 114-32-25 Right to Reduce Coverage and Lower Premiums. 25.1
25.1.a. Every long-term care insurance policy and certificate shall include a provision that allows the policyholder or certificateholder to reduce coverage and lower the policy or certificate premium in at least one of the following ways:
25.1.a.1. Reducing the maximum benefit; or
25.1.a.2. Reducing the daily, weekly or monthly benefit amount.
25.1.b. The insurer may also offer other reduction options that are consistent with the policy or certificate design or the carrier's administrative processes.
25.2. The provision shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage.
25.3. The age to determine the premium for the reduced coverage shall be based on the age used to determine the premiums for the coverage currently in force.
25.4. The insurer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable.
25.5. If a policy or certificate is about to lapse, the insurer shall provide a written reminder to the policyholder or certificateholder of his or her right to reduce coverage and premiums in the notice required by subdivision c, subsection 5.1 of this rule.
25.6. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.
25.7. The requirements of this section shall apply to any long-term care policy issued in this state on or after twelve months after the effective date of this rule, amended in 2009.
W. Va. Code R. § 114-32-26 Nonforfeiture Benefit Requirement
26.1. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.
26.2. To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of W. Va. Code §33-15A-9:
26.2.a. A policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the benefit described in subsection 26.5 of this section; and
26.2.b. The offer shall be in writing if the nonforfeiture benefit is not otherwise described in the Outline of Coverage or other materials given to the prospective policyholder.
26.3. If the offer required to be made under W. Va. Code §33-15A-9 is rejected, the insurer shall provide the contingent benefit upon lapse described in this section. Even if this offer is accepted for a policy with a fixed or limited premium paying period, the contingent benefit on lapse in subdivision d, subsection 26.4 of this section shall still apply. 26.4.
26.4.a. After rejection of the offer required under W. Va. Code §33-15A-9, for individual and group policies without nonforfeiture benefits issued after the effective date of this section, the insurer shall provide a contingent benefit upon lapse.
26.4.b. In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificate holder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.
26.4.c. A contingent benefit on lapse shall be triggered every time an insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.
Triggers for a Substantial Premium Increase Issue Age Percent Increase Over Initial Premium 29 and under 200% 30-34 190% 35-39 170% 40-44 150% 45-49 130% 50-54 110% 55-59 90% 70% 66% 62% 58% 54% 50% 48% 46% 44% 42% 40% 38% 36% 34% 32% 30% 28% 26% 24% 22% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 90 and over 10%
26.4.d. A contingent benefit on lapse shall also be triggered for policies with a fixed or limited premium paying period every time an insurer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, the policy or certificate lapses within 120 days of the due date of the premium so increased, and the ratio in paragraph 2 of subdivision f is forty percent (40%) or more. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.
Triggers for a Substantial Premium Increase Issue Age Percent Increase Over Initial Premium Under 65 50% 65-80 30% Over 80 10% This provision shall be in addition to the contingent benefit provided by subdivision c of this subsection and where both are triggered, the benefit provided shall be at the option of the insured.
26.4.e. On or before the effective date of a substantial premium increase as defined in subdivision c of this subsection, the insurer shall:
26.4.e.1. Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;
26.4.e.2. Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of subsection 26.5 of this section. This option may be elected at any time during the 120-day period referenced in subdivision c of this subsection; and
26.4.e.3. Notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period referenced in subdivision c of this subsection shall be deemed to be the election of the offer to convert in paragraph 2 of this subdivision unless the automatic option in paragraph 3 of subdivision f applies.
26.4.f. On or before the effective date of a substantial premium increase as defined in subdivision d of this subsection, the insurer shall:
26.4.f.1. Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;
26.4.f.2. Offer to convert the coverage to a paid-up status where the amount payable for each benefit is ninety percent (90%) of the amount payable in effect immediately prior to lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period. This option may be elected at any time during the 120-day period referenced in subdivision d of this subsection; and
26.4.f.3. Notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period referenced in subdivision d of this subsection shall be deemed to be the election of the offer to convert in paragraph 2 of this subdivision if the ratio is forty percent (40%) or more.
26.5. Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with subdivision c, subsection 26.4 of this section but not subdivision d, subsection 26.4 of this section, are described in this subsection:
26.5.a. For purposes of this subsection, attained age rating is defined as a schedule of premiums starting from the issue date which increases age at least one percent per year prior to age fifty (50), and at least three percent (3%) per year beyond age fifty (50).
26.5.b. For purposes of this subsection, the nonforfeiture benefit shall be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in subdivision c of this subsection.
26.5.c. The standard nonforfeiture credit will be equal to 100% of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The insurer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than thirty (30) times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of subsection 26.6 of this section. 26.5.d.
26.5.d.1. The nonforfeiture benefit shall begin not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse shall be effective during the first three (3) years as well as thereafter.
26.5.d.2. Notwithstanding paragraph 1 of this subdivision, for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of:
26.5.d.2.A. The end of the tenth year following the policy or certificate issue date; or
26.5.d.2.B. The end of the second year following the date the policy or certificate is no longer subject to attained age rating.
26.5.e. Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate.
26.6. All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid up status will not exceed the maximum benefits which would be payable if the policy or certificate had remained in premium paying status.
26.7. There shall be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies.
26.8. The requirements set forth in this section shall become effective twelve (12) months after the effective date of this rule, amended in 2009, and shall apply as follows:
26.8.a. Except as provided in subdivisions b and c of this subsection, this section applies to any long-term care policy issued in this state on or after the effective date of this rule, amended in 2009.
26.8.b. For certificates issued on or after the effective date of this section, under a group long-term care insurance policy as defined in W. Va. Code §33-15A-4(e)(1), which policy was in force at the time of the effective date of this rule, amended in 2009, this section shall not apply.
26.8.c. The last sentence in subsection 26.3 of this section and subdivisions d and f, subsection 26.4 of this section shall apply to any long-term care insurance policy or certificate issued in this state after six (6) months after their adoption, except new certificates on a group policy as defined in W. Va. Code §33-15A-4(e)(1) one year after adoption.
26.9. Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse shall be subject to the loss ratio requirements of section 17 or section 18 of this rule, whichever is applicable, treating the policy as a whole.
26.10. To determine whether contingent nonforfeiture upon lapse provisions are triggered under subdivision c or d, subsection 26.4 of this section, a replacing insurer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer.
26.11. A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets the following requirements:
26.11.a. The nonforfeiture provision shall be appropriately captioned;
26.11.b. The nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency and interest as reflected in changes in rates for premium paying contracts approved by the Commissioner for the same contract form; and
26.11.c. The nonforfeiture provision shall provide at least one of the following:
26.11.c.1. Reduced paid-up insurance;
26.11.c.2. Extended term insurance;
26.11.c.3. Shortened benefit period; or
26.11.c.4. Other similar offerings approved by the Commissioner
W. Va. Code R. § 114-32-27 Standards for Benefit Triggers
27.1. A long-term care insurance policy shall condition the payment of benefits on a determination of the insured's ability to perform activities of daily living and on cognitive impairment. Eligibility for the payment of benefits shall not be more restrictive than requiring either a deficiency in the ability to perform not more than three (3) of the activities of daily living or the presence of cognitive impairment. 27.2.
27.2.a. Activities of daily living shall include at least the following as defined in section 3 and in the policy:
27.2.a.1. Bathing;
27.2.a.2. Continence;
27.2.a.3. Dressing;
27.2.a.4. Eating;
27.2.a.5. Toileting; and
27.2.a.6. Transferring;
27.2.b. Insurers may use activities of daily living to trigger covered benefits in addition to those contained in subdivision a of this subsection as long as they are defined in the policy.
27.3. An insurer may use additional provisions for the determination of when benefits are payable under a policy or certificate; however the provisions shall not restrict, and are not in lieu of, the requirements contained in subsections 27.1 and 27.2 of this section.
27.4. For purposes of this section the determination of a deficiency shall not be more restrictive than:
27.4.a. Requiring the hands-on assistance of another person to perform the prescribed activities of daily living; or
27.4.b. If the deficiency is due to the presence of a cognitive impairment, supervision or verbal cueing by another person is needed in order to protect the insured or others.
27.5. Assessments of activities of daily living and cognitive impairment shall be performed by licensed or certified professionals, such as physicians, nurses or social workers.
27.6. Long term care insurance policies shall include a clear description of the process for appealing and resolving benefit determinations.
27.7. The requirements set forth in this section shall be effective twelve (12) months after the effective date of this provision and shall apply as follows:
27.7.a. Except as provided in subdivision b of this subsection, the provisions of this section apply to a long-term care policy issued in this state on or after the effective date of the rule, amended in 2009.
27.7.b. For certificates issued on or after the effective date of this section, under a group long-term care insurance policy as defined in W. Va. Code §33-15A-4(e)(1) that was in force at the time this rule, amended in 2009, became effective, the provisions of this section shall not apply.
W. Va. Code R. § 114-32-28 Additional Standards for Benefit Triggers for Qualified Long-Term Care Insurance Contracts
28.1. For purposes of this section the following definitions apply:
28.1.a. “Qualified long-term care services” means services that meet the requirements of Section 7702(c)(1) of the Internal Revenue Code of 1986, as amended, as follows: necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation and rehabilitative services, and maintenance or personal care services which are required by a chronically ill individual, and are provided pursuant to a plan of care prescribed by a licensed health care practitioner. 28.1.b.
28.1.b.1. “Chronically ill individual” has the meaning prescribed for this term by section 7702B(c)(2) of the Internal Revenue Code of 1986, as amended. Under this provision, a chronically ill individual means any individual who has been certified by a licensed health care practitioner as:
28.1.b.1.A. Being unable to perform (without substantial assistance from another individual) at least two (2) activities of daily living for a period of at least ninety (90) days due to a loss of functional capacity; or
28.1.b.1.B. Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.
28.1.b.2. The term “chronically ill individual” shall not include an individual otherwise meeting these requirements unless within the preceding twelve-month period a licensed health care practitioner has certified that the individual meets these requirements.
28.1.c. “Licensed health care practitioner” means a physician, as defined in Section 1861(r)(1) of the Social Security Act, a registered professional nurse, licensed social worker or other individual who meets requirements prescribed by the Secretary of the Treasury.
28.1.d. “Maintenance or personal care services” means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual (including the protection from threats to health and safety due to severe cognitive impairment).
28.2. A qualified long term care insurance contract shall pay only for qualified long term care services received by a chronically ill individual provided pursuant to a plan of care prescribed by a licensed health care practitioner.
28.3. A qualified long-term care insurance contract shall condition the payment of benefits on a determination of the insured's inability to perform activities of daily living for an expected period of at least ninety (90) days due to a loss of functional capacity or to severe cognitive impairment.
28.4. Certifications regarding activities of daily living and cognitive impairment required pursuant to subsection 28.3 of this section shall be performed by the following licensed or certified professionals: physicians, registered professional nurses, licensed social workers, or other individuals who meet requirements prescribed by the Secretary of the Treasury.
28.5. Certifications required pursuant to subsection 28.3 of this section may be performed by a licensed health care professional at the direction of the carrier as is reasonably necessary with respect to a specific claim, except that when a licensed health care practitioner has certified that an insured is unable to perform activities of daily living for an expected period of at least ninety (90) days due to a loss of functional capacity and the insured is in claim status, the certification may not be rescinded and additional certifications may not be performed until after the expiration of the ninety-day period.
28.6. Qualified long-term care insurance contracts shall include a clear description of the process for appealing and resolving disputes with respect to benefit determinations.
W. Va. Code R. § 114-32-29 Appealing An Insurer’s Determination That The Benefit Trigger Is Not Met
29.1. For purposes of this section, "authorized representative" is authorized to act as the covered person's personal representative within the meaning of 45 CFR 164.502(g) promulgated by the Secretary of the Department of Health and Human Services under the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act and means the following:
29.1.a. A person to whom a covered person has given express written consent to represent the covered person in an external review;
29.1.b. A person authorized by law to provide substituted consent for a covered person; or
29.1.c. A family member of the covered person or the covered person's treating health care professional only when the covered person is unable to provide consent.
29.2. If an insurer determines that the benefit trigger of a long-term care insurance policy has not been met, it shall provide a clear, written notice to the insured and the insured's authorized representative, if applicable, of all of the following:
29.2.a. The reason that the insurer determined that the insured's benefit trigger has not been met;
29.2.b. The insured's right to internal appeal in accordance with subsection 29.3 of this rule, and the right to submit new or additional information relating to the benefit trigger denial with the appeal request; and
29.2.c. The insured's right, after exhaustion of the insurer's internal appeal process, to have the benefit trigger determination reviewed under the independent review process in accordance with subsection 29.4 of this rule.
29.3. Internal Appeal. The insured or the insured's authorized representative may appeal the insurer's adverse benefit trigger determination by sending a written request to the insurer, along with any additional supporting information, within 120 calendar days after the insured and the insured's authorized representative, if applicable, receives the insurer's benefit determination notice. The internal appeal shall be considered by an individual or group of individuals designated by the insurer, provided that the individual or individuals making the internal appeal decision may not be the same individual or individuals who made the initial benefit determination. The internal appeal shall be completed and written notice of the internal appeal decision shall be sent to the insured and the insured's authorized representative, if applicable, within thirty (30) calendar days of the insurer's receipt of all necessary information upon which a final determination can be made.
29.3.a. If the insurer's original determination is upheld upon internal appeal, the notice of the internal appeal decision shall describe any additional internal appeal rights offered by the insurer. Nothing herein shall require the insurer to offer any internal appeal rights other than those described in this subsection. 29.3.b If the insurer's original determination is upheld after the internal appeal process has been exhausted, and new or additional information has not been provided to the insurer, the insurer shall provide a written description of the insured's right to request an independent review of the benefit determination as described in subsection 29.4 of this rule to the insured and the insured's authorized representative, if applicable.
29.3.c. As part of the written description of the insured's right to request an independent review, an insurer shall include the following, or substantially equivalent, language:
"We have determined that the benefit eligibility criteria ("benefit trigger") of your [policy] [certificate] has not been met. You may have the right to an independent review of our decision conducted by long-term care professionals who are not associated with us. Please send a written request for independent review to us at [address]. You must inform us, in writing, of your election to have this decision reviewed within 120 days of receipt of this letter.
29.3.d. Within 10 days of notice that the insured has elected to have the decision reviewed by an IRO, the insurer shall designate a certified internal review organization to hear the matter: Provided, That if the insurer does not believe the benefit trigger decision is eligible for independent review, the insurer shall inform the insured and the insured's authorized representative, if applicable, and the commissioner in writing and include in the notice the reasons for its determination of independent review ineligibility.
29.3.e. The appeal process described in subsection 29.3 is not deemed to be a new service or provider as referenced in section 24 of this rule and therefore does not trigger the notice requirements of that section.
29.4. Independent Review of Benefit Trigger Determination.
29.4.a. Request. The insured or the insured's authorized representative may request an independent review of the insurer's benefit trigger determination after the internal appeal process outlined in subsection 29.3 of this rule has been exhausted. A written request for independent review may be made by the insured or the insured's authorized representative to the insurer within 120 calendar days after the insurer's written notice of the final internal appeal decision is received by the insured and the insured's authorized representative, if applicable.
29.4.b. Cost. The cost of the independent review shall be borne by the insurer.
29.4.c. Independent Review Process.
29.4.c.1. Within five (5) business days of receiving a written request for independent review, the insurer shall choose an independent review organization approved or certified by the state. The insurer shall vary its selection of authorized independent review organizations on a rotating basis.
29.4.c.2. The insurer shall refer the request for independent review of a benefit trigger determination to an independent review organization, subject to the following:
29.4.c.2.A. The independent review organization shall be on a list of certified or approved independent review organizations that satisfy the requirements of a qualified long-term care insurance independent review organization contained in this section;
29.4.c.2.B. The independent review organization shall not have any conflicts of interest with the insured, the insured's authorized representative, if applicable, or the insurer; and
29.4.c.2.C. Such review shall be limited to the information or documentation provided to and considered by the insurer in making its determination, including any information or documentation considered as part of the internal appeal process.
29.4.c.3. If the insured or the insured's authorized representative has new or additional information not previously provided to the insurer, whether submitted to the insurer or the independent review organization, such information shall first be considered in the internal review process, as set forth in subsection 29.3 of this rule. 29.4.c.3.A While this information is being reviewed by the insurer, the independent review organization shall suspend its review and the time period for review is suspended until the insurer completes its review.
29.4.c.3.B. The insurer shall complete its review of the information and provide written notice of the results of the review to the insured and the insured's authorized representative, if applicable, and the independent review organization within five (5) business days of the insurer's receipt of such new or additional information.
29.4.c.3.C. If the insurer maintains its denial after such review, the independent review organization shall continue its review, and render its decision within the time period specified in paragraph 9, subdivision c, subsection 29.4 of this rule below. If the insurer overturns its decision following its review, the independent review request shall be considered withdrawn.
29.4.c.4. The insurer shall acknowledge in writing to the insured and the insured's authorized representative, if applicable, and the commissioner that the request for independent review has been received, accepted and forwarded to an independent review organization for review. Such notice will include the name and address of the independent review organization.
29.4.c.5. Within five (5) business days of receipt of the request for independent review, the independent review organization assigned pursuant to this paragraph shall notify the insured and the insured's authorized representative, if applicable, the insurer and the commissioner that it has accepted the independent review request and identify the type of licensed health care professional assigned to the review. The assigned independent review organization shall include in the notice a statement that the insured or the insured's authorized representative may submit in writing to the independent review organization within seven (7) days following the date of receipt of the notice additional information and supporting documentation that the independent review organization should consider when conducting its review.
29.4.c.6. The independent review organization shall review all of the information and documents received pursuant to paragraph 5, subdivision c, subsection 29.4 of this rule that has been provided to the independent review organization. The independent review organization shall provide copies of any documentation or information provided by the insured or the insured's authorized representative to the insurer for its review, if it is not part of the information or documentation submitted by the insurer to the independent review organization. The insurer shall review the information and provide its analysis of the new information in accordance with paragraph 3, subdivision c, subsection 29.4 of this rule.
29.4.c.7. The insured or the insured's authorized representative may submit, at any time, new or additional information not previously provided to the insurer but pertinent to the benefit trigger denial. The insurer shall consider such information and affirm or overturn its benefit trigger determination. If the insurer affirms its benefit trigger determination, the insurer shall promptly provide such new or additional information to the independent review organization for its review, along with the insurer's analysis of such information.
29.4.c.8. If the insurer overturns its benefit trigger determination:
29.4.c.8.A. The insurer shall provide notice to the independent review organization and the insured and the insured's authorized representative, if applicable, and the commissioner of its decision; and
29.4.c.8.B. The independent review process shall immediately cease.
29.4.c.9. The independent review organization shall provide the insured and the insured's authorized representative, if applicable, the insurer and the commissioner written notice of its decision, within 30 calendar days from receipt of the referral referenced in paragraph 2, subdivision c, subsection 29.4 of this rule. If the independent review organization overturns the insurer's decision, it shall:
29.4.c.9.A. Establish the precise date within the specific period of time under review that the benefit trigger was deemed to have been met;
29.4.c.9.B. Specify the specific period of time under review for which the insurer declined eligibility, but during which the independent review organization deemed the benefit trigger to have been met; and
29.4.c.9.C. For tax-qualified long-term care insurance contracts, provide a certification (made only by a licensed health care practitioner as defined in section 7702B(c)(4) of the Internal Revenue Code) that the insured is a chronically ill individual.
29.4.c.10. The decision of the independent review organization with respect to whether the insured met the benefit trigger will be final and binding on the insurer.
29.4.c.11. The independent review organization's determination shall be used solely to establish liability for benefit trigger decisions, and is intended to be admissible in any proceeding only to the extent it establishes the eligibility of benefits payable.
29.4.c.12. Nothing in this section shall restrict the insured's right to submit a new request for benefit trigger determination after the independent review decision, should the independent review organization uphold the insurer's decision.
29.4.c.13. The independent review organization shall utilize the criteria set forth in Appendix H, Guidelines for Long-Term Care Independent Review Entities, in certifying or approving entities to review long-term care insurance benefit trigger decisions.
29.4.c.14. The commissioner shall maintain and periodically update a list of approved independent review organizations.
29.5. Certification of Long-Term Care Insurance Independent Review Organizations. The commissioner shall certify or approve a qualified long-term care insurance independent review organization, provided the independent review organization demonstrates to the satisfaction of the commissioner that it is unbiased and meets the following qualifications:
29.5.a. Have on staff, or contract with, a qualified and licensed health care professional in an appropriate field for determining an insured's functional or cognitive impairment (e.g. physical therapy, occupational therapy, neurology, physical medicine and rehabilitation) to conduct the review.
29.5.b. Neither it nor any of its licensed health care professionals may, in any manner, be related to or affiliated with an entity that previously provided medical care to the insured.
29.5.c. Utilize a licensed health care professional who is not an employee of the insurer or related in any manner to the insured.
29.5.d. Neither it nor its licensed health care professional who conducts the reviews may receive compensation of any type that is dependent on the outcome of the review.
29.5.e. Be state approved or certified to conduct such reviews if the state requires such approvals or certifications.
29.5.f. Provide a description of the fees to be charged by it for independent reviews of a long-term care insurance benefit trigger decision. Such fees shall be reasonable and customary for the type of long-term care insurance benefit trigger decision under review.
29.5.g. Provide the name of the medical director or health care professional responsible for the supervision and oversight of the independent review procedure.
29.5.h. Have on staff or contract with a licensed health care practitioner, as defined by section 7702B(c)(4) of the Internal Revenue Code of 1986, as amended, who is qualified to certify that an individual is chronically ill for purposes of a qualified long-term care insurance contract.
29.6. Maintenance of Records and Reporting Obligations by Independent Review Organizations. Each certified independent review organization shall comply with the following:
29.6.a. Maintain written documentation establishing the date it receives a request for independent review, the date each review is conducted, the resolution, the date such resolution was communicated to the insurer and the insured, the name and professional status of the reviewer conducting such review in an easily accessible and retrievable format for the year in which it received the information, plus two (2) calendar years.
29.6.b. Be able to document measures taken to appropriately safeguard the confidentiality of such records and prevent unauthorized use and disclosures in accordance with applicable federal and state law.
29.6.c. Report annually to the commissioner, by June 1, in the aggregate and for each long-term care insurer all of the following:
29.6.c.1. The total number of requests received for independent review of long-term care benefit trigger decisions;
29.6.c.2. The total number of reviews conducted and the resolution of such reviews (i.e., the number of reviews which upheld or overturned the long-term care insurer's determination that the benefit trigger was not met);
29.6.c.3. The number of reviews withdrawn prior to review;
29.6.c.4. The percentage of reviews conducted within the prescribed timeframe set forth in paragraph 9, subdivision c, subsection 29.4 of this rule; and
29.6.c.5. Such other information the commissioner may require.
29.6.d. Report immediately to the commissioner any change in its status which would cause it to cease meeting any of the qualifications required of an independent review organization performing independent reviews of long-term care benefit trigger decisions.
29.7. Additional Rights. Nothing contained in this section shall limit the ability of an insurer to assert any rights an insurer may have under the policy related to:
29.7.a. An insured's misrepresentation;
29.7.b. Changes in the insured's benefit eligibility; and
29.7.c. Terms, conditions, and exclusions of the policy, other than failure to meet the benefit trigger.
29.8. Applicability. The requirements of this rule apply to a benefit trigger request made on or after August 1, 2011 under a long-term care insurance policy. However, this section does not apply to insurance claims made under a group a long-term care insurance policy that insures a plan governed by the Employee Retirement Income Security Act of 1974, as amended.
29.9. Conflict with Other Laws. The provisions of this section supersede any other external review requirements found in W. Va. Code of State Rules §114-58-1, et seq.
W. Va. Code R. § 114-32-30 Prompt Payment of Clean Claims
30.1. For purposes of this section:
30.1.a. "Claim" means a request for payment of benefits under an in-force policy, regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met.
30.1.b. "Clean claim" means a claim that has no defect or impropriety, including any lack of required substantiating documentation, such as satisfactory evidence of expenses incurred, or particular circumstance requiring special treatment that prevents timely payment from being made on the claim.
30.2. Within thirty (30) business days after receipt of a claim for benefits under a long-term care insurance policy or certificate, an insurer shall pay such claim if it is a clean claim, or send a written notice acknowledging the date of receipt of the claim and one of the following:
30.2.a. The insurer is declining to pay all or part of the claim and the specific reason(s) for denial; or
30.2.b. That additional information is necessary to determine if all or any part of the claim is payable and the specific additional information that is necessary.
30.3. Within thirty (30) business days after receipt of all the requested additional information, an insurer shall pay a claim for benefits under a long-term care insurance policy or certificate if it is a clean claim, or send a written notice that the insurer is declining to pay all or part of the claim, and the specific reason or reasons for denial.
30.4. If an insurer fails to comply with subsection 30.2 or 30.3 of this rule, such insurer shall pay interest at the rate of 1% per month on the amount of the claim that should have been paid but that remains unpaid forty-five (45) business days after the receipt of the claim with respect to subsection 30.2 of this rule or all requested additional information with respect to subsection 30.3 of this rule. The interest payable pursuant to this subsection shall be included in any late reimbursement without requiring the person who filed the original claim to make any additional claim for such interest.
30.5. The provisions of this section shall not apply where the insurer has a reasonable basis supported by specific information that such claim was fraudulently submitted.
W. Va. Code R. § 114-32-31 Standard Format Outline of Coverage
This section of the rule implements, interprets and makes specific, the provisions of W. Va. Code §33-15A-6(g)(1)(A) in prescribing a standard format and the content of an outline of coverage.
31.1. The outline of coverage shall be a free-standing document, using no smaller than ten point type.
31.2. The outline of coverage shall contain no material of an advertising nature.
31.3. Text that is capitalized or underscored in the standard format outline of coverage may be emphasized by other means that provide prominence equivalent to the capitalization or underscoring.
31.4. Use of the text and sequence of text of the standard format outline of coverage is mandatory, unless otherwise specifically indicated.
31.5. Format for outline of coverage:
[COMPANY NAME]
[ADDRESS - CITY & STATE]
[TELEPHONE NUMBER]
LONG-TERM CARE INSURANCE
OUTLINE OF COVERAGE [Policy Number or Group Master Policy and Certificate Number] [Except for policies or certificates which are guaranteed issue, the following caution statement, or language substantially similar, must appear as follows in the outline of coverage.]
Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address]
-
This policy is [an individual policy of insurance]([a group policy] which was issued in the [indicate jurisdiction in which group policy was issued]).
-
PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides a very brief description of the important features of the policy. You should compare this outline of coverage to outlines of coverage for other policies available to you. This is not an insurance contract, but only a summary of coverage. Only the individual or group policy contains governing contractual provisions. This means that the policy or group policy sets forth in detail the rights and obligations of both you and the insurance company. Therefore, if you purchase this coverage, or any other coverage, it is important that you READ YOUR POLICY (OR CERTIFICATE) CAREFULLY!
-
FEDERAL TAX CONSEQUENCES.
This [POLICY] [CERTIFICATE] is intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended.
OR Federal Tax Implications of this [POLICY] [CERTIFICATE]. This [POLICY] [CERTIFICATE] is not intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986 as amended. Benefits received under the [POLICY] [CERTIFICATE] may be taxable as income.
- Terms Under Which the Policy OR Certificate May Be Continued in Force or Discontinued.
(a) [For long-term care health insurance policies or certificates describe one of the following permissible policy renewability provisions:
(1) Policies and certificates that are guaranteed renewable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your policy, [certificate] to continue this policy as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy on its own, except that, in the future, IT MAY INCREASE THE PREMIUM YOU PAY.
(2) [Policies and certificates that are noncancellable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS NONCANCELLABLE. This means that you have the right, subject to the terms of your policy, to continue this policy as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy on its own and cannot change the premium you currently pay. However, if your policy contains an inflation protection feature where you choose to increase your benefits, [Company Name] may increase your premium at that time for those additional benefits.
(b) [For group coverage, specifically describe continuation/conversion provisions applicable to the certificate and group policy;]
(c) [Describe waiver of premium provisions or state that there are not such provisions.]
-
TERMS UNDER WHICH THE COMPANY MAY CHANGE PREMIUMS. [In bold type larger than the maximum type required to be used for the other provisions of the outline of coverage, state whether or not the company has a right to change the premium, and if a right exists, describe clearly and concisely each circumstance under which the premium may change.]
-
TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.
(a) [Provide a brief description of the right to return–“free look” provision of the policy.]
(b) [Include a statement that the policy either does or does not contain provisions providing for a refund or partial refund of premium upon the death of an insured or surrender of the policy or certificate. If the policy contains such provisions, include a description of them.]
- THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare, review the Medicare Supplement Buyer’s Guide available from the insurance company.
(a) [For producers] Neither [insert company name] nor its producers represent Medicare, the federal government or any state government.
(b) [For direct response] [insert company name] is not representing Medicare, the federal government or any state government.
- LONG-TERM CARE COVERAGE. Policies of this category are designed to provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community or in the home.
This policy provides coverage in the form of a fixed dollar indemnity benefit for covered long-term care expenses, subject to policy [limitations] [waiting periods] and [coinsurance] requirements. [Modify this paragraph if the policy is not an indemnity policy.]
- BENEFITS PROVIDED BY THIS POLICY.
(a) [Covered services, related deductibles, waiting periods, elimination periods and benefit maximums.]
(b) [Institutional benefits, by skill level.]
(c) [Non-institutional benefits, by skill level.]
(d) Eligibility for Payment of Benefits [Activities of daily living and cognitive impairment shall be used to measure an insured’s need for long-term care and must be defined and described as part of the outline of coverage.] [Any additional benefit triggers must also be explained. If these triggers differ for different benefits, explanation of the triggers should accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too must be specified.]
- LIMITATIONS AND EXCLUSIONS. [Describe:
(a) Preexisting conditions;
(b) Non-eligible facilities and provider;
(c) Non-eligible levels of care (e.g., unlicensed providers, care or treatment provided by a family member, etc.);
(d) Exclusions and exceptions;
(e) Limitations.] [This section should provide a brief specific description of any policy provisions which limit, exclude, restrict, reduce, delay, or in any other manner operate to qualify payment of the benefits described in Number 6 above.]
THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.
- RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted. [As applicable, indicate the following:
(a) That the benefit level will not increase over time;
(b) Any automatic benefit adjustment provisions;
(c) Whether the insured will be guaranteed the option to buy additional benefits and the basis upon which benefits will be increased over time if not by a specified amount or percentage;
(d) If there is such a guarantee, include whether additional underwriting or health screening will be required, the frequency and amounts of the upgrade options, and any significant restrictions or limitations;
(e) And finally, describe whether there will be any additional premium charge imposed, and how that is to be calculated.]
-
ALZHEIMER’S DISEASE AND OTHER ORGANIC BRAIN DISORDERS. [State that the policy provides coverage for insureds clinically diagnosed as having Alzheimer’s disease or related degenerative and dementing illnesses. Specifically describe each benefit screen or other policy provision which provides preconditions to the availability of policy benefits for such an insured.]
-
PREMIUM. [(a) State the total annual premium for the policy;
(b) If the premium varies with an applicant’s choice among benefit options, indicate the portion of annual premium which corresponds to each benefit option.]
- ADDITIONAL FEATURES. [(a) Indicate if medical underwriting is used;
(b) Describe other important features.]
- CONTACT THE STATE SENIOR HEALTH INSURANCE ASSISTANCE PROGRAM IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE POLICY OR CERTIFICATE.
W. Va. Code R. § 114-32-32 Requirement to Deliver Shopper's Guide
32.1. A long-term care insurance shopper's guide in the format developed by the National Association of Insurance Commissioners, or a guide developed or approved by the Commissioner, shall be provided to all prospective applicants of a long-term care insurance policy or certificate.
32.1.a. In the case of t producer solicitations, a producer must deliver the shopper's guide prior to the presentation of an application or enrollment form.
32.1.b. In the case of direct response solicitation, the shopper's guide must be presented in conjunction with any application or enrollment form.
32.2. Life insurance policies or riders containing accelerated long-term care benefits are not required to furnish the above-referenced guide, but shall furnish the policy summary required under W. Va. Code §33-15A-6.
W. Va. Code R. § 114-32-33 Penalties
In addition to any other penalties provided by the laws of this state, any insurer and any producer found to have violated any requirement of this state relating to the regulation of long-term care insurance or the marketing of such insurance shall be subject to a fine of up to three (3) times the amount of any commissions paid for each policy involved in the violation or up to $10,000, whichever is greater.
APPENDIX A
RESCISSION REPORTING FORM FOR
LONG-TERM CARE POLICIES
FOR THE STATE OF WEST VIRGINIA
FOR THE REPORTING YEAR 20[ ]
Company Name:
Address:
Phone Number:
Due: March 1 annually Instructions:
The purpose of this form is to report all rescissions of long-term care insurance policies or certificates. Those rescissions voluntarily effectuated by an insured are not required to be included in this report. Please furnish one form per rescission.
Policy Form # Policy and Certificate # Name of Insured Date of Policy Issuance Date/s Claim/s Submitted Date of Rescission Detailed reason for rescission:
Signature Name and Title (please type)
Date
APPENDIX B
Long Term Care Insurance Personal Worksheet People buy long-term care insurance for many reasons. Some don’t want to use their own assets to pay for long-term care. Some buy insurance to make sure they can choose the type of care they get. Others don’t want their family to have to pay for care or don’t want to go on Medicaid. But long term care insurance may be expensive, and may not be right for everyone.
By state law, the insurance company must fill out part of the information on this worksheet and ask you to fill out the rest to help you and the company decide if you should buy this policy.
Premium Information Policy Form Numbers The premium for the coverage you are considering will be [$ per month, or $ per year,] [a one-time single premium of $ .]
Type of Policy (noncancellable/guaranteed renewable):
The Company's Right to Increase Premiums: [The company cannot raise your rates on this policy.] [The company has a right to increase premiums on this policy form in the future, provided it raises rates for all policies in the same class in this state.] [Insurers shall use appropriate bracketed statement. Rate guarantees shall not be shown on this form.]
Rate Increase History The company has sold long-term care insurance since [year] and has sold this policy since [year]. [The company has never raised its rates for any long-term care policy it has sold in this state or any other state.] [The company has not raised its rates for this policy form or similar policy forms in this state or any other state in the last 10 years.] [The company has raised its premium rates on this policy form or similar policy forms in the last 10 years. Following is a summary of the rate increases.]
Questions Related to Your Income How will you pay each year’s premium? ☐ From my Income ☐ From my Savings/Investments ☐ My Family will Pay [ Have you considered whether you could afford to keep this policy if the premiums went up, for example, by 20%?]
What is your annual income? (check one) ☐ Under $10,000 ☐ $[10-20,000] ☐ $[20-30,000] ☐ $[30-50,000] ☐ Over $50,000 How do you expect your income to change over the next 10 years? (check one) ☐ No change ☐ Increase ☐ Decrease If you will be paying premiums with money received only from your own income, a rule of thumb is that you may not be able to afford this policy if the premiums will be more than 7% of your income.
Will you buy inflation protection? (check one) ☐ Yes ☐ No If not, have you considered how you will pay for the difference between future costs and your daily benefit amount? ☐ From my Income ☐ From my Savings/Investments ☐ My Family will Pay The national average annual cost of care in [insert year] was [insert $ amount], but this figure varies across the country. In ten years the national average annual cost would be about [insert $ amount] if costs increase 5% annually.
What elimination period are you considering? Number of days _______ Approximate cost $__________ for that period of care.
How are you planning to pay for your care during the elimination period? (check one) ☐ From my Income ☐ From my Savings/Investments ☐ My Family will Pay Questions Related to Your Savings and Investments Not counting your home, about how much are all of your assets (your savings and investments) worth? (check one) ☐ Under $20,000 ☐ $20,000-$30,000 ☐ $30,000-$50,000 ☐ Over $50,000 How do you expect your assets to change over the next ten years? (check one) ☐ Stay about the same ☐ Increase ☐ Decrease If you are buying this policy to protect your assets and your assets are less than $30,000, you may wish to consider other options for financing your long-term care.
Disclosure Statement ☐ The answers to the questions above describe my financial situation.
Or ☐ I choose not to complete this information.
(Check one.) ☐ I acknowledge that the carrier or its producer (below) has reviewed this form with me including the premium, premium rate increase history and potential for premium increases in the future. [For direct mail situations, use the following: I acknowledge that I have reviewed this form including the premium, premium rate increase history and potential for premium increases in the future.] I understand the above disclosures. I understand that the rates for this policy may increase in the future. (This box must be checked).
Signed:
(Applicant) (Date) [☐ I explained to the applicant the importance of completing this information.
Signed:
(Producer) (Date)
Producer’s Printed Name: _____________________________________________________] [In order for us to process your application, please return this signed statement to [name of company], along with your application.] [My producer has advised me that this policy does not seem to be suitable for me. However, I still want the company to consider my application.
Signed:_______________________________________________________________________]
(Applicant) (Date)
The company may contact you to verify your answers.
APPENDIX C
Things You Should Know Before You Buy Long-Term Care Insurance Long-Term Care Insurance A long-term care insurance policy may pay most of the costs for your care in a nursing home. Many policies also pay for care at home or other community settings. Since policies can vary in coverage, you should read this policy and make sure you understand what it covers before you buy it. [You should not buy this insurance policy unless you can afford to pay the premiums every year.] [Remember that the company can increase premiums in the future.]
The personal worksheet includes questions designed to help you and the company determine whether this policy is suitable for your needs.
Medicare Medicare does not pay for most long-term care.
Medicaid Medicaid will generally pay for long-term care if you have very little income and few assets. You probably should not buy this policy if you are now eligible for Medicaid.
Many people become eligible for Medicaid after they have used up their own financial resources by paying for long-term care services.
When Medicaid pays your spouse’s nursing home bills, you are allowed to keep your house and furniture, a living allowance, and some of your joint assets.
Your choice of long-term care services may be limited if you are receiving Medicaid. To learn more about Medicaid, contact your local or state Medicaid agency.
Shopper’s Guide Make sure the insurance company or producer gives you a copy of a book called the National Association of Insurance Commissioners’ “Shopper’s Guide to Long-Term Care Insurance.” Read it carefully. If you have decided to apply for long-term care insurance, you have the right to return the policy within 30 days and get back any premium you have paid if you are dissatisfied for any reason or choose not to purchase the policy.
Counseling Free counseling and additional information about long-term care insurance are available through your state’s insurance counseling program. Contact your state insurance department or department on aging for more information about the senior health insurance counseling program in your state.
Facilities Some long-term care insurance contracts provide for benefit payments in certain facilities only if they are licensed or certified, such as in assisted living centers. However, not all states regulate these facilities in the same way. Also, many people move into a different state from where they purchased their long-term care insurance policy. Read the policy carefully to determine what types of facilities qualify for benefit payments, and to determine that payment for a covered service will be made if you move to a state that has a different licensing scheme for facilities than the one in which you purchased the policy.
APPENDIX D
Long-Term Care Insurance Suitability Letter Dear [Applicant]:
Your recent application for long-term care insurance included a “personal worksheet,” which asked questions about your finances and your reasons for buying long-term care insurance. For your protection, state law requires us to consider this information when we review your application, to avoid selling a policy to those who may not need coverage. [Your answers indicate that long-term care insurance may not meet your financial needs. We suggest that you review the information provided along with your application, including the booklet “Shopper’s Guide to Long-Term Care Insurance” and the page titled “Things You Should Know Before Buying Long-Term Care Insurance.” Your state insurance department also has information about long-term care insurance and may be able to refer you to a counselor free of charge who can help you decide whether to buy this policy.] [You chose not to provide any financial information for us to review.]
We have suspended our final review of your application. If, after careful consideration, you still believe this policy is what you want, check the appropriate box below and return this letter to us within the next 60 days. We will then continue reviewing your application and issue a policy if you meet our medical standards.
If we do not hear from you within the next 60 days, we will close your file and not issue you a policy. You should understand that you will not have any coverage until we hear back from you, approve your application and issue you a policy.
Please check one box and return in the enclosed envelope. ☐ Yes, [although my worksheet indicates that long-term care insurance may not be a suitable purchase,] I wish to purchase this coverage. Please resume review of my application. ☐ No. I have decided not to buy a policy at this time.
APPLICANT’S SIGNATURE DATE
Please return to [issuer] at [address] by [date].
APPENDIX E
Claims Denial Reporting Form Long-Term Care Insurance For the State of For the Reporting Year of Company Name: Due: June 30 annually Company Address:
Company NAIC Number:
Contact Person: Phone Number:
Line of Business: Individual Group Instructions The purpose of this form is to report all long-term care claim denials under in force long-term care insurance policies. Indicate the manner of reporting by checking one of the boxes below: [ ] Per Claimant - counts each individual who makes one or a series of claim requests. [ ] Per Transaction - counts each claim payment request.
“Denied” means a claim that is not paid for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition.
State Data Nationwide Data1 Total Number of Long-Term Care Claims Reported Total Number of Long-Term Care Claims Denied/Not Paid Number of Claims Not Paid due to Preexisting Condition Exclusion Number of Claims Not Paid due to Waiting (Elimination) Period Not Met Net Number of Long-Term Care Claims Denied for Reporting Purposes (Line 2 Minus Line 3 Minus Line 4)
Percentage of Long-Term Care Claims Denied of Those Reported (Line 5 Divided By Line 1)
Number of Long-Term Care Claim Denied due to:
Long-Term Care Services Not Covered under the Policy2 Provider/Facility Not Qualified under the Policy3 Benefit Eligibility Criteria Not Met4 Other 1. The nationwide data may be viewed as a more representative and credible indicator where the data for claims reported and denied for your state are small in number.
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Example—home health care claim filed under a nursing home only policy.
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Example—a facility that does not meet the minimum level of care requirements or the licensing requirements as outlined in the policy.
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Examples—a benefit trigger not met, certification by a licensed health care practitioner not provided, no plan of care.
APPENDIX F
Instructions:
This form provides information to the applicant regarding premium rate schedules, rate schedule adjustments, potential rate revisions, and policyholder options in the event of a rate increase.
Insurers shall provide all of the following information to the applicant:
Long Term Care Insurance Potential Rate Increase Disclosure Form 1. [Premium Rate] [Premium Rate Schedules]: [Premium rate] [Premium rate schedules] that [is][are] applicable to you and that will be in effect until a request is made and [filed][approved] for an increase [is][are] [on the application][$_____])
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The [premium] [premium rate schedule] for this policy [will be shown on the schedule page of] [will be attached to] your policy.
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Rate Schedule Adjustments:
The company will provide a description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.) (fill in the blank):
- Potential Rate Revisions:
This policy is Guaranteed Renewable. This means that the rates for this product may be increased in the future. Your rates can NOT be increased due to your increasing age or declining health, but your rates may go up based on the experience of all policyholders with a policy similar to yours.
If you receive a premium rate or premium rate schedule increase in the future, you will be notified of the new premium amount and you will be able to exercise at least one of the following options:
Pay the increased premium and continue your policy in force as is.
Reduce your policy benefits to a level such that your premiums will not increase. (Subject to state law minimum standards.)
Exercise your nonforfeiture option if purchased. (This option is available for purchase for an additional premium.)
Exercise your contingent nonforfeiture rights.* (This option may be available if you do not purchase a separate nonforfeiture option.) * Contingent Nonforfeiture If the premium rate for your policy goes up in the future and you didn’t buy a nonforfeiture option, you may be eligible for contingent nonforfeiture. Here’s how to tell if you are eligible:
You will keep some long-term care insurance coverage, if:
Turn the Page Your premium after the increase exceeds your original premium by the percentage shown (or more) in the following table; and You lapse (not pay more premiums) within 120 days of the increase.
The amount of coverage (i.e., new lifetime maximum benefit amount) you will keep will equal the total amount of premiums you’ve paid since your policy was first issued. If you have already received benefits under the policy, so that the remaining maximum benefit amount is less than the total amount of premiums you’ve paid, the amount of coverage will be that remaining amount.
Except for this reduced lifetime maximum benefit amount, all other policy benefits will remain at the levels attained at the time of the lapse and will not increase thereafter.
Should you choose this Contingent Nonforfeiture option, your policy, with this reduced maximum benefit amount, will be considered “paid-up” with no further premiums due.
Example:
You bought the policy at age 65 and paid the $1,000 annual premium for 10 years, so you have paid a total of $10,000 in premium.
In the eleventh year, you receive a rate increase of 50%, or $500 for a new annual premium of $1,500, and you decide to lapse the policy (not pay any more premiums).
Your “paid-up” policy benefits are $10,000 (provided you have a least $10,000 of benefits remaining under your policy.)
Turn the Page Contingent Nonforfeiture Cumulative Premium Increase over Initial Premium That qualifies for Contingent Nonforfeiture (Percentage increase is cumulative from date of original issue. It does NOT represent a one-time increase.)
Issue Age Percent Increase Over Initial Premium 29 and under 200% 30-34 190% 35-39 170% 40-44 150% 45-49 130% 50-54 110% 55-59 90% 70% 66% 62% 58% 54% 50% 48% 46% 44% 42% 40% 38% 36% 34% 32% 30% 28% 26% 24% 22% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 90 and over 10% [The following contingent nonforfeiture disclosure need only be included for those limited pay policies to which Sections 28D(4) and 28D(6) of the regulation are applicable].
In addition to the contingent nonforfeiture benefits described above, the following reduced “paid-up” contingent nonforfeiture benefit is an option in all policies that have a fixed or limited premium payment period, even if you selected a nonforfeiture benefit when you bought your policy. If both the reduced “paid-up” benefit AND the contingent benefit described above are triggered by the same rate increase, you can chose either of the two benefits.
You are eligible for the reduced “paid-up” contingent nonforfeiture benefit when all three conditions shown below are met:
- The premium you are required to pay after the increase exceeds your original premium by the same percentage or more shown in the chart below;
Triggers for a Substantial Premium Increase Percent Increase Triggers for a Substantial Premium Increase Percent Increase Issue Age Over Initial Premium Under 65 50% 65-80 30% Over 80 10% 2. You stop paying your premiums within 120 days of when the premium increase took effect; AND 3. The ratio of the number of months you already paid premiums is 40% or more than the number of months you originally agreed to pay.
If you exercise this option your coverage will be converted to reduced “paid-up” status. That means there will be no additional premiums required. Your benefits will change in the following ways:
a. The total lifetime amount of benefits your reduced paid up policy will provide can be determined by multiplying 90% of the lifetime benefit amount at the time the policy becomes paid up by the ratio of the number of months you already paid premiums to the number of months you agreed to pay them.
b. The daily benefit amounts you purchased will also be adjusted by the same ratio.
If you purchased lifetime benefits, only the daily benefit amounts you purchased will be adjusted by the applicable ratio.
Example:
You bought the policy at age 65 with an annual premium payable for 10 years.
In the sixth year, you receive a rate increase of 35% and you decide to stop paying premiums.
Because you have already paid 50% of your total premium payments and that is more than the 40% ratio, your “paid-up” policy benefits are .45 (.90 times .50) times the total benefit amount that was in effect when you stopped paying your premiums. If you purchased inflation protection, it will not continue to apply to the benefits in the reduced “paid-up” policy.
APPENDIX G
Long-Term Care Insurance Replacement and Lapse Reporting Form For the State of For the Reporting Year of Company Name: Due: June 30 annually Company Address: Company NAIC Number:
Contact Person: Phone Number: (____)
Instructions The purpose of this form is to report on a statewide basis information regarding long-term care insurance policy replacements and lapses. Specifically, every insurer shall maintain records for each producer on that producer’s amount of long-term care insurance replacement sales as a percent of the producer’s total annual sales and the amount of lapses of long-term care insurance policies sold by the producer as a percent of the producer’s total annual sales. The tables below should be used to report the ten percent (10%) of the insurer’s producers with the greatest percentages of replacements and lapses.
Listing of the 10% of Producers with the Greatest Percentage of Replacements Producer’s Name Number of Policies Sold By This Producer Number of Policies Replaced By This Producer Number of Replacements As % of Number Sold By This Producer Listing of the 10% of Producers with the Greatest Percentage of Lapses Producer’s Name Number of Policies Sold By This Producer Number of Policies Lapsed By This Producer Number of Lapses As % of Number Sold By This Producer Company Totals Percentage of Replacement Policies Sold to Total Annual Sales ____% Percentage of Replacement Policies Sold to Policies In Force (as of the end of the preceding calendar year) ____% Percentage of Lapsed Policies to Total Annual Sales _____% Percentage of Lapsed Policies to Policies In Force (as of the end of the preceding calendar year) _____%
Appendix H Guidelines for long-term care independent review entities In order for an organization to qualify as an independent review organization for long-term care insurance benefit trigger decisions, it shall comply with all of the following:
a. The independent review organization shall ensure that all health care professionals on its staff and with whom it contracts to provide benefit trigger determination reviews hold a current unrestricted license or certification to practice a health care profession in the United States.
b. The independent review organization shall ensure that any health care professional on its staff and with whom it contracts to provide benefit trigger determination reviews who is a physician holds a current certification by a recognized American medical specialty board in a specialty appropriate for determining an insured's functional or cognitive impairment.
c. The independent review organization shall ensure that any health care professional on its staff and with whom it contracts to provide benefit trigger determination reviews who is not a physician holds a current certification in the specialty in which that person is licensed, by a recognized American specialty board in a specialty appropriate for determining an insured's functional or cognitive impairment.
d. The independent review organization shall ensure that all health care professionals on its staff and with whom it contracts to provide benefit trigger determination reviews have no history of disciplinary actions or sanctions including, but not limited to, the loss of staff privileges or any participation restriction taken or pending by any hospital or state or federal government regulatory agency.
e. The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed health care professionals, utilized for benefit trigger determination reviews receives compensation of any type that is dependent on the outcome of the review.
f. The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed health care professionals it utilizes for benefit trigger determination reviews are in any manner related to, employed by or affiliated with the insurer, insured or with a person who previously provided medical care or long term care services to the insured.
g. The independent review organization shall provide a description of the qualifications of the reviewers retained to conduct independent review of long-term care insurance benefit trigger decisions, including the reviewer's current and past employment history, practice affiliations and a description of past experience with decisions relating to long-term care, functional capacity, dependency in activities of daily living, or in assessing cognitive impairment. Specifically, with regard to reviews of tax qualified long-term care insurance contracts, it must demonstrate the ability to assess the severity of cognitive impairment requiring substantial supervision to protect the individual from harm, or with assessing deficits in the ability to perform without substantial assistance from another person at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity.
h. The independent review organization shall provide a description of the procedures employed to ensure that reviewers conducting independent reviews are appropriately licensed, registered or certified; trained in the principles, procedures and standards of the independent review organization; and knowledgeable about the functional or cognitive impairments associated with the diagnosis and disease staging processes, including expected duration of such impairment, which is the subject of the independent review.
i. The independent review organization shall provide the number of reviewers retained by the independent review organization and a description of the areas of expertise available from such reviewers and the types of cases such reviewers are qualified to review (e.g., assessment of cognitive impairment or inability to perform activities of daily living due to a loss of functional capacity).
j. The independent review organization shall provide a description of the policies and procedures employed to protect confidentiality of protected health information, in accordance with federal and state law.
k. The independent review organization shall provide a description of its quality assurance program.
l. The independent review organization shall provide the names of all corporations and organizations owned or controlled by the independent review organization or which own or control the organization, and the nature and extent of any such ownership or control. The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed health care professionals utilized are not a subsidiary of, or owned or controlled by, an insurer or by a trade association of insurers of which the insured is a member.
m. The independent review organization shall provide the names and resumes of all directors, officers and executives of the independent review organization.
Series 34 Filing Fees For Purchasing Groups And For Risk Retention Groups Not Chartered In this State
W. Va. Code R. § 114-34-1 General
1.1. Scope. -- This legislative rule implements the provisions of W. Va. Code ''33-32-17 and 33-32-4 relating to all purchasing groups, and to risk retention groups not chartered in this State. The rule establishes the amounts of registration fees to be paid by both types of entities, as well as the amounts of annual financial statement filing fees to be paid by these risk retention groups. It also provides for increases in the fees for risk retention groups chartered in other jurisdictions that impose higher analogous fees on risk retention groups domiciled in West Virginia.
1.2. Authority. -- W. Va. Code ''33-2-10, 33-32-4 (f), and 33-32-17(e)
1.3. Filing Date. -- April 27, 1994
1.4. Effective Date. -- April 27, 1994
W. Va. Code R. § 114-34-2 Registration Fees for Purchasing Groups, and for Risk Retention Groups Not Chartered in this State
2.1. Each purchasing group seeking to do business in this State, and each risk retention group not chartered in this State but seeking to do business in West Virginia, shall remit a two hundred dollar ($200) processing fee upon the initial filing of registration materials with the Insurance Commissioner.
2.2. Each purchasing group already registered to do business in West Virginia, and each risk retention group not chartered in this state but already registered to do business here shall remit a fifty dollar ($50) processing fee upon the filing of any registration materials modification with the Insurance Commissioner.
W. Va. Code R. § 114-34-3 Annual Financial Statement Filing Fees for Risk Retention Groups Not Chartered in this State
Each risk retention group not chartered in this State, but registered or seeking to register with the Insurance Commissioner to do business as a risk retention group in West Virginia, shall remit a one hundred dollar ($100) fee upon filing with the Commissioner its annual financial statement required by W. Va. Code '33-32-4(e)(1).
W. Va. Code R. § 114-34-4 Retaliatory Fee Increases for Risk Retention Groups Not Chartered in this State
As provided in W. Va. Code '33-3-16(a), when another state charges a higher fee to West Virginia-domiciled risk retention groups than a fee set in Section 2 or 3 of this rule, a risk retention group chartered in that state and doing business or seeking to do business in West Virginia shall remit to the Insurance Commissioner the higher fee equivalent to the registration fee or annual statement filing fee, or its counterpart, which the other state charges to West Virginia- domiciled risk retention groups.
W. Va. Code R. § 114-34-5 Fees Designated for Insurance Department Operation
All fees remitted by purchasing groups, and by risk retention groups not chartered in this State, pursuant to this rule are designated by W. Va. Code '33-3-13(b) for use by the Insurance Commissioner in operating the Insurance Department of this State.
W. Va. Code R. § 114-34-6 Severability
If any provision of this rule or the application thereof to any person or circumstance is for any reason held invalid, the remainder of the rule and the application of that provision to other persons or circumstances shall not be affected thereby.
114CSR34
Series 35 Insurance Holding Company Systems
W. Va. Code R. § 114-35-1 General
W. Va. Code R. § 114-35-2 Definitions
W. Va. Code R. § 114-35-3 Forms - General Requirements
W. Va. Code R. § 114-35-4 Forms - Incorporation by Reference, Summaries and Omissions
W. Va. Code R. § 114-35-5 Forms - Information Unknown or Unavailable and Extension of Time to Furnish
W. Va. Code R. § 114-35-6 Forms - Additional Information and Exhibits
W. Va. Code R. § 114-35-7 Subsidiaries of Domestic Insurers
W. Va. Code R. § 114-35-8 Acquisition of Control - Statement Filing
W. Va. Code R. § 114-35-9 Amendments to Form A
W. Va. Code R. § 114-35-10 Acquisition of W. Va. Code §33-27-3(a)(4) Insurers
W. Va. Code R. § 114-35-11 Pre-Acquisition Notification
W. Va. Code R. § 114-35-12 Annual Registration of Insurers - Statement Filing
W. Va. Code R. § 114-35-13 Summary of Changes to Registration - Statement Filing
W. Va. Code R. § 114-35-14 Amendments to Form B
W. Va. Code R. § 114-35-15 Alternative and Consolidated Registrations
W. Va. Code R. § 114-35-16 Disclaimers and Termination of Registration
W. Va. Code R. § 114-35-17 Transactions Subject to Prior Notice - Notice Filing
W. Va. Code R. § 114-35-18 Enterprise Risk Report
W. Va. Code R. § 114-35-19 Extraordinary Dividends and Other Distributions
W. Va. Code R. § 114-35-20 Adequacy of Surplus
W. Va. Code R. § 114-35-21 Group Capital Calculation
Appendices
Appendix A - Form A - Statement Regarding The Acquisition Of Control Of Or Merger With A Domestic Insurer
Appendix B - Form B - Insurance Holding Company System Annual Registration Statement
Appendix C - Form C - Summary Of Changes To Registration Statement
Appendix D - Form D - Prior Notice Of A Transaction
Appendix E - Form E - Pre-Acquisition Notification Form Regarding The Potential Competitive Impact Of A Proposed Merger Or Acquisition By A Non-Domiciliary Insurer Doing Business In This State Or By A Domestic Insurer
Appendix F - Form F - Enterprise Risk Report TITLE 114 LEGISLATIVE RULE INSURANCE COMMISSIONER SERIES 35 INSURANCE HOLDING COMPANY SYSTEMS
W. Va. Code R. § 114-35-1 General
1.1. Scope. -- The purpose of this rule is to set forth rules and procedural requirements that the Commissioner deems necessary to carry out the provisions of the West Virginia Holding Company Systems Act, W. Va. Code §33-27-1 et seq. The information required by this rule is hereby declared to be necessary and appropriate in the public interest and for the protection of the policyholders in this state. This rule is based on the National Association of Insurance Commissioners’ (NAIC) “Insurance Holding Company System Model Regulation with Reporting Forms and Instructions” (Model 450), as amended in 2021.
1.2. Authority. -- W. Va. Code §§33-27-14 and 33-2-10.
1.3. Filing Date. -- April 6, 2026.
1.4. Effective Date. -- April 6, 2026.
1.5. Sunset Date. -- This rule shall terminate and have no further force or effect upon August 1, 2036.
W. Va. Code R. § 114-35-2 Definitions
As used in this legislative rule:
2.1. “Commissioner” means the West Virginia Insurance Commissioner.
2.2. “Executive officer” means the chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officer under whatever title.
2.3. “Form A” means the form as set forth in Appendix A of this rule.
2.4. “Form B” means the form as set forth in Appendix B of this rule.
2.5. “Form C” means the form as set forth in Appendix C of this rule.
2.6. “Form D” means the form as set forth in Appendix D of this rule.
2.7. “Form E” means the form as set forth in Appendix E of this rule.
2.8. “Form F” means the form as set forth in Appendix F of this rule.
2.9. “Ultimate controlling person” means that person which is not controlled by any other person.
W. Va. Code R. § 114-35-3 Forms -- General Requirements
3.1. Forms A, B, C, D, E and F are intended to be guides in the preparation of the statements required by W. Va. Code §§33-27-3, -3a, -4 and -5. They are not intended to be blank forms to be filled in. The statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers thereto are prepared in such a manner as to indicate clearly the scope and coverage of the items. All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made.
3.2. Three (3) complete copies of each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with the Commissioner by personal delivery or mail addressed to: West Virginia Offices of the Insurance Commissioner, 900 Pennsylvania Avenue, Charleston, WV 25302, Attention: Financial Conditions Division. At least one of the copies shall be signed in the manner prescribed on the form. Unsigned copies shall be conformed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of the power of attorney or other authority shall also be filed with the statement.
3.3. If an applicant requests a hearing on a consolidated basis under W. Va. Code §33-27-3(f)(3), in addition to filing Form A with the Commissioner, the applicant shall file a copy of Form A with the NAIC in electronic form within five days of making such request.
3.4. Statements should be prepared electronically. Statements shall be easily readable and suitable for review and reproduction. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies. Statements shall be in the English language and monetary values shall be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language, and any monetary value shown in a foreign currency normally shall be converted into United States currency.
W. Va. Code R. § 114-35-4 Forms -- Incorporation by Reference, Summaries and Omissions
4.1. Information required by any item of Form A, Form B, Form D, Form E or Form F may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Form A, Form B, Form D, Form E or Form F provided the document is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the Commissioner which were filed within three (3) years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that the material is to be incorporated by reference in answer to the item. Matter shall not be incorporated by reference in any case where the incorporation would render the statement incomplete, unclear or confusing.
4.2. Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the Commissioner which was filed within three (3) years and may be qualified in its entirety by such reference. In any case where two (2) or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties thereto, the dates of execution, or other details, a copy of only one of the documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which the documents differ from the documents, a copy of which is filed.
W. Va. Code R. § 114-35-5 Forms -- Information Unknown or Unavailable and Extension of Time to Furnish
5.1. If it is impractical to furnish any required information, document or report at the time it is required to be filed, there shall be filed with the Commissioner, as a separate document:
5.1.1. Identifying the information, document or report in question;
5.1.2. Stating why the filing thereof at the time required is impractical; and
5.1.3. Requesting an extension of time for filing the information, document or report to a specified date. The request for extension shall be deemed granted unless the Commissioner within sixty (60) days after receipt thereof enters an order denying the request.
W. Va. Code R. § 114-35-6 Forms -- Additional Information and Exhibits
In addition to the information expressly required to be included in Form A, Form B, Form C, Form D, Form E and Form F, the Commissioner may request such further material information, if any, as may be necessary to make the information contained therein not misleading. The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. The exhibits shall be marked to indicate clearly the subject matters to which they refer. Changes to Forms A, B, C, D, E or F shall include on the top of the cover page the phrase: “Change No. [INSERT NUMBER] to” and shall indicate the date of the change and not the date of the original filing.
W. Va. Code R. § 114-35-7 Subsidiaries of Domestic Insurers
The authority to invest in subsidiaries under W. Va. Code §33-27-2a(b) is in addition to any authority to invest in subsidiaries which may be contained in any other provision of the Insurance Code.
W. Va. Code R. § 114-35-8 Acquisition of Control -- Statement Filing
A person required to file a statement pursuant to W. Va. Code §33-27-3 shall furnish the required information on Form A and on Form E.
W. Va. Code R. § 114-35-9 Amendments to Form A
The applicant shall promptly advise the Commissioner of any changes in the information furnished on Form A arising subsequent to the date upon which the information was furnished but prior to the Commissioner’s disposition of the application.
W. Va. Code R. § 114-35-10 Acquisition of W. Va. Code §33-27-3(a)(4) Insurers
10.1. If the person being acquired is considered to be a “domestic insurer” solely because of the provisions of W. Va. Code §33-27-3(a)(4), the name of the domestic insurer on the cover page should be indicated as follows:
“ABC Insurance Company, a subsidiary of XYZ Holding Company.”
10.2. Where a W. Va. Code §33-27-3(a)(4) insurer is being acquired, references to “the insurer” contained in Form A shall refer to both the domestic subsidiary insurer and the person being acquired.
W. Va. Code R. § 114-35-11 Pre-Acquisition Notification
If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to W. Va. Code §33-27-3(a)(1), that person shall file a pre-acquisition notification form, Form E.
Additionally, if a non-domiciliary insurer licensed to do business in this state is proposing a merger or acquisition pursuant to W. Va. Code §33-27-3a, that person shall file a pre-acquisition notification form, Form E. No pre-acquisition notification form need be filed if the acquisition is beyond the scope of W. Va. Code §33-27-3a, as set forth in W. Va. Code §33-27-3a(b)(2).
In addition to the information required by Form E, the Commissioner may require an expert opinion as to the competitive impact of the proposed acquisition.
W. Va. Code R. § 114-35-12 Annual Registration of Insurers -- Statement Filing
An insurer required to file an annual registration statement pursuant to W. Va. Code §33-27-4 shall furnish the required information on Form B.
W. Va. Code R. § 114-35-13 Summary of Changes to Registration -- Statement Filing
An insurer required to file an annual registration statement pursuant to W. Va. Code §33-27-4 is also required to furnish information required on Form C.
W. Va. Code R. § 114-35-14 Amendments to Form B
14.1. An amendment to Form B shall be filed within fifteen (15) days after the end of any month in which there is a material change to the information provided in the annual registration statement.
14.2. Amendments shall be filed in the Form B format with only those items which are being amended reported. Each amendment shall include at the top of the cover page “Amendment No. [INSERT NUMBER] to Form B for [INSERT YEAR]” and shall indicate the date of the change and not the date of the original filings.
W. Va. Code R. § 114-35-15 Alternative and Consolidated Registrations
15.1. Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under W. Va. Code §33-27-4. A registration statement may include information not required by statute regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this state. In lieu of filing a registration statement on Form B, the authorized insurer may file a copy of the registration statement or similar report which it is required to file in its state of domicile, provided:
15.1.1. The statement or report contains substantially similar information required to be furnished on Form B; and
15.1.2. The filing insurer is the principal insurance company in the insurance holding company system.
15.2. The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Form B on behalf of an affiliated insurer, shall set forth a brief statement of facts which will substantiate the filing insurer’s claim that it, in fact, is the principal insurer in the insurance holding company system.
15.3. With the prior approval of the Commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under subsection 15.1 of this section.
15.4. Any insurer may take advantage of the provisions of W. Va. Code §33-27-4(h) (consolidated filing) or (i) (alternative registration) without obtaining the prior approval of the Commissioner. The Commissioner, however, reserves the right to require individual filings if he or she considers the filings necessary in the interest of clarity, ease of administration or the public good.
W. Va. Code R. § 114-35-16 Disclaimers and Termination of Registration
16.1. A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (hereinafter referred to as the “subject”) shall contain the following information:
16.1.1. The number of authorized, issued and outstanding voting securities of the subject;
16.1.2. With respect to the person whose control is denied and all affiliates of that person, the number and percentage of shares of the subject’s voting securities which are held of record or known to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly;
16.1.3. All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of that person; and
16.1.4. A statement explaining why the person should not be considered to control the subject.
16.2. A request for termination of registration shall be deemed to have been granted unless the Commissioner, within thirty (30) days after receipt of the request, notifies the registrant otherwise.
W. Va. Code R. § 114-35-17 Transactions Subject to Prior Notice -- Notice Filing
17.1. An insurer required to give notice of a proposed transaction pursuant to W. Va. Code §33-27-5 shall furnish the required information on Form D.
17.2. Agreements for cost-sharing services and management services shall at a minimum and as applicable:
17.2.1. Identify the person providing services and the nature of such services;
17.2.2. Set forth the methods to allocate costs;
17.2.3. Require timely settlement, not less frequently than on a quarterly basis, and compliance with the requirements in the Accounting Practices and Procedures Manual;
17.2.4. Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;
17.2.5. State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;
17.2.6. Define data and records of the insurer to include all data and records developed or maintained under or related to the agreement that are otherwise the property of the insurer, in whatever form maintained, including, but not limited to, claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records or similar records within the possession, custody or control of the affiliate;
17.2.7. Specify that all data and records of the insurer are and remain the property of the insurer and:
17.2.7.a. Are subject to control of the insurer;
17.2.7.b. Are identifiable; and
17.2.7.c. Are segregated from all other persons’ data and records or are readily capable of segregation at no additional cost to the insurer;
17.2.8. State that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer;
17.2.9. Include standards for termination of the agreement with and without cause;
17.2.10. Include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services and for any actions by the affiliate that violate provisions of the agreement required in subdivisions 17.2.11, 17.2.12, 17.2.13, 17.2.14 and 17.2.15 of this section;
17.2.11. Specify that, if the insurer is placed in supervision, seizure, conservatorship or receivership by the Commissioner under W. Va. Code §33-10-1 et seq. and W. Va. Code §33-34-1 et seq.:
17.2.11.a. All of the rights of the insurer under the agreement extend to the receiver or Commissioner; and
17.2.11.b. All data and records of the insurer shall be identifiable and segregated from all persons’ data and records or readily capable of segregation at no additional cost to the receiver or the Commissioner;
17.2.11.c. A complete set of data and records of the insurer will immediately be made available to the receiver or the Commissioner, shall be made available in a usable format and shall be turned over to the receiver or Commissioner immediately upon the receiver’s or the Commissioner’s request, and the cost to transfer data to the receiver or the Commissioner shall be fair and reasonable; and
17.2.11.d. The affiliated person(s) will make available all employees essential to the operations of the insurer and the services associated therewith for the immediate continued performance of the essential services ordered or directed by the receiver or Commissioner;
17.2.12. Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in supervision, seizure, conservatorship or receivership pursuant to W. Va. Code §33-10-1 et seq. and W. Va. Code §33-34-1 et seq.;
17.2.13. Specify that the affiliate will continue to maintain any systems, programs, or other infrastructure, notwithstanding supervision, seizure, conservatorship or receivership by the Commissioner under W. Va. Code §33-10-1 et seq. and W. Va. Code §33-34-1 et seq., and will make them available to the receiver or Commissioner, for so long as the affiliate continues to receive timely payment for post-receivership services rendered, and unless released by the receiver, Commissioner or supervising court;
17.2.14. Specify that the affiliate will provide the essential services for a minimum period of time, as specified in the agreement, after termination of the agreement if the insurer is placed into supervision, seizure, conservatorship or receivership pursuant to W. Va. Code §33-10-1 et seq. and W. Va. Code §33-34-1 et seq., as ordered or directed by the receiver or Commissioner. Performance of the essential services will continue to be provided without regard to pre-receivership unpaid fees, so long as the affiliate continues to receive timely payment for post-receivership services rendered, and unless released by the receiver, Commissioner or supervising court; and
17.2.15. Specify that, in furtherance of the cooperation between the receiver and the affected guaranty association(s) and subject to the receiver’s authority over the insurer, if the insurer is placed into supervision, seizure, conservatorship or receivership pursuant to W. Va. Code §33-10-1 et seq. and W. Va. Code §33-34-1 et seq. and portions of the insurer’s policies or contracts are eligible for coverage by one or more guaranty associations, the affiliate’s commitments under subdivisions 17.2.11, 17.2.12, 17.2.13 and 17.2.14 of this section will extend to such guaranty association(s).
W. Va. Code R. § 114-35-18 Enterprise Risk Report
The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to W. Va. Code §33-27-4(l)(1) shall furnish the required information on Form F; the requirement to file an enterprise risk report shall take effect on July 1, 2013.
W. Va. Code R. § 114-35-19 Extraordinary Dividends and Other Distributions
19.1. Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:
19.1.1. The amount of the proposed dividend;
19.1.2. The date established for payment of the dividend;
19.1.3. A statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation;
19.1.4. A copy of the calculations determining that the proposed dividend is extraordinary. The work paper shall include the following information:
19.1.4.a. The amounts, dates and form of payment of all dividends or distributions (including regular dividends but excluding distributions of the insurer’s own securities) paid within the period of twelve (12) consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and commencing on the day after the same day of the same month in the last preceding year;
19.1.4.b. Surplus as regards policyholders (total capital and surplus) as of the 31st day of December next preceding;
19.1.4.c. If the insurer is a life insurer, the net gain from operations for the twelve (12) month period ending the 31st day of December next preceding;
19.1.4.d. If the insurer is not a life insurer, the net income less realized capital gains for the twelve (12) month period ending the 31st day of December next preceding and the two (2) preceding twelve (12) months periods; and
19.1.4.e. If the insurer is not a life insurer, the dividends paid to stockholders excluding distributions of the insurer’s own securities in the preceding two (2) calendar years;
19.1.5. A balance sheet and statement of income for the period intervening from the last annual statement filed with the Commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and
19.1.6. A brief statement as to the effect of the proposed dividend upon the insurer’s surplus and the reasonableness of the surplus in relation to the insurer’s outstanding liabilities and the adequacy of surplus relative to the insurer’s financial needs.
19.2. Subject to W. Va. Code §33-27-5(c), each registered insurer shall report to the Commissioner all dividends and other distributions to shareholders within fifteen (15) business days following the declaration thereof, including the same information required by subdivision 19.1.4 of this section.
W. Va. Code R. § 114-35-20 Adequacy of Surplus
The factors set forth in W. Va. Code §33-27-5(b) are not intended to be an exhaustive list. In determining the adequacy of the reasonableness of an insurer’s surplus, no single factor is necessarily controlling. The Commissioner, instead, will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by other insurers, the Commissioner will consider the extent to which each of these factors varies from company to company and in determining the quality and liquidity of investments in subsidiaries, the Commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments warrant.
W. Va. Code R. § 114-35-21 Group Capital Calculation
21.1. Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination based upon that filing that the insurance holding company system meets all of the following criteria:
21.1.1. Has annual direct written and unaffiliated assumed premium (including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than $1,000,000,000;
21.1.2. Has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories;
21.1.3. Has no banking, depository or other financial entity that is subject to an identified regulatory capital framework within its holding company structure;
21.1.4. The holding company system attests that there are no material changes in the transactions between insurers and non-insurers in the group that have occurred since the last filing of the annual group capital; and
21.1.5. The non-insurers within the holding company system do not pose a material financial risk to the insurer’s ability to honor policyholder obligations.
21.2. Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to accept in lieu of the group capital calculation a limited group capital filing if:
21.2.1. The insurance holding company system has annual direct written and unaffiliated assumed premium (including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than $1,000,000,000; and all of the following additional criteria are met:
21.2.1.a. Has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories;
21.2.1.b. Does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework; and
21.2.1.c. The holding company system attests that there are no material changes in transactions between insurers and non-insurers in the group that have occurred since the last filing of the report to the lead state commissioner and the non-insurers within the holding company system do not pose a material financial risk to the insurers’ ability to honor policyholder obligations.
21.3. For an insurance holding company that has previously met an exemption with respect to the group capital calculation pursuant to subsections 21.1 or 21.2 of this section, the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the NAIC Group Capital Calculation Instructions, if any of the following criteria are met:
21.3.1. Any insurer within the insurance holding company system is in a Risk-Based Capital action level event as set forth in W. Va. Code §33-40-1 et seq. or a similar standard for a non-United States insurer; or
21.3.2. Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in W. Va. Code §33-34-3a; or
21.3.3. Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer as determined by the lead state commissioner based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.
21.4. A non-United States jurisdiction is considered to “recognize and accept” the group capital calculation if it satisfies the following criteria:
21.4.1. With respect to the W. Va. Code §33-27-4(l)((2)(A)(iv):
21.4.1.a. The non-United States jurisdiction recognizes the United States state regulatory approach to group supervision and group capital, by providing confirmation by a competent regulatory authority, in such jurisdiction, that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC Accreditation Program shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-United States jurisdiction; or
21.4.1.b. Where no United States insurance groups operate in the non-United States jurisdiction, that non-United States jurisdiction indicates formally in writing to the lead state with a copy to the International Association of Insurance Supervisors that the group capital calculation is an acceptable international capital standard. This will serve as the documentation otherwise required in paragraph 21.4.1.a. of this section.
21.4.2. The non-United States jurisdiction provides confirmation by a competent regulatory authority in such jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC. The commissioner shall determine, in consultation with the NAIC Committee Process, if the requirements of the information sharing agreements are in force.
21.5. A list of non-United States jurisdictions that “recognize and accept” the group capital calculation will be published through the NAIC Committee Process pursuant to the following criteria:
21.5.1. A list of jurisdictions that “recognize and accept” the group capital calculation pursuant to W. Va. Code §33-27-4(l)((2)(A)(iv), is published through the NAIC Committee Process to assist the lead state commissioner in determining which insurers shall file an annual group capital calculation. The list will clarify those situations in which a jurisdiction is exempted from filing under W. Va. Code §33-27-4(l)((2)(A)(iv). To assist with a determination under W. Va. Code §33-27-4(l)((2)(B), the list will also identify whether a jurisdiction that is exempted under either W. Va. Code §33-27-4(l)((2)(A)(iii) or W. Va. Code §33-27-4(l)((2)(A)(iv) requires a group capital filing for any United States based insurance group’s operations in that non-United States jurisdiction.
21.5.2. For a non-United States jurisdiction where no United States insurance groups operate, the confirmation provided to meet the requirement of paragraph 21.4.1.b. of this section will serve as support for recommendation to be published as a jurisdiction that “recognizes and accepts” the group capital calculation through the NAIC Committee Process.
21.5.3. If the lead state commissioner makes a determination pursuant to W. Va. Code §33-27-4(l)((2)(A)(iv) that differs from the NAIC List, the lead state commissioner shall provide thoroughly documented justification to the NAIC and other states.
21.5.4. Upon determination by the lead state commissioner that a non-United States jurisdiction no longer meets one or more of the requirements to “recognize and accept” the group capital calculation, the lead state commissioner may provide a recommendation to the NAIC that the non-United States jurisdiction be removed from the list of jurisdictions that “recognize and accepts” the group capital calculation.
Appendix A FORM A STATEMENT REGARDING THE ACQUISITION OF CONTROL OF OR MERGER WITH A DOMESTIC INSURER ________________________ Name of Domestic Insurer BY ____________________________ Name of Acquiring Person (Applicant)
Filed with the Insurance Department of (State of domicile of insurer being acquired)
Dated:_________________________, 20___________ Name, title, address and telephone number of Individual to Whom Notices and Correspondence Concerning this Statement Should be Addressed:
ITEM 1. METHOD OF ACQUISITION
State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.
ITEM 2. IDENTITY AND BACKGROUND OF THE APPLICANT
(a) State the name and address of the applicant seeking to acquire control over the insurer.
(b) If the applicant is not an individual, state the nature of its business operations for the past five years or for such lesser period as such person and any predecessors thereof shall have been in existence. Briefly describe the business intended to be done by the applicant and the applicant’s subsidiaries.
(c) Furnish a chart or listing clearly presenting the identities of the interrelationships among the applicant and all affiliates of the applicant. Indicate in such chart or listing the percentage of voting securities of each such person which is owned or controlled by the applicant or by any other such person. If control of any person is maintained other than by the ownership or control of voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g. corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings involving a reorganization or liquidation are pending with respect to any such person, indicate which person, and set forth the title of the court, nature of proceedings and the date when commenced.
ITEM 3. IDENTITY AND BACKGROUND OF INDIVIDUALS ASSOCIATED WITH THE APPLICANT
On the biographical affidavit, include a third party background check, and state the following with respect to (1) the applicant if (s)he is an individual or (2) all persons who are directors, executive officers or owners of 10% or more of the voting securities of the applicant if the applicant is not an individual.
(a) Name and business address;
(b) Present principal business activity, occupation or employment including position and office held and the name, principal business and address of any corporation or other organization in which such employment is carried on;
(c) Material occupations, positions, offices or employment during the last five years, giving the starting and ending dates of each and the name, principal business and address of any business corporation or other organization in which each such occupation, position, office or employment was carried on; if any such occupation, position, office or employment required licensing by or registration with any federal, state or municipal governmental agency, indicate such fact, the current status of such licensing or registration, and an explanation of any surrender, revocation, suspension or disciplinary proceedings in connection therewith.
(d) Whether or not such person has ever been convicted in a criminal proceeding (excluding minor traffic violations) during the last ten years and, if so, give the date, nature of conviction, name and location of court, and penalty imposed or other disposition of the case.
ITEM 4. NATURE, SOURCE AND AMOUNT OF CONSIDERATION
(a) Describe the nature, source and amount of funds or other considerations used or to be used in effecting the merger or other acquisition of control. If any part of the same is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding or trading securities, furnish a description of the transaction, the names of the parties thereto, the relationship, if any, between the borrower and the lender, the amounts borrowed or to be borrowed, and copies of all agreements, promissory notes and security arrangements relating thereto.
(b) Explain the criteria used in determining the nature and amount of such consideration.
(c) If the source of the consideration is a loan made in the lender’s ordinary course of business and if the applicant wishes the identity of the lender to remain confidential, he must specifically request that the identity be kept confidential.
ITEM 5. FUTURE PLANS OF INSURER
Describe any plans or proposals which the applicant may have to declare an extraordinary dividend, to liquidate such insurer, to sell its assets to or merge it with any person or persons or to make any other material change in its business operations or corporate structure or management.
ITEM 6. VOTING SECURITIES TO BE ACQUIRED
State the number of shares of the insurer’s voting securities which the applicant, its affiliates and any person listed in Item 3 plan to acquire, and the terms of the offer, request, invitation, agreement or acquisition, and a statement as to the method by which the fairness of the proposal was arrived at.
ITEM 7. OWNERSHIP OF VOTING SECURITIES
State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates or any person listed in Item 3.
ITEM 8. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS WITH RESPECT TO VOTING SECURITIES OF THE INSURER
Give a full description of any contracts, arrangements or understandings with respect to any voting security of the insurer in which the applicant, its affiliates or any person listed in Item 3 is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. Such description shall identify the persons with whom the contracts, arrangements or understandings have been entered into.
ITEM 9. RECENT PURCHASES OF VOTING SECURITIES
Describe any purchases of any voting securities of the insurer by the applicant, its affiliates or any person listed in Item 3 during the 12 calendar months preceding the filing of this statement. Include in the description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid therefor. State whether any shares so purchased are hypothecated.
ITEM 10. RECENT RECOMMENDATIONS TO PURCHASE
Describe any recommendations to purchase any voting security of the insurer made by the applicant, its affiliates or any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the applicant, its affiliates or any person listed in Item 3 during the 12 calendar months preceding the filing of this statement.
ITEM 11. AGREEMENTS WITH BROKER-DEALERS
Describe the terms of any agreement, contract or understanding made with any broker-dealer as to the solicitation of voting securities of the insurer for tender and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto.
ITEM 12. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements, exhibits, and three-year financial projections of the insurer(s) shall be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached.
(b) The financial statements shall include the annual financial statements of the persons identified in Item 2(c) for the preceding five fiscal years (or for such lesser period as such applicant and its affiliates and any predecessors thereof shall have been in existence), and similar information covering the period from the end of such person’s last fiscal year, if the information is available. The statements may be prepared on either an individual basis, or, unless the Commissioner otherwise requires, on a consolidated basis if consolidated statements are prepared in the usual course of business.
The annual financial statements of the applicant shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the Annual Statement of the person filed with the insurance department of the person’s domiciliary state and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of the state.
(c) File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, and agreements to acquire or exchange any voting securities of the insurer and (if distributed) of additional soliciting material relating thereto, any proposed employment, consultation, advisory or management contracts concerning the insurer, annual reports to the stockholders of the insurer and the applicant for the last two fiscal years, and any additional documents or papers required by Form A or Rule §§ 114-35-3 and 114-35-5.
ITEM 13. AGREEMENT REQUIREMENTS FOR ENTERPRISE RISK MANAGEMENT
Applicant agrees to provide, to the best of its knowledge and belief, the information required by Form F within fifteen (15) days after the end of the month in which the acquisition of control occurs.
ITEM 14. SIGNATURE AND CERTIFICATION
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of W. Va. Code §33-27-3 ______________________ has caused this application to be duly signed on its behalf in the City of _______________________ and State of ___________________________ on the __________ day of __, 20.
(SEAL)_____________________________
Name of Applicant BY_________________________________ (Name) (Title)
Attest:
(Signature of Officer)
(Title)
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached application dated ___________, 20, for and on behalf of ______________________(Name of Applicant); that (s)he is the ____________________________(Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with the instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.
(Signature)_______________________________ (Type or print name beneath)_____________________________
Appendix B FORM B INSURANCE HOLDING COMPANY SYSTEM ANNUAL REGISTRATION STATEMENT Filed with the Insurance Department of the State of _______________________ By ______________________________________ Name of Registrant On Behalf of the Following Insurance Companies Name Address Date:____________, 20 Name, title, address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:
ITEM 1. IDENTITY AND CONTROL OF REGISTRANT
Furnish the exact name of each insurer registering or being registered (hereinafter called “the Registrant”), the home office address and principal executive offices of each; the date on which each Registrant became part of the insurance holding company system; and the method(s) by which control of each Registrant was acquired and is maintained.
ITEM 2. ORGANIZATIONAL CHART
Furnish a chart or listing clearly presenting the identities of and interrelationships among all affiliated persons within the insurance holding company system. The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of the control. As to each person specified in the chart or listing indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile.
ITEM 3. THE ULTIMATE CONTROLLING PERSON
As to the ultimate controlling person in the insurance holding company system furnish the following information:
(a) Name;
(b) Home office address;
(c) Principal executive office address;
(d) The organizational structure of the person, i.e., corporation, partnership, individual, trust, etc.;
(e) The principal business of the person;
(f) The name and address of any person who holds or owns 10% or more of any class of voting security, the class of such security, the number of shares held of record or known to be beneficially owned, and the percentage of class so held or owned; and (g) If court proceedings involving a reorganization or liquidation are pending, indicate the title and location of the court, the nature of proceedings and the date when commenced.
ITEM 4. BIOGRAPHICAL INFORMATION
If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, furnish the following information for the directors and executive officers of the ultimate controlling person: the individual’s name and address, his or her principal occupation and all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations. If the ultimate controlling person is an individual, furnish the individual’s name and address, his or her principal occupation and all offices and positions held during the past 5 years, and any conviction of crimes other than minor traffic violations.
ITEM 5. TRANSACTIONS AND AGREEMENTS
Briefly describe the following agreements in force, and transactions currently outstanding or which have occurred during the last calendar year between the Registrant and its affiliates:
(a) Loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the Registrant or of the Registrant by its affiliates;
(b) Purchases, sales or exchanges of assets;
(c) Transactions not in the ordinary course of business;
(d) Guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the Registrant’s assets to liability, other than insurance contracts entered into in the ordinary course of the Registrant’s business;
(e) All management agreements, service contracts and all cost-sharing arrangements;
(f) Reinsurance agreements;
(g) Dividends and other distributions to shareholders;
(h) Consolidated tax allocation agreements; and (i) Any pledge of the Registrant’s stock and/or of the stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system.
No information need be disclosed if such information is not material for purposes of W. Va. Code §33-27-4.
Sales, purchases, exchanges, loans or extensions of credit, investments or guarantees involving one-half of 1% or less of the Registrant's admitted assets as of the 31st day of December next preceding shall not be deemed material.
The description shall be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include at least the following: the nature and purpose of the transaction, the nature and amounts of any payments or transfers of assets between the parties, the identity of all parties to the transaction, and relationship of the affiliated parties to the Registrant.
ITEM 6. LITIGATION OR ADMINISTRATIVE PROCEEDINGS
A brief description of any litigation or administrative proceedings of the following types, either then pending or concluded within the preceding fiscal year, to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any such person is or was the subject; give the names of the parties and the court or agency in which the litigation or proceeding is or was pending:
(a) Criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party thereto; and (b) Proceedings which may have a material effect upon the solvency or capital structure of the ultimate holding company including, but not necessarily limited to, bankruptcy, receivership or other corporate reorganizations.
ITEM 7. STATEMENT REGARDING PLAN OR SERIES OF TRANSACTIONS
The insurer shall furnish a statement that transactions entered into since the filing of the prior year’s annual registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.
ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements and exhibits should be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached.
(b) If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, the financial statements shall include the annual financial statements of the ultimate controlling person in the insurance holding company system as of the end of the person’s latest fiscal year.
If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information shall be filed for any subsequent period to the extent such information is available. Such financial statements may be prepared on either an individual basis; or, unless the Commissioner otherwise requires, on a consolidated basis if consolidated statements are prepared in the usual course of business.
Other than with respect to the foregoing, such financial statement shall be filed in a standard form and format adopted by the National Association of Insurance Commissioners, unless an alternative form is accepted by the Commissioner. Documentation and financial statements filed with the Securities and Exchange Commission or audited GAAP financial statements shall be deemed to be an appropriate form and format.
Unless the Commissioner otherwise permits, the annual financial statements shall be accompanied by the certificate of an independent public accountant to the effect that the statements present fairly the financial position of the ultimate controlling person and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the Annual Statement of the insurer's domiciliary state and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of that state.
Any ultimate controlling person who is an individual may file personal financial statements that are reviewed rather than audited by an independent public accountant. The review shall be conducted in accordance with standards for review of personal financial statements published in the Personal Financial Statements Guide by the American Institute of Certified Public Accountants. Personal financial statements shall be accompanied by the independent public accountant’s Standard Review Report stating that the accountant is not aware of any material modifications that should be made to the financial statements in order for the statements to be in conformity with generally accepted accounting principles.
(c) Exhibits shall include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person; and any additional documents or papers required by Form B or Rule §§114-35-3 and 114-35-5.
ITEM 9. FORM C REQUIRED
A Form C, Summary of Registration Statement, must be prepared and filed with this Form B.
ITEM 10. SIGNATURE AND CERTIFICATION
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of W. Va. Code §33-27-4, Registrant has caused this annual registration statement to be duly signed on its behalf in the City of_____________________ and State of ___________________________ on the __________ day of ____, 20.
(SEAL)_____________________________
Name of Applicant BY _______________________________ (Name) (Title)
Attest:
(Signature of Officer)
(Title)
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached annual registration statement dated ________, 20, for and on behalf of _____________ (Name of Applicant); that (s)he is the __________________ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.
(Signature)_______________________________ (Type or print name beneath)_____________________________
Appendix C FORM C SUMMARY OF CHANGES TO REGISTRATION STATEMENT Filed with the Insurance Department of the State of __________ By _____________________________ Name of Registrant On Behalf of the Following Insurance Companies Name Address Date:____________________, 20 ______ Name, title, address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:
Furnish a brief description of all items in the current annual registration statement which represent changes from the prior year’s annual registration statement. The description shall be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include specific references to Item numbers in the annual registration statement and to the terms contained therein.
Changes occurring under Item 2 of Form B insofar as changes in the percentage of each class of voting securities held by each affiliate is concerned, need only be included where such changes are ones which result in ownership or holdings of 10 percent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.
Changes occurring under Item 4 of Form B need only be included where an individual is, for the first time, made a director or executive officer of the ultimate controlling person; a director or executive officer terminates his or her responsibilities with the ultimate controlling person; or in the event an individual is named president of the ultimate controlling person.
If a transaction disclosed on the prior year’s annual registration statement has been changed, the nature of such change shall be included. If a transaction disclosed on the prior year’s annual registration statement has been effectuated, furnish the mode of completion and any flow of funds between affiliates resulting from the transaction.
The insurer shall furnish a statement that transactions entered into since the filing of the prior year’s annual registration statement are not part of a plan or series of like transactions whose purpose it is to avoid statutory threshold amounts and the review that might otherwise occur.
SIGNATURE AND CERTIFICATION
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of W. Va. Code §33-27-4, Registrant has caused this annual registration statement to be duly signed on its behalf in the City of ____________________ and State of ___________________________ on the __________ day of __, 20.
(SEAL)_____________________________
Name of Registrant BY _____________________________ (Name) (Title)
Attest:
(Signature of Officer)
(Title)
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached annual registration statement dated , 20, for and on behalf of______________(Name of Applicant); that (s)he is the ____________________________(Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.
(Signature)_______________________________ (Type or print name beneath)_____________________________
Appendix D FORM D PRIOR NOTICE OF A TRANSACTION Filed with the Insurance Department of the State of _________ By _______________________________________ Name of Registrant On Behalf of the Following Insurance Companies Name Address Date:_________________________, 20______________ Name, Title, Address and Telephone Number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:
ITEM 1. IDENTITY OF PARTIES TO TRANSACTION
Furnish the following information for each of the parties to the transaction:
(a) Name;
(b) Home office address;
(c) Principal executive office address;
(d) The organizational structure, i.e. corporation, partnership, individual, trust, etc.;
(e) A description of the nature of the parties' business operations;
(f) Relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval, or by the insurer filing the notice in the affiliated parties;
(g) Where the transaction is with a non-affiliate, the name(s) of the affiliate(s) which will receive, in whole or in substantial part, the proceeds of the transaction.
ITEM 2. DESCRIPTION OF THE TRANSACTION
Furnish the following information for each transaction for which notice is being given:
(a) A statement as to whether notice is being given under W. Va. Code §§33-27-5(d)(1), (2), (3), (4) or (5);
(b) A statement of the nature of the transaction;
(c) A statement of how the transaction meets the “fair and reasonable” standard of W. Va. Code §33-27-5(a)(1); and (d) The proposed effective date of the transaction.
ITEM 3. SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, GUARANTEES OR INVESTMENTS
Furnish a brief description of the amount and source of funds, securities, property or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice, a description of the terms of any securities being received, if any, and a description of any other agreements relating to the transaction such as contracts or agreements for services, consulting agreements and the like. If the transaction involves other than cash, furnish a description of the consideration, its cost and its fair market value, together with an explanation of the basis for evaluation.
If the transaction involves a loan, extension of credit or a guarantee, furnish a description of the maximum amount which the insurer will be obligated to make available under such loan, extension of credit or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of or deferral of interest.
If the transaction involves an investment, guarantee or other arrangement, state the time period during which the investment, guarantee or other arrangement will remain in effect, together with any provisions for extensions or renewals of such investments, guarantees or arrangements. Furnish a brief statement as to the effect of the transaction upon the insurer’s surplus.
No notice need be given if the maximum amount which can at any time be outstanding or for which the insurer can be legally obligated under the loan, extension of credit or guarantee is less than (a) in the case of non-life insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders, or (b) in the case of life insurers, 3% of the insurer's admitted assets, each as of the 31st day of December next preceding.
ITEM 4. LOANS OR EXTENSIONS OF CREDIT TO A NON-AFFILIATE
If the transaction involves a loan or extension of credit to any person who is not an affiliate, furnish a brief description of the agreement or understanding whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase the assets of, or to make investments in, any affiliate of the insurer making such loans or extensions of credit, and specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of or make investments in any affiliate. Describe the amount and source of funds, securities, property or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, a description of its cost and its fair market value together with an explanation of the basis for evaluation. Furnish a brief statement as to the effect of the transaction upon the insurer’s surplus.
No notice need be given if the loan or extension of credit is one which equals less than, in the case of non-life insurers, the lesser of 3% of the insurer’s admitted assets or 25% of surplus as regards policyholders or, with respect to life insurers, 3% of the insurer’s admitted assets, each as of the 31st day of December next preceding.
ITEM 5. REINSURANCE
If the transaction is a reinsurance agreement or modification thereto, as described by W. Va. Code §33-27-5(d)(3)(B), or a reinsurance pooling agreement or modification thereto as described by W. Va. Code §33-27-5(d)(3)(A), furnish a description of the known and/or estimated amount of liability to be ceded and/or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and non-affiliate to the effect that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer’s affiliates. Furnish a brief description of the consideration involved in the transaction, and a brief statement as to the effect of the transaction upon the insurer’s surplus.
No notice need be given for reinsurance agreements or modifications thereto if the reinsurance premium or a change in the insurer’s liabilities, or the projected reinsurance premium or change in the insurer’s liabilities in any of the next three years, in connection with the reinsurance agreement or modification thereto is less than 5% of the insurer’s surplus as regards policyholders, as of the 31st day of December next preceding. Notice shall be given for all reinsurance pooling agreements including modifications thereto.
ITEM 6. MANAGEMENT AGREEMENTS, SERVICE AGREEMENTS AND COST-SHARING ARRANGEMENTS
For management and service agreements, furnish:
(a) A brief description of the managerial responsibilities, or services to be performed;
(b) A brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made.
For cost-sharing arrangements, furnish:
(a) A brief description of the purpose of the agreement;
(b) A description of the period of time during which the agreement is to be in effect;
(c) A brief description of each party’s expenses or costs covered by the agreement;
(d) A brief description of the accounting basis to be used in calculating each party’s costs under the agreement;
(e) A brief statement as to the effect of the transaction upon the insurer’s policyholder surplus;
(f) A statement regarding the cost allocation methods that specifies whether proposed charges are based on “cost or market.” If market based, rationale for using market instead of cost, including justification for the company’s determination that amounts are fair and reasonable; and (g) A statement regarding compliance with the NAIC Accounting Practices and Procedure Manual regarding expense allocation.
ITEM 7. SIGNATURE AND CERTIFICATION
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of W. Va. Code §33-27-5, ____________________ has caused this application to be duly signed on its behalf in the City of ____________________ and State of ___________________________ on the __________ day of __, 20.
(SEAL)_____________________________
Name of Applicant BY _________________________________ (Name) (Title)
Attest:
(Signature of Officer)
(Title)
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached application dated ___________, 20, for and on behalf of ____________________________ (Name of Applicant); that (s)he is the ____________________________ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.
(Signature)_______________________________ (Type or print name beneath)_________________
Appendix E FORM E PRE-ACQUISITION NOTIFICATION FORM REGARDING THE POTENTIAL COMPETITIVE IMPACT OF A PROPOSED MERGER OR ACQUISITION BY A NON-DOMICILIARY INSURER DOING BUSINESS IN THIS STATE OR BY A DOMESTIC INSURER ___________________________________ Name of Applicant ___________________________________ Name of Other Person Involved in Merger or Acquisition Filed with the Insurance Department of ______________________________________________________________________________ Dated:__________________________, 20 _______________ Name, title, address and telephone number of person completing this statement:
ITEM 1. NAME AND ADDRESS
State the names and addresses of the persons who hereby provide notice of their involvement in a pending acquisition or change in corporate control.
ITEM 2. NAME AND ADDRESSES OF AFFILIATED COMPANIES
State the names and addresses of the persons affiliated with those listed in Item 1. Describe their affiliations.
ITEM 3. NATURE AND PURPOSE OF THE PROPOSED MERGER OR ACQUISITION
State the nature and purpose of the proposed merger or acquisition.
ITEM 4. NATURE OF BUSINESS
State the nature of the business performed by each of the persons identified in response to Item 1 and Item 2.
ITEM 5. MARKET AND MARKET SHARE
State specifically what market and market share in each relevant insurance market the persons identified in Item 1 and Item 2 currently enjoy in this state. Provide historical market and market share data for each person identified in Item 1 and Item 2 for the past five years and identify the source of such data. Provide a determination as to whether the proposed acquisition or merger, if consummated, would violate the competitive standards of the state as stated in W. Va. Code §33-27-3a(d). If the proposed acquisition or merger would violate competitive standards, provide justification of why the acquisition or merger would not substantially lessen competition or create a monopoly in the state.
For purposes of this question, market means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state.
Appendix F FORM F ENTERPRISE RISK REPORT Filed with the Insurance Department of the State of______________________ By ____________________________________ Name of Registrant/Applicant On Behalf of/Related to Following Insurance Companies Name Address Date: _______________, 20 Name, Title, Address and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:
ITEM 1. ENTERPRISE RISK
The Registrant/Applicant, to the best of its knowledge and belief, shall provide information regarding the following areas that could produce enterprise risk as defined in W. Va. Code §33-27-2(4), provided such information is not disclosed in the Insurance Holding Company System Annual Registration Statement filed on behalf of itself or another insurer for which it is the ultimate controlling person:
• Any material developments regarding strategy, internal audit findings, compliance or risk management affecting the insurance holding company system;
• Acquisition or disposal of insurance entities and reallocating of existing financial or insurance entities within the insurance holding company system;
• Any changes of shareholders of the insurance holding company system exceeding ten percent (10%) or more of voting securities;
• Developments in various investigations, regulatory activities or litigation that may have a significant bearing or impact on the insurance holding company system;
• Business plan of the insurance holding company system and summarized strategies for next 12 months;
• Identification of material concerns of the insurance holding company system raised by supervisory college, if any, in last year;
• Identification of insurance holding company system capital resources and material distribution patterns;
• Identification of any negative movement, or discussions with rating agencies which may have caused, or may cause, potential negative movement in the credit ratings and individual insurer financial strength ratings assessment of the insurance holding company system (including both the rating score and outlook);
• Information on corporate or parental guarantees throughout the holding company and the expected source of liquidity should such guarantees be called upon; and • Identification of any material activity or development of the insurance holding company system that, in the opinion of senior management, could adversely affect the insurance holding company system.
The Registrant/Applicant may attach the appropriate form most recently filed with the U.S. Securities and Exchange Commission, provided the Registrant/Applicant includes specific references to those areas listed in Item 1 for which the form provides responsive information. If the Registrant/Applicant is not domiciled in the United States, it may attach its most recent public audited financial statement filed in its country of domicile, provided the Registrant/Applicant includes specific references to those areas listed in Item 1 for which the financial statement provides responsive information.
ITEM 2: OBLIGATION TO REPORT.
If the Registrant/Applicant has not disclosed any information pursuant to Item 1, the Registrant/Applicant shall include a statement affirming that, to the best of its knowledge and belief, it has not identified enterprise risk subject to disclosure pursuant to Item 1.
114CSR35
114CSR35
Series 37 Substandard Risk Motor Vehicle Insurance Notice
W. Va. Code R. § 114-37-1 General
1.1. Scope. -- This legislative rule implements the provisions of West Virginia Code '33-6-31c requiring a written notification on automobile insurance applications and policies written on substandard risks, and a written notification to substandard risk applicants and insureds regarding eligibility for coverage under a standard or preferred policy. This rule sets forth the format, style, design and method for approval of substandard risk insurance applications, policies, and notices, and any additional procedures required.
1.2. Authority. -- W. Va. Code '33-6-31c.
1.3. Filing Date. -- April 2, 1996.
1.4. Effective Date. -- April 2, 1996.
W. Va. Code R. § 114-37-2 Applicability
2.1. Applicability. -- This legislative rule applies to all insurers writing motor vehicle liability insurance in this State if the rate or premium charged for the motor vehicle liability coverage reflects a greater than normal exposure to loss which is assumed by an insurer writing insurance for a substandard risk. The notification provisions apply to all motor vehicle liability policies covering substandard risks issued on or after the effective date of this rule, all motor vehicle liability insurance applications covering substandard risks taken on or after the effective date of this rule, and all notices to substandard risk policyholders of eligibility for coverage under a standard or preferred policy arising on or after the effective date of this rule.
2.2. This legislative rule applies to insurance companies writing motor vehicle liability insurance coverage through the assigned risk plan ("AIPSO").
2.3. This legislative rule applies to insurance companies that write only one tier of motor vehicle liability insurance business if the rate or premium charged for such coverage reflects the greater than normal exposure to loss which is assumed by the insurer writing insurance for a substandard risk.
2.4. The provisions of this legislative rule do not apply to insurance policies issued or applications taken for commercial automobile liability insurance.
W. Va. Code R. § 114-37-3 Definitions
The following words and terms, when used in this rule, have the following meanings, unless the context clearly indicates otherwise:
3.1. "Application" means a printed form used by an insurance company which includes questions about a prospective insured and the desired insurance coverage and limits. It provides the insurer's underwriter with information for accepting or rejecting the prospective insured and rating the desired policy.
3.2. "Commissioner" means the Insurance Commissioner of the State of West Virginia.
3.3. "Contrasting Color" means a color strikingly dissimilar to the color of the other text and background as to produce an intensified effect that is easily readable and draws the attention of the reader.
3.4. "Form Filing" means a filing of the application and first page of the policy bearing the imprint of the specified statement submitted to the Commissioner for prior approval in accordance with W. Va. Code '33-6-8.
3.5. "Policy" is the form setting forth the automobile insurance declarations, insuring agreements, conditions and exceptions, often bound by a policy jacket.
3.6. "Reverse Print" means white text on a black background as to produce an intensified effect that is easily readable and draws the attention of the reader.
3.7. "State" means the State of West Virginia.
3.8. "Substandard Risk Insurance Application Notice" means the written notice required by W. Va. Code '33-6-31c(b).
3.9. "Substandard Risk Insurance Policy Notice" means the written notice required by W. Va. Code '33-6-31c(c). 3.10 ."Substandard Risk" means an applicant for insurance who presents a greater exposure to loss than that contemplated by commonly used rate classifications, as evidenced by one or more of the following conditions: (A) A record of traffic accidents; (B) A record of traffic law violations; (C) Undesirable occupational circumstances; or (D) Any other valid underwriting consideration.
3.11. "Substandard Risk Rate" means a rate or premium charge that reflects the greater than normal exposure to loss which is assumed by an insurer writing insurance for a substandard risk.
W. Va. Code R. § 114-37-4 Format of Substandard Risk Insurance Application Notice
4.1. The Application for a motor vehicle insurance policy to be issued in this State and written on the basis of a substandard risk rate schedule shall have printed directly thereon in a minimum 10 point bold-faced type in a contrasting color or in reverse print, a statement appearing on the front page of the Application reading substantially as follows: THE POLICY FOR WHICH YOU ARE APPLYING HAS BEEN RATED IN ACCORDANCE WITH A SPECIAL RATING SCHEDULE FILED WITH THE COMMISSIONER OF INSURANCE PROVIDING FOR HIGHER PREMIUM CHARGES THAN THOSE GENERALLY APPLICABLE FOR AVERAGE RISKS. IF THE COVERAGE OR PREMIUM IS NOT SATISFACTORY, YOU MAY BE ELIGIBLE FOR OTHER INSURANCE. IF THIS COVERAGE OR PREMIUM IS SATISFACTORY, YOU MAY BE ELIGIBLE FOR COVERAGE UNDER A STANDARD OR PREFERRED POLICY IF DURING THE NEXT THREE YEARS YOU HAVE NO TRAFFIC VIOLATIONS OR ACCIDENTS AND YOU MAINTAIN CONTINUOUS INSURANCE COVERAGE.
4.2. The Substandard Risk Application Notice shall be clear and conspicuous on the face of the Substandard Risk Application.
4.3. The Substandard Risk Application Notice may not be printed on a separate sheet of paper, on a sticker attached to the Application, or on an overlay sheet.
W. Va. Code R. § 114-37-5 Format of Substandard Risk Insurance Policy Notice
5.1. A motor vehicle insurance policy issued in this State and written on the basis of a substandard risk rate schedule shall have printed directly thereon, in a minimum 10 point boldfaced type in a contrasting color or in reverse print, a statement appearing on the policy jacket or the first page of the policy reading substantially as follows: THIS POLICY HAS BEEN RATED IN ACCORDANCE WITH A SPECIAL RATING SCHEDULE FILED WITH THE COMMISSIONER OF INSURANCE PROVIDING FOR HIGHER PREMIUM CHARGES THAN THOSE GENERALLY APPLICABLE FOR AVERAGE RISKS. IF THE COVERAGE OR PREMIUM IS NOT SATISFACTORY, YOU MAY BE ELIGIBLE FOR OTHER INSURANCE. IF THIS COVERAGE OR PREMIUM IS SATISFACTORY, YOU MAY BE ELIGIBLE FOR COVERAGE UNDER A STANDARD OR PREFERRED POLICY IF DURING THE NEXT THREE YEARS YOU HAVE NO TRAFFIC VIOLATIONS OR ACCIDENTS AND YOU MAINTAIN CONTINUOUS INSURANCE COVERAGE.
5.2. The Substandard Risk Insurance Policy Notice shall be clear and conspicuous on the face of the Substandard Risk Policy.
5.3. The Substandard Risk Insurance Policy Notice may not be printed on a separate sheet of paper, on a sticker attached to the Policy, or on an overlay sheet.
W. Va. Code R. § 114-37-6 Submission of Form Filing Required
6.1. All insurers shall submit the Form Filing to comply with W. Va. Code '33-6-31c to the Rates and Forms Division of the Office of the West Virginia Insurance Commissioner. The form filing is effective upon approval by the Commissioner.
6.2. The Form Filing shall include: Two (2) Cover Letters informing the Commissioner that this filing is submitted to comply with W. Va. Code '33-6-31c; a Form Filing Abstract (PCA-F-81); a copy of the properly imprinted application; a copy of the properly imprinted Policy Form; an amendment to the manual page stating that these imprinted forms are to be used with every automobile insurance policy written on a substandard risk in the State; and the appropriate filing fee required by W.Va. Code '33-6-34.
W. Va. Code R. § 114-37-7 Notice of Eligibility for Coverage Under Standard or Preferred Policy
7.1. All insurers selling or which have in force substandard risk motor vehicle insurance policies shall provide a one time notice in writing to their substandard risk policyholders who have maintained continuous insurance coverage for three years, have not been convicted of any moving traffic violations and had no at fault accidents, that they may be eligible for coverage under a standard or preferred policy.
7.2. The notice to substandard risk policyholders regarding their eligibility for coverage under a standard or preferred policy shall read substantially as follows: Our records show that for the past three years you have maintained continuous motor vehicle insurance coverage, have not been convicted of any moving traffic violations, and have had no at fault accidents. You may, therefore, be eligible for coverage under a standard or preferred policy at lower premium charges than those you are currently paying. To confirm your eligibility for such coverage, contact us at (appropriate address and telephone number)or contact the insurer of your choice.
7.3. The notice required in this section must be provided either by personal delivery or by regular mail addressed to the policyholder at the last address appearing for the policyholder in the records of the insurer.
W. Va. Code R. § 114-37-8 Severability
8.1. If any provision of this rule or the application of this rule to any person or circumstances is for any reason held to be invalid, the remainder of the rule and the application of the provisions to other persons or circumstances shall not be affected by the holding.
114CSR37
Series 38 Continuation Of Coverage Under Automobile Liability Policies
W. Va. Code R. § 114-38-1 General
1.1. Scope. -- This rule establishes the form and procedures for notice to be given by insurers to named insureds and spouses of named insureds with regard to the continuation of motor vehicle liability coverage when the named insured dies, becomes legally separated, or terminates his or her marital relationship.
1.2. Authority. -- W. Va. Code ''33-6-36(c), 33-2-10
1.3. Filing Date. -- April 22, 1994
1.4. Effective Date. -- April 22, 1994
W. Va. Code R. § 114-38-2 Applicability
2.1. Applicability. -- This rule applies to all motor vehicle liability policies under which the named insured is a natural person.
W. Va. Code R. § 114-38-3 Definitions
3.1. "Commissioner" means the Insurance Commissioner of the State of West Virginia.
3.2. "Named Insured" means any natural person who appears on the records of an insurer as an insured under a motor vehicle liability policy.
3.3. "Insurer" means any insurer offering or providing motor vehicle liability insurance coverage.
3.4. "Policy" means any motor vehicle liability policy.
3.5. "Expiration of Policy" or "Termination of Policy" means the discontinuation of coverage by the insurer under a motor vehicle liability policy as to any named insured or spouse of a named insured for any reason except those permissible reasons for cancellation and non-renewal of policies set forth in W. Va. Code ''33-6A-1 and 4.
W. Va. Code R. § 114-38-4 Notice of Policy Availability
4.1. Insurers must provide to all named insureds a notice in the form of Appendix A to this rule:
4.1.1. Either when the policy is issued, or at the first renewal of the policy after this rule is effective, whichever occurs first; and
4.1.2. Upon the occurrence of any change in the policy or termination of the policy for any reason other than those set forth in W. Va. Code ''33-6A-1 and 4.
4.2. The notice required in this section must be provided either by personal delivery or by regular mail addressed to the named insured at the last address appearing for the named insured in the records of the insurer.
W. Va. Code R. § 114-38-5 Mandatory Continuation of Coverage Upon Timely Request
5.1. As to all policies which have been in existence for a continuous period of two full years the insurer must issue a separate policy to any named insured or spouse of a named insured when:
5.1.1. The named insured has died;
5.1.2. The named insured has become legally separated from their spouse; or
5.1.3. The named insured has terminated their marital relationship with their spouse; and
5.1.4. The named insured or the named insured's spouse has made a request to the insurer for the issuance of their own policy and the request was made within thirty (30) days of the expiration or termination of the policy.
5.2. The named insured or spouse of the named insured may make a request for their own policy either in writing to the home office of the insurer or in writing or orally to a local agent of the insurer. In the event of an oral request, the insurer must within thirty (30) days of the request either:
5.2.1. Provide a written confirmation of the request to the named insured or spouse of the named insured; or
5.2.2. Issue a policy to the named insured or spouse of the named insured.
5.3. Property and casualty insurers which are organized for the sole purpose of providing insurance policies to members of a particular organization and which have provisions in their by-laws which prohibit the sale of insurance policies to nonmembers of that organization may condition the issuance of the policies addressed in this rule upon the named insureds' or spouse of the named insureds' continued membership in the organization. If the issuance of a policy is made mandatory by this rule, membership or continued membership in the subject organization shall be offered to the named insured or spouse of the named insured.
W. Va. Code R. § 114-38-6 No Lapse in Coverage
6.1. As to all policies issued pursuant to Section 5 of this rule, there will be no lapse in the coverage provided to the named insured or spouse of a named insured who has requested a separate policy so long as appropriate premiums are paid for all relevant time periods.
W. Va. Code R. § 114-38-7 Changes in Coverage Amount
7.1. Upon the issuance of policies pursuant to Section 5 of this rule, the named insured or spouse of named insured must be permitted by the insurer to increase or decrease coverage amounts to the same extent such coverage options would have been available under the original policy.
7.2. Requests for increases or decreases in coverage made pursuant to subsection 7.1 of this rule, will be effective at the time the request is made to the insurer.
W. Va. Code R. § 114-38-8 Severability
8.1. If any provision of this rule or the application of this rule to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of the provision to other persons or circumstances shall not be affected by the holding.
Appendix A IMPORTANT NOTICE OF POLICYHOLDER RIGHTS IN EVENT OF DEATH, LEGAL SEPARATION, OR TERMINATION OF MARRIAGE (DIVORCE)
OF THE NAMED INSURED
RIGHT TO REQUEST SEPARATE POLICY
If you have had your auto policy two full years and the named insured either dies, becomes legally separated, or the marital relationship ends (eg. divorce), then each named insured and the named insured's spouse has the right to request their own separate policy with this company.
MUST ACT WITHIN THIRTY DAYS OF END OF YOUR COVERAGE
If any of the situations above apply to you and you are a named insured or named insured's spouse, and you want your own separate policy you must make a request to this insurance company for your own separate policy within thirty days after the date the existing policy ends your coverage.
IMPORTANT TWO-YEAR POLICYHOLDER PROTECTIONS
Once you have had your auto policy for two full years you earn certain protection from your policy being terminated. After two years West Virginia law won't let your policy be terminated except for certain reasons which are spelled out by statute. If you switch coverage to a different insurance company you will lose these protections.
If you wish to make a request for your own separate policy as explained above please contact us at (appropriate address and telephone number).
114CSR38
Series 39 Group Accident And Sickness Insurance Minimum Policy Coverage Standards
W. Va. Code R. § 114-39-1 General
1.1. Scope and Applicability. -- This rule applies to all group accident and sickness insurance policies, all group subscriber contracts of hospital, medical, dental and health service corporations, health care corporations and fraternal benefit societies and all enrollee agreements or contracts of health maintenance organizations, issued in connection with a group health plan and delivered or issued for delivery in this state on and after the effective date hereof, except that it does not apply to:
a. Individual policies or contracts issued pursuant to a conversion privilege under a policy or contract of group insurance;
b. Individual policies or contracts issued to eligible individuals.
c. Credit accident and sickness insurance subject to WV 114CSR6 "Regulation of Credit Life Insurance and Credit Accident and Sickness Insurance;"
d. Medicare supplement insurance policies subject to WV 114CSR24 "Medicare Supplement Insurance; "
e. Long-term care insurance policies subject to WV 114CSR32 "Long-Term Care Insurance; "
f. Coverage under the West Virginia Public Employees Insurance Act (W. Va. Code §§5-16-1 et seq.): Provided, That this rule applies to a health benefit plan issued by a health insurer to provide medical care under the West Virginia Public Employees Insurance Act;
g. Coverage under Medicare or Medicaid: Provided, That this rule applies to a health benefit plan issued by a health insurer to provide medical care under Medicare or Medicaid;
h. Coverage under any automobile no-fault, workers' compensation, employer's liability, occupational disease or similar law;
i. Basic Hospital and Medical-Surgical Expense Coverage; and j. Individual limited benefits. "Limited benefits policy" means any individual or group accident and sickness insurance policy, including all riders thereto (and certificates in the case of a group policy), that covers one or more residents of this state and that is not required to offer or provide all benefits mandated by any other applicable provision of this chapter. Such policies include, but are not limited to, 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:"
-
Credit accident and sickness insurance;
-
Long-term care insurance;
-
Medicare supplement insurance;
-
Minimum benefits accident and sickness insurance issued pursuant to section fifteen, article fifteen of this chapter or article sixteen-c of this chapter;
-
Accident and sickness policies which provide benefits for loss of income due to disability;
-
Major medical policies;
-
Dental policies; and 8. Vision policies.
k. Disability income insurance
1.2. Sections 7, 8 and 9 of this rule apply only to group major medical expense coverage.
The requirements contained in this rule are in addition to WV 114CSR54 "Group Accident and Sickness Insurance Issuance, Portability and Marketing Requirements" and any other applicable rules previously adopted.
1.3. Authority. -- W. Va. Code §§33-2-10, 33-16-3(f), 33-16-17 and 33-16D-6.
1.4. Filing Date. -- April 3, 2003.
1.5. Effective Date. -- April 3, 2003.
1.6. Purpose. -- The purpose of this legislative rule is to provide reasonable standardization of coverage and simplification of terms and benefits of group accident and sickness insurance policies, subscriber contracts of hospital, medical, dental and health service corporations, health care corporations, fraternal benefit societies and enrollee agreements and contracts of health maintenance organizations, which are issued in connection with a group health plan; to facilitate public understanding and comparison of such policies, contracts and agreements, to eliminate provisions contained in such policies, contracts and agreements which may be misleading or confusing in connection with either their purchase or the settlement of claims; to provide for full disclosure in the sale of such policies, contracts and agreements; and to implement standards set forth in 1997 W. Va. Acts 109 and the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191), as amended by the Newborns' and Mothers' Health Protection Act of 1996 and the Mental Health Parity Act of 1996 (P.L. 104-204).
W. Va. Code R. § 114-39-2 Definitions
As used in this legislative rule:
2.1. "Applicant" means a person who seeks to contract for insurance coverage.
2.2. "Basic Hospital and Medical Surgical Expense Coverage" means policies designed to provide coverage for hospital and medical surgical expenses only incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, hospital out-patient services, surgical services, anesthesia services, and in-hospital medical services, subject to any limitations, deductibles and copayment requirements set forth in the policy. Coverage is not provided for unlimited hospital or medical surgical expenses.
2.3. "Bona Fide Association" means an association which:
a. Has been organized in good faith for purposes other than that of obtaining or providing insurance;
b. Has a minimum of one hundred members;
c. Has been actively in existence for at least five years;
d. Has a constitution and bylaws providing that:
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The association holds annual meetings to further purposes of its members;
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Except in the case of credit unions, the association collects dues or solicits contributions from members; and 3. The members have voting privileges and representation on the governing board and committees that exist under the authority of the association;
e. Does not condition membership in the association on any health status-related factor relating to an individual;
f. Makes accident and sickness insurance offered through the association available to all members regardless of any health status-related factor relating to members or individuals eligible for coverage through a member;
g. Does not make accident and sickness insurance coverage offered through the association available other than in connection with a member of the association; and h. Meets any additional requirements as may be set forth in chapter thirty-three of the W. Va. Code or by rule.
2.4. "Certificate" means any certificate delivered or issued for delivery in this state under a policy subject to this rule.
2.5. "Commissioner" means the Insurance Commissioner of the state of West Virginia.
2.6. "Eligible individual" means an individual:
a. For whom, as of the date on which the individual seeks coverage, the aggregate period of creditable coverage is eighteen months or more and whose most recent prior creditable coverage was under a group health plan, governmental plan (as defined in section 3(32) of the Employee Retirement Income Security Act of 1974), church plan (as defined in section 3(33) of the Employee Retirement Income Security Act of 1974) or accident and sickness insurance coverage offered in connection with any such plan;
b. Who is not eligible for coverage under a group health plan, Part A or Part B of Title XVIII of the Social Security Act, or state plan under Title XIX of such act (or any successor program), and does not have other accident and sickness insurance coverage;
c. With respect to whom the most recent prior creditable coverage was not terminated as a result of fraud, intentional misrepresentation of material fact under the terms of the coverage, or nonpayment of premium;
d. Who did not turn down an offer of continuation of coverage under a COBRA continuation provision or under a similar state program if it was offered; and e. Who, if the individual elected such continuation coverage, has exhausted that coverage under the COBRA continuation provision or similar state program.
2.7. "Enrollment date" means the first day of an individual's coverage under a policy, or if there is a waiting period for coverage, the first day of the waiting period.
2.8. "Excepted benefits" means:
a. Any policy of liability insurance or contract supplemental thereto; coverage only for accident or disability income insurance or any combination thereof; automobile medical payment insurance; credit-only insurance; coverage for on-site medical clinics, workers' compensation insurance; or other similar insurance under which benefits for medical care are secondary or incidental to other insurance benefits; or b. If offered separately, a policy providing benefits for long-term care, nursing home care, home health care, community-based care or any combination thereof, dental or vision benefits, or other similar, limited benefits; or c. If offered as independent, noncoordinated benefits under separate policies or certificates, specified disease or illness coverage, hospital indemnity or other fixed indemnity insurance, or coverage, such as medicare supplement insurance, supplemental to a group health plan; or d. A policy of accident and sickness insurance covering a period of less than one year.
2.9. "Group health plan" means an employee welfare benefit plan, including a church plan or a governmental plan, all as defined in section three of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1003, to the extent that the plan provides medical care. For purposes of this rule, "group health plan" includes any plan, fund or program which would not (but for this subsection) be a group health plan and which is established or maintained by a partnership, to the extent that such plan, fund or program provides medical care to present or former partners or their dependents (as defined under terms of the plan, fund or program).
2.10. "Health benefit plan" means benefits consisting of medical care provided, directly through insurance or reimbursement, or indirectly, including items and services paid for as medical care, under any hospital or medical expense incurred policy or certificate; hospital; medical or health service corporation contract; health maintenance organization contract; or plan provided by a multiple-employer trust or a multiple-employer welfare arrangement. "Health benefit plan" does not include a policy consisting solely of excepted benefits.
2.11. "Health Insurer" means any of the following entities that holds a valid certificate of authority from the commissioner: An insurance company authorized to transact accident and sickness insurance; a fraternal benefit society organized pursuant to W. Va. Code §§33-23-l et seq.; a hospital, medical, dental or health service corporation organized pursuant to W. Va. Code §§33-24-1 et seq., a health care corporation organized pursuant to W. Va. Code §§33-25-1 et seq.; or a health maintenance organization organized pursuant to W. Va. Code §§33-25A-1 et seq.
2.12. A "home health care agency" is:
a. An agency approved under Title XVIII of the Social Security Act (42 U.S.C. §1395 et seq.) (Medicare); or b. An agency certified to provide home health care in this state.
2.13. "Individual" means any private or natural person as distinguished from a partnership, corporation, limited liability company or other legal entity.
2.14. "Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.
2.15. "Limited benefits insurance coverage," for purposes of this rule, is any policy, other than a policy, covering only a specified disease or diseases, which provides benefits that are less than the minimum standards for benefits required under subsections 5.2, 5.3, 5.5 and 5.6 of this rule.
2.16. "Medical care" means amounts paid for, or paid for insurance covering, the diagnosis, cure, mitigation, treatment or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body, including amounts paid for transportation primarily for and essential to such care.
2.17. "Medical care provider" means an individual licensed or similarly authorized to provide medical care and operating within the scope of services authorized for the individual.
2.18. "Medicare" means the "Health Insurance for the Aged Act," Title XVIII of the Social Security Amendments of 1965, as then constituted or later amended.
2.19. "Medicare supplement policy" means a policy of accident and sickness insurance, a subscriber contract of a hospital, medical, dental or health service corporation or health care corporation, or an enrollee agreement or contract of a health maintenance organization, other than a policy issued pursuant to a contract under section 1876 or 1833 of the federal Social Security Act, 42 U.S.C. section 1395 et seq., or an issued policy under a demonstration project authorized pursuant to amendments to the federal Social Security Act, which is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare.
2.20. "Mental health benefits" means benefits with respect to mental health services, as defined under the terms of a group health plan or a health benefit plan offered in connection with the group health plan.
2.21. "Policy" means any health benefit plan, policy, plan, contract, agreement, provision, rider or endorsement delivered or issued for delivery in this state by a health insurer subject to this rule.
2.22. "Premium" means the consideration for insurance, by whatever name called.
2.23. "Small employer" means any person, firm, corporation, partnership or bona fide association actively engaged in business in the state of West Virginia who during the preceding calendar year, employed an average of no more than fifty but not fewer than two eligible employees and employs at least two employees on the first day of its group health plan year. A new employer, not in existence for all of the preceding calendar year, shall be considered a small employer if it is reasonably expected to employ an average of no more than fifty but not fewer than two eligible employees on business days in the current calendar year. Companies which are affiliated companies or which are eligible to file a combined tax return for state tax purposes shall be considered one employer.
2.24. "Specified accident coverage" is an accident insurance policy which provides coverage for a specifically identified kind of accident (or accidents) for each person insured under the policy for accidental death or accidental death and dismemberment combined, with a benefit amount not less than one thousand dollars ($1,000) for accidental death, one thousand dollars ($1,000) for double dismemberment, and five hundred dollars ($500) for single dismemberment.
W. Va. Code R. § 114-39-3 Policy Definitions
3.1. Except as provided in this rule, no policy subject to this rule may be advertised, solicited, delivered or issued for delivery in this state unless the policy contains definitions or terms which conform to the requirements of this section. Certificates issued under a policy subject to this rule and the terms used therein shall be consistent with this section. However, only this subsection and subsection 3.10 apply to a policy issued to an employer of fifty-one (51) or more employees, under which the coverage is negotiated by the policyholder.
3.2. "Accident," "accidental injury," or "accidental means" shall be defined to employ "result" language and may not include words which establish an accidental means test or use words such as "external, violent, visible wounds" or similar words of description or characterization.
a. The definition may not be more restrictive than the following: "Injury or injuries, for which benefits are provided" means accidental bodily injury sustained by the insured person which is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while the insurance coverage is in force.
b. The definition may provide that the term "injuries" excludes injuries for which benefits are provided or available under any motor vehicle no-fault, workers' compensation, employer's liability, occupational disease or similar law, unless prohibited by law.
3.3. "Convalescent nursing home," "extended care facility," "intermediate care facility" or "skilled nursing facility" shall be defined in relation to its status, facilities and available services.
a. A definition of the home or facility may not be more restrictive than one requiring that it:
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Be operated pursuant to law;
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Be approved for payment of Medicare benefits or be qualified to receive such approval if requested;
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Be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician;
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Provide continuous twenty-four-hour-a-day nursing services by or under the supervision of a registered graduate professional nurse (R.N.); and 5. Maintain a daily medical record of each patient.
b. The definition of the home or facility may provide that the term excludes:
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Any home, facility, or part thereof used primarily for rest;
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A home or facility for the aged or for the care of drug addicts or alcoholics; or 3. A home or facility primarily used for the care and treatment of mental diseases or disorders, or custodial or educational care.
3.4. "Hospital" may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals.
a. The definition of "hospital" may not be more restrictive than one requiring that the hospital:
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Be an institution operated pursuant to law;
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Be primarily and continuously engaged in providing or operating, either on its premises or in facilities available to the hospital on a prearranged basis and under the supervision of a staff of duly licensed physicians, medical, diagnostic and major surgical facilities for the medical care and treatment of sick or injured persons on an in-patient basis for which a charge is made; and 3. Provide twenty-four-hour (24-hour) nursing services by or under the supervision of registered graduate professional nurses (R.N.'s).
b. The definition of "hospital" may state that the term excludes:
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Convalescent homes, or convalescent, rest or nursing facilities;
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Facilities primarily affording custodial, educational or rehabilitory care;
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Facilities for the aged, drug addicts or alcoholics; or 4. Any military or veterans hospital or soldiers home or any hospital contracted for or operated by any national government or agency thereof for the treatment of members or ex-members of the armed forces, except for services rendered on an emergency basis where a legal liability exists for charges made to the individual for the services: Provided, That no policy providing hospital indemnity coverage may exclude coverage because of confinement in a hospital operated by the federal or state government.
3.5. "Medicare" shall be substantially defined as "the Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended," or "Title I, Part I Of Public Law 89-97 as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof," or words of similar import.
3.6. "Mental or nervous disorder" may not be defined more restrictively than a definition including neurosis, psycho-neurosis, psychosis, or mental or emotional disease or disorder of any kind.
3.7. "Nurse" may be defined so that the description of "nurse" is restricted to a type of nurse, such as registered graduate professional nurse (R.N.), a licensed practical nurse (L.P.N.), or a licensed vocational nurse (L.V.N.).If the words "nurse," "trained nurse," "registered nurse" or "nurse-midwife" are used without specific instruction, then the use of those terms requires the health insurer to recognize the services of any individual who qualifies under that terminology in accordance with the applicable statutes or administrative rules of the licensing or registry board of this state.
3.8. "One (1) period of confinement" means consecutive days of in-hospital service received as an in-patient or successive confinements when discharge from and readmission to the hospital occur within a period of time not more than ninety (90) days or three times the maximum number of days of in-hospital coverage provided by the policy to a maximum of one hundred eighty (180) days.
3.9. "Partial disability" shall be defined in relation to the individual's inability to perform one or more but not all of the "major," "important," or "essential" duties of employment or occupation, or may be related to a percentage of time worked or to a specified number of hours or to compensation. Where a policy provides total disability benefits and partial disability benefits, only one (1) elimination period may be required.
3.10. "Physician" may be defined by including words such as "duly qualified physician" or "duly licensed physician." The use of these terms requires a health insurer to recognize and to accept, to the extent of its obligation under the policy, all providers of medical care and treatment when the services are within the scope of the provider's licensed authority and are provided pursuant to applicable laws.
3.11. "Preexisting condition" may not be defined to be more restrictive than the following: "Preexisting condition" means a condition (whether physical or mental and regardless of its cause) for which medical advice diagnosis, care or treatment was recommended by or received from a medical care provider prior to the enrollment date of the individual covered under the policy.
3.12. "Residual disability" shall be defined in relation to the individual's reduction in earnings and may be related either to the inability to perform some part of the "major," "important" or "essential duties" of employment or occupation, or to the inability to perform all usual business duties for as long as is usually required. A policy which provides for residual disability benefits may require a qualification period, during which the insured shall be continuously totally disabled before residual disability benefits are payable. The qualification period for residual benefits may be longer than the elimination period for total disability. In lieu of the term "residual disability," the health insurer may use the term "proportionate disability" or other term of similar import which, in the opinion of the commissioner, adequately and fairly describes the benefit.
3.13. "Sickness" may not be defined to be more restrictive than the following: "Sickness" means illness or disease of an insured person which first manifests itself after the effective date of the policy and while the policy is in force. The definition may be further modified to exclude sickness or disease for which benefits are provided or available under any workers' compensation, occupational disease, employer's liability or similar law.
3.14. "Total disability" may not be defined more restrictively than a disability which prohibits the individual from being engaged in any employment or occupation for which he or she is or becomes qualified by reason of education, training or experience, and in fact prohibits the individual from being engaged in any employment or occupation for wage or profit.
a. Total disability may be defined in relation to the inability of the person to perform duties but may not be based solely upon an individual's inability to:
- Perform "any occupation whatsoever," "any occupational duty," or "any and every duty of his or her occupation"; or 2. Engage in any training or rehabilitation program.
b. A health insurer may specify the requirement of the complete inability of the person to perform all of the substantial and material duties of his or her regular occupation, or words of similar import. A health insurer may require care by a physician (other than the insured or a member of the insured's immediate family).
W. Va. Code R. § 114-39-4 Prohibited Policy Provisions
4.1. No policy may exclude coverage for a loss due to a preexisting condition for a period greater than twelve (12) months following an individual's enrollment date. For a health benefit plan issued in connection with a group health plan, a waiting period or affiliation period elected by a health maintenance organization pursuant to WV 114CSR54 "Group Accident and Sickness Insurance Issuance, Portability and Marketing Requirements," prior to an insured's eligibility for benefits must run concurrently with a preexisting condition exclusion period.
4.2. Policies providing hospital confinement indemnity coverage may not contain provisions excluding coverage because of confinement in a hospital operated by the federal or state government.
4.3. For a health benefit plan issued in connection with a group health plan, a health insurer may impose a preexisting condition exclusion only as provided in WV 114CSR54 "Group Accident and Sickness Insurance Issuance, Portability and Marketing Requirements."
4.4. For policies other than a health benefit plan issued in connection with a group health plan, this rule does not impair or limit the use of waivers to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases, physical conditions or extra- hazardous activity. Where waivers are required as a condition of policy issuance, renewal or reinstatement, signed acceptance by the insured is required unless on initial issuance of the policy, the full text of the waiver is contained either on the first page or the specification page.
4.5. Policy provisions expressly precluded in this section shall in no way be construed as a limitation on the authority of the commissioner to disapprove other policy provisions including, but not limited to, provisions respecting limitations, exceptions, reductions or eliminations of coverage, not otherwise specifically authorized by statute or rule, which policy provisions are determined by the commissioner to be unjust, unfair, unreasonable or unfairly discriminatory either to the policyholder, subscriber, beneficiary or any person insured under the policy.
W. Va. Code R. § 114-39-5 Minimum Standards for Benefits
5.1. General. -- The following minimum standards for benefits are prescribed for the categories of coverage noted in the following subdivisions. No health insurer may deliver or issue for delivery in this state a policy which does not meet the required minimum standards of subdivisions a and b of this subsection, if applicable. Except for coverage under policies issued to employers of fifty-one (51) or more employees, under which the coverage is negotiated by the policyholder, no health insurer may deliver or issue for delivery in this state a policy which does not meet the required minimum standards of subdivisions c through k of this subsection unless the commissioner finds that policies containing less than the prescribed minimum standards for benefits, which are filed for approval, will be in the public interest and otherwise meet the requirements set forth in W. Va. Code §33-6-9. The benefits described in a certificate issued under a policy subject to this rule shall be consistent with the benefits contained in the policy and shall be no less than those required under this section.
a. A health benefit plan issued in connection with a group health plan and providing inpatient benefits in connection with childbirth must meet all requirements of W. Va. Code §33-16-3j with respect to both the mother and her newborn.
b. A health benefit plan issued in connection with a group health plan and providing mental health benefits must meet all requirements of W. Va. Code §33-16-3a: Provided, That W. Va. Code §33-16-3a(d) does not apply to any health benefit plan for any group health plan year of a small employer.
c. If a policy contains a status-type military service exclusion which suspends coverage during military service, the policy shall provide, upon receipt of written request, for refund of premiums as applicable to an insured in military service on a pro rata basis.
d. If a health insurer terminates coverage under a policy providing pregnancy coverage, such policy shall provide for an extension of benefits as to pregnancy commencing while the policy is in force and for which benefits would have been payable had the policy remained in force, provided that this subsection shall not apply when termination of coverage is due to fraud, nonpayment of premium or any breach of the terms of the policy for which termination is authorized under chapter 33 of the W. Va. Code.
e. Policies providing convalescent or extended care benefits following hospitalization may not condition the benefits upon admission to the convalescent or extended care facility within a period of less than fourteen (14) days after discharge from the hospital.
f. Any policy which provides coverage of a dependent child may not terminate coverage for the dependent child if upon attainment of any limiting age set forth in the policy, the child is and continues to be both: (1) incapable of self-sustaining employment due to mental retardation or physical handicap on the date that the child's coverage would otherwise terminate under the policy due to the attainment of the specified limiting age; and (2) chiefly dependent on the policyholder for support and maintenance. The policy may require that within thirty-one (31) days of the termination date, the health insurer must receive due proof of the incapacity in order for the insured to elect to continue the policy in force with respect to the dependent child. As an alternative to this requirement, a separate converted policy may be issued to the child at the option of the insured or policyholder.
g. Any policy providing coverage for the recipient in a transplant operation shall also provide for the reimbursement of any medical expenses of a live donor to the extent that benefits remain and are available under the recipient's policy, after benefits for the recipient's own expenses have been paid provided such benefits may be limited to those expenses directly relating to the organ donation.
h. A policy may contain a provision relating to recurrent disabilities: Provided, That no such provision may specify that a recurrent disability be separated by a period greater than six (6) months from the last previous occurrence of the disability.
i. Accidental death and dismemberment benefits shall be payable if the loss occurs within ninety (90) days from the date of the accident, irrespective of total disability. Disability income benefits, if provided, may not require the loss to commence less than thirty (30) days after the date of accident, nor may any policy which the health insurer cancels or refuses to renew require that it be in force at the time disability commences if the accident occurred while the policy was in force.
j. Specific dismemberment benefits may not be in lieu of other benefits unless the specific benefit exceeds the other benefits.
k. Termination of coverage under a policy shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period the policy was in force may be predicated upon the continuous disability of the individual covered under the policy or limited to the duration of the policy benefit period if any: Provided, That this subdivision shall not apply when termination of coverage is due to fraud, nonpayment of premium or any breach of the terms of the policy for which refusal to renew the policy is authorized under W. Va. Code, chapter thirty-three.
5.2. Hospital Confinement Indemnity Coverage. -- "Hospital confinement indemnity coverage" is a policy which provides daily benefits for hospital confinement on an indemnity basis in an amount not less than thirty dollars ($30) per day and for a period of not less than thirty-one (31) days during any one (1) period of confinement for each person insured under the policy.
5.3. Major Medical Expense Coverage. -- "Major medical expense coverage" is a policy which provides hospital, medical and surgical expense coverage, to an aggregate maximum of not less than ten thousand dollars ($10,000); copayment by the covered person not to exceed twenty-five percent (25%) of covered charges; and a deductible stated on a per person, per family, per illness, per benefit period, or per year basis, or a combination of such bases not to exceed five percent (5%) of the aggregate maximum limit under the policy, unless the policy is written to complement underlying hospital and medical insurance in which case the deductible may be increased by the amount of the benefits provided by the underlying insurance, for each covered person for at least:
a. Daily hospital room and board expenses for not less than fifty dollars ($50) daily (or in lieu thereof the average daily cost of the semi-private room rate in the area where the insured resides) for a period of not less than thirty-one (31) days during continuous hospital confinement;
b. Miscellaneous hospital services for an aggregate maximum of not less than four thousand five hundred dollars ($4,500) or fifteen (15) times the daily room and board rate if specified in dollar amounts;
c. Surgical services to a maximum of not less than six hundred dollars ($600) for the most expensive surgical procedure when two or more medically necessary surgical procedures are performed during the course of a single operation. Amounts paid for the second and each additional surgical procedure during such single operation shall be reasonably related to the above-stated maximum amount for the first surgical procedure.
d. Anesthesia services for a maximum of not less than fifteen (15%) percent of the covered surgical fees or, alternatively, if the surgical schedule is based on relative values, not less than the amount provided in the surgical schedule for anesthesia services at the same unit value as used for the surgical schedule;
e. In-hospital medical services, consisting of physicians' services rendered to a person who is a bed patient in a hospital for treatment of sickness or injury other than that for which surgical care is required, in an amount not less than eighty percent (80%) of the reasonable charges, or five dollars ($5) per hospital call, one (1) call per day, for at least twenty-one (21) calls during one period of confinement.
f. Out-of-hospital care, consisting of physicians' services rendered on an ambulatory basis where coverage is not provided elsewhere in the policy for diagnosis and treatment of sickness or injury, and diagnostic X-ray, laboratory services, radiation therapy and hemodialysis order by a physician; and g. Prosthetic appliances, meaning artificial limbs or other prosthetic appliances (except replacements thereof) and rental of durable medical equipment required for therapeutic use.
5.4. Disability Income Protection Coverage.
a. "Disability income protection coverage" is a policy which provides for periodic payments, weekly or monthly, for a specified period during the continuance of disability resulting from either sickness or injury or a combination of sickness or injury that:
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Provides that periodic payments which are payable at ages after sixty-two (62) and reduced solely on the basis of age are at least fifty percent (50%) of amounts payable immediately prior to age sixty-two (62).
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Contains an elimination period no greater than:
A. Ninety (90) days in the case of coverage providing a benefit of one (1) year or less;
B. One hundred eighty (180) days in the case of coverage providing a benefit of more than one year but not greater than two (2) years; or C. Three hundred sixty-five (365) days in all other cases during the continuance of disability resulting from sickness or injury; and 3. Has a maximum period of time for which it is payable during disability of at least six (6) months. No reduction in benefits may be put into effect because of an increase in Social Security or similar benefits during a benefit period.
b. Subsection 5.4 of this rule does not apply to those disability income protection policies providing business buy-out coverage.
5.5. Accident-Only Coverage. "Accident-only coverage" is a policy of accident insurance which provides coverage, singly or in combination, for death, dismemberment, disability or hospital and medical care caused by accident. Accidental death and double dismemberment amounts under an accident-only policy shall be at least one thousand dollars ($1,000), and a single dismemberment amount shall be at least five hundred dollars ($500).
5.6. Specified Disease and Specified Accident Coverage.
a. "Specified disease coverage" pays benefits for the diagnosis and treatment of a specifically named disease or diseases. Any such policy shall meet the following rules and one of the following sets of minimum standards for benefits. Such insurance covering cancer -- whether cancer only, or in conjunction with other conditions(s) or disease(s) -- shall meet the standards of paragraphs 3, 4 and 5 of this subdivision. Insurance covering specified disease(s) other than cancer shall meet the standards of paragraph 2 of this subdivision.
- Except for cancer coverage provided on an expense-incurred basis, either as cancer-only coverage or in combination with one or more other specified diseases, the following provisions apply to specified disease coverages in addition to all other requirements imposed by this rule. In cases of conflict between the following and other provisions, the following provisions shall govern:
A. Policies covering a single specified disease or combination of specified diseases may not be sold or offered for sale other than as specified disease coverage under this section.
B. Any policy issued pursuant to this section which conditions payment upon pathological diagnosis of a covered disease shall also provide that if such a pathological diagnosis is medically inappropriate, a clinical diagnosis will be accepted in lieu thereof.
C. Notwithstanding any other provision of this rule, specified disease policies shall provide benefits to any covered person not only for the specified disease(s) but also for any other conditions(s) or disease(s) directly caused or aggravated by the specified diseases(s) or the treatment of the specified disease(s).
D. No policy issued pursuant to this section may contain a waiting or probationary period greater than thirty (30) days.
E. Any application for specified disease coverage shall contain a statement above the signature of the applicant that no person to be covered for specified disease is also covered by any Title XIX program such as Medicaid. The statement may be combined with any other statement for which the health insurer may require the applicant's signature.
F. Payments may be conditioned upon a covered person receiving medically necessary care, given in a medically appropriate location, under a medically accepted course of diagnosis or treatment.
G. Except for the uniform provision regarding other insurance with this health insurer, benefits for specified disease coverage shall be paid regardless of other coverage available through other individual health insurance.
H. After the effective date of the coverage or applicable waiting period, benefits shall begin with the first day of care or confinement if the care or confinement is for a covered disease even though the diagnosis is made at some later date. The retroactive application of the coverage may not be less than ninety (90) days prior to the diagnosis.
- The following minimum benefits standards apply to non-cancer coverages:
A. Coverage for each person insured under the policy for a specifically named disease or diseases with a deductible amount not in excess of two hundred fifty dollars ($250) and an overall aggregate benefit limit of not less than five thousand dollars ($5,000) and a benefit period of not less than two (2) years for at least the following incurred expenses:
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Hospital room and board and any other hospital-furnished medical services or supplies;
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Treatment by a legally qualified physician or surgeon;
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Private duty services of a registered nurse (R.N.);
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X-ray, radium and other therapy procedures used in diagnosis and treatment;
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Professional ambulance for local service to or from a local hospital;
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Blood transfusions, including expenses incurred for blood donors;
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Drugs and medicines prescribed by a physician;
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Rental of a mechanical ventilator or similar mechanical apparatus;
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Braces, crutches and wheelchairs as are deemed necessary by the attending physician for the treatment of the disease;
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Emergency transportation if, in the opinion of the attending physician, it is necessary to transport the insured to another locality for treatment of the disease; and 11. Any other expenses necessarily incurred in the treatment of the disease; and B. Coverage for each person insured under the policy for a specifically named disease or diseases with no deductible amount, and an overall aggregate benefit limit of not less than twenty-five thousand dollars ($25,000) payable at the rate of not less than fifty dollars ($50) a day while confined in a hospital and a benefit period of not less than five hundred (500) days.
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A policy which provides coverage for each person insured under the policy for cancer-only coverage or in combination with one or more other specified diseases on an expense-incurred basis for services, supplies, care and treatment of cancer, in amounts not in excess of the usual and customary charges, with a deductible amount not in excess of two hundred fifty dollars ($250), and an overall aggregate benefit limit of not less than ten thousand dollars ($10,000) and a benefit period of not less than three (3) years for at least the following:
A. Treatment by, or under the direction of, a properly licensed and/or certified physician or surgeon;
B. X-ray, radium, chemotherapy and other therapy procedures used in diagnosis and treatment;
C. Hospital room and board and any other hospital-furnished medical services or supplies;
D. Blood transfusions, and the administration thereof, including expenses incurred for blood donors;
E. Drugs and medicines prescribed by a physician;
F. Professional ambulance for local service to or from a local hospital;
G. Private duty services of a registered nurse (R.N.) provided in a hospital;
H. Any other expenses necessarily incurred in the treatment of the disease: Provided, That subparagraphs A, B, D, E and G of this paragraph, plus at least the following shall also be included, but may be subject to copayment by the covered person not to exceed twenty percent (20%) of covered charges when rendered on an out-patient basis:
I. Braces, crutches and wheelchairs as are considered necessary by the attending physician for the treatment of the disease;
J. Emergency transportation if, in the opinion of the attending physician, it is necessary to transport the insured to another locality for treatment of the disease;
K. Home health care that is necessary care and treatment provided at the covered person's residence by a home health care agency or by others under arrangements made with a home health care agency. The program of care and treatment shall be ordered in writing by the covered person's attending physician, who shall approve the program prior to its start and renew the order for such care and treatment at least every sixty (60) days. The physician shall certify that hospital confinement would be otherwise required.
- Home health care coverages shall include:
(a) Services provided by a registered nurse (R.N.) or a licensed practical nurse (L.P.N.);
(b) Home health aide services to the extent that the services would be covered if provided to the insured on an in-patient basis;
(c) Health services provided by physical, occupational, respiratory, or speech and hearing therapists; and (d) Medical supplies, drugs and medicines prescribed by a physician and related pharmaceutical services, and laboratory services to the extent the charges or costs would be covered under the policy if provided to the insured on an in-patient basis.
L. Physical, respiratory, speech, hearing and occupational therapy;
M. Special equipment including hospital beds, toilettes, pulleys, wheelchairs, aspirators, chux, oxygen, surgical dressings, rubber shields, and colostomy and ileostomy appliances;
N. Prosthetic devices including wigs and artificial breasts; and O. Nursing home care for noncustodial services.
- The following minimum benefits standards apply to cancer coverages written on a per diem indemnity basis. The coverages shall offer covered persons:
A. A fixed-sum payment of at least one hundred dollars ($100) for each day of hospital confinement for at least three hundred sixty-five (365) days.
B. A fixed-sum payment equal to one half of the hospital in-patient benefit for each day of hospital or non-hospital out-patient surgery, chemotherapy and radiation therapy, for at least three hundred sixty-five (365) days of treatment.
- The following minimum benefits standards apply to cancer coverages written on a per diem indemnity basis. Benefits tied to confinement in a skilled nursing home or to receipt of home health care are optional. If a policy offers these benefits, they must equal the following:
A. A fixed-sum payment equal to one-fourth of the hospital in-patient benefit for each day of skilled nursing home confinement for at least one hundred (100) days;
B. A fixed-sum payment equal to one-fourth of the hospital in-patient benefit for each day of home health care for at least one hundred (100) days;
C. Benefit payments shall begin with the first day of care or confinement after the effective date of coverage if the care or confinement is for a covered disease, even though the diagnosis of a covered disease is made at some later date (but not retroactive more than thirty (30) days from the date of diagnosis) if the initial care or confinement was for diagnosis or treatment of the covered disease;
D. Notwithstanding any other provision of this rule, any restriction or limitation applied to the benefits in subparagraphs A and B of this paragraph, whether by definition or otherwise, shall be no more restrictive than those under Medicare.
- The following minimum benefits standards apply to lump-sum indemnity coverage of any specified disease(s):
A. The coverages shall pay indemnity benefits on behalf of covered persons for a specifically named disease or diseases. The benefits are payable as a fixed, one-time payment made within thirty (30) days of submission to the health insurer of proof of diagnosis of the specified disease(s). Dollar benefits shall be offered for sale only in even increments of one thousand dollars ($1,000); and B. Where coverage is advertised or otherwise represented to offer generic coverage of a disease or diseases, the same dollar amounts shall be payable regardless of the particular subtype of the disease with one exception. In the case of clearly identifiable subtypes with significantly lower treatment costs, lesser amounts may be payable so long as the policy clearly differentiates that subtype and its benefits.
5.7. Specified disease coverage. -- A policy covering a single specified disease or combination of diseases shall meet the requirements of subsection 5.6 of this rule and shall not be offered for sale as a policy that limits benefits in a manner contrary to subsection 5.6 of this rule.
W. Va. Code R. § 114-39-6 Required Disclosure Provisions
6.1. Each policy subject to this rule shall include a renewal, continuation or nonrenewal provision. The language or specifications of such provision shall be consistent with the type of policy to be issued. The provision shall be appropriately captioned, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the policy is issued and for which it may be renewed.
6.2. Except for riders or endorsements by which the health insurer effectuates a request made in writing by the policyholder or certificate holder, or exercises a specifically reserved right under the policy, all riders or endorsements added to a policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy require signed acceptance by the policyholder or certificate holder, as appropriate. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term shall be agreed to in writing signed by the policyholder or certificate holder, as appropriate, except if the increased coverage or benefits are required by law.
6.3. Where a separate additional premium is paid for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy.
6.4. A policy which provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or words of similar import shall include a definition of those terms within the policy.
6.5. Any provisions limiting or excluding coverage of preexisting conditions shall appear in a separate paragraph of the policy and shall be labeled as "Preexisting Condition Limitations."
6.6. All accident-only policies shall contain on the first page of the policy or attached thereto in either contrasting color or in boldface type at least equal to the size of type used for policy captions, a prominent statement as follows: "This is an accident-only policy, and it does not pay benefits for loss from sickness."
6.7. Any accident-only policy providing benefits which vary according to the type of accidental cause shall prominently set forth the circumstances under which benefits are payable which are less than the maximum amount payable under the policy.
6.8. All specified disease policies shall contain on the first page of the policy or attached thereto, in either contrasting color or in boldface type at least equal to the size of type used for policy captions, a prominent statement as follows: "Caution: This is a limited benefits policy. Read it carefully."
6.9. All policies shall have a notice prominently printed on the first page of the policy or attached thereto, stating in substance that the group policyholder shall have the right to return the policy within ten (10) days of its delivery and to have the premium refunded if, after examination of the policy, the group policyholder is not satisfied for any reason. The notice shall also state that in the event the policyholder exercises this right, the health insurer shall not be obligated to pay any benefits under the policy for claims submitted to the health insurer during such ten (10) day period.
6.10. If age is to be used as a determining factor for reducing the maximum aggregate benefits made available in the policy as originally issued, that fact shall be prominently set forth in the policy and certificate.
6.11. If a policy contains a conversion privilege, it shall comply, in substance, with the following: The caption of the provision shall be "Conversion Privilege," or words of similar import. The provision shall indicate the persons eligible for conversion; the circumstances applicable to the conversion privilege, including any limitations on the conversion; and the person by whom the conversion privilege may be exercised. The provision shall specify the benefits to be provided on conversion, or may state that the converted coverage will be as provided on a policy form then being used by the health insurer for that purpose.
W. Va. Code R. § 114-39-7 Association Group Policy Disclosure, Affiliation of Association and Insurer
7.1. Each insurer offering coverage under a group accident and sickness policy which is issued to a non bona fide association shall be required to make full disclosure to each applicant who is not already a member of the association on a form approved by the Commissioner. Such disclosure shall be provided at the time the application for coverage is completed.
7.2. Full disclosure under 7.1 above shall state:
a. That the individual must already be or become a member of the association to be eligible for coverage under the group policy;
b. All costs related to association membership, including but not limited to initial association membership fee and the amount of the annual association dues;
c. That membership fees and/or dues are in addition to the policy premium;
d. That the association holds the master policy;
e. That the premium charged and the terms and conditions of coverage are determined between the association and the insurer; and f. That the premium, terms and conditions of coverage may be changed by agreement of the association group policyholder and the insurer, without the consent of the individual certificate holder.
7.3. In the event the premium, terms and/or conditions of coverage change, a notice of the changes shall be provided to the certificate holders as follows:
a. If the master policyholder is not a bona fide association, the insurer shall notify the certificate holders no later than thirty (30) days prior to a change in the premium, terms and/or conditions of the coverage.
b. If the master policyholder is a bona fide association, the insurer shall notify the group certificate holder of changes in premium, terms and/or conditions of the coverage.
c. If the master policyholder is a bona fide association and there is not a group certificate holder, the insurer shall notify the individual certificate holder of changes in premium, terms and/or conditions of the coverage.
7.4. An insurer may not provide group accident and sickness insurance to an association or other eligible group in which the insurer has an affiliation. "Affiliation" includes but is not limited to:
a. Common board members, officers, executives or employees;
b. Common ownership or control of the insurer, association or other eligible group; or c. Common use of the same office space or equipment utilized by the insurer to transact insurance.
7.5. An insurer offering group accident and sickness insurance may not make any false, deceptive or misleading statement regarding the insurer’s endorsement by the association or other eligible group.
W. Va. Code R. § 114-39-8 Billing of Association Dues by an Insurer
8.1. An insurer which bills association member ship dues shall provide the certificate holders a statement at least annually disclosing the amount of the premium billed by the insurer.
8.2. An insurer which bills association fees and/or dues may not include the cost of the billing for the association in the determination of the premium rate.
W. Va. Code R. § 114-39-9 Eligibility of Associations
9.1. Prior to offering a group accident and sickness insurance policy to an association, an insurer must submit evidence to the commissioner that the association meets the requirements under W. Va. Code §§33-16-1a(a) or 33-16-2(b). The commissioner shall review the evidence and may request additional evidence as needed.
9.2. An insurer shall submit to the commissioner within thirty (30) days any changes in the evidence submitted under subsection 9.1 of this section.
9.3. The commissioner may order an insurer to cease offering accident and sickness insurance to an association if the commissioner determines that the association does not satisfy the requirements under W.Va. Code §§33-16-1 et seq.
W. Va. Code R. § 114-39-10 Severability
If any provision of this legislative rule or the application thereof to any person or circumstance is for any reason held invalid, the remainder of the rule and the application of the provision to other persons or circumstances shall not be affected by the holding.
114CSR39
114CSR39
Series 40 Credit For Reinsurance
W. Va. Code R. § 114-40-1 General
W. Va. Code R. § 114-40-2 Reinsurer Licensed in This State
W. Va. Code R. § 114-40-3 Accredited Reinsurers
W. Va. Code R. § 114-40-4 Reinsurer Domiciled in Another State
W. Va. Code R. § 114-40-5 Reinsurers Maintaining Trust Funds
W. Va. Code R. § 114-40-6 Certified Reinsurers
W. Va. Code R. § 114-40-7 Reciprocal Jurisdictions
W. Va. Code R. § 114-40-8 Credit for Reinsurance Required by Law
W. Va. Code R. § 114-40-9 Asset or Reduction From Liability for Reinsurance Ceded to an Unauthorized Assuming Insurer Not Meeting the Requirements of Sections 2 through 8
W. Va. Code R. § 114-40-10 Trust Agreements Qualified Under Section 9
W. Va. Code R. § 114-40-11 Letters of Credit Qualified Under Section 9
W. Va. Code R. § 114-40-12 Other Security
W. Va. Code R. § 114-40-13 Reinsurance Contract
W. Va. Code R. § 114-40-14 Contracts Affected
W. Va. Code R. § 114-40-15 Fees
114CSR40
TITLE 114
LEGISLATIVE RULE
INSURANCE COMMISSIONER
SERIES 40
CREDIT FOR REINSURANCE
W. Va. Code R. § 114-40-1 General
1.1. Scope. -- This legislative rule establishes the standards and procedural requirements which the commissioner considers necessary to carry out the provision of W. Va. Code §33-4-15a dealing with credit for reinsurance. The actions and information required by this rule are declared to be necessary and appropriate in the public interest and for the protection of the ceding insurers in this state.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-4-15a(e).
1.3. Filing Date. -- April 8, 2026.
1.4. Effective Date. -- April 8, 2026.
1.5. Sunset Provision. -- This rule shall terminate and have no further force or effect upon August 1, 2036.
W. Va. Code R. § 114-40-2 Reinsurer Licensed in This State
Pursuant to W. Va. Code §33-4-15a(b)(2)(A), the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that was licensed in this state as of any date on which statutory financial statement credit for reinsurance is claimed.
W. Va. Code R. § 114-40-3 Accredited Reinsurers
3.1. Pursuant to W. Va. Code §33-4-15a(b)(2)(B), the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is accredited as a reinsurer in this state as of any date on which statutory financial statement credit for reinsurance is claimed. An accredited reinsurer must:
3.1.1. File a properly executed Form AR-1, as adopted by the National Association of Insurance Commissioners, with the commissioner as evidence of its submission to this state’s jurisdiction and to this state’s authority to examine its books and records, pursuant to W. Va. Code §33-2-9;
3.1.2. File with the commissioner a certified copy of a certificate of authority or other acceptable evidence that it is licensed to transact insurance or reinsurance in at least one state, or, in the case of a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state;
3.1.3. File annually, on or before the first day of March, with the commissioner a copy of its annual statement. The annual statement shall be a copy of the statement filed with the insurance department of its state of domicile or, in the case of an alien assuming insurer, with the state through which it is entered and in which it is licensed to transact insurance or reinsurance, and a copy of its most recent audited financial statement; and
3.1.4. Maintain a surplus as regards policyholders in an amount not less than $20,000,000, or obtain the affirmative approval of the commissioner upon a finding that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers.
3.2. If the commissioner determines that the assuming insurer has failed to meet or maintain any of the qualifications required by this section, he or she may upon written notice and opportunity for hearing, suspend or revoke the accreditation. Credit shall not be allowed a domestic ceding insurer under this section if the assuming insurer’s accreditation has been revoked by the commissioner after notice and hearing, or if the reinsurance was ceded while the assuming insurer’s accreditation was under suspension by the commissioner.
W. Va. Code R. § 114-40-4 Reinsurer Domiciled in Another State
4.1. Pursuant to W. Va. Code §33-4-15a(b)(2)(C), the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that as of any date on which statutory financial statement credit for reinsurance is claimed:
4.1.1. Is domiciled in (or, in the case of a United States branch of an alien assuming insurer, is entered through) a state that employs standards regarding credit for reinsurance substantially similar to those applicable under W. Va. Code §33-4-15a and this rule;
4.1.2. Maintains a surplus as regards policyholders in an amount not less than $20,000,000; and
4.1.3. Files a properly executed Form AR-1, as adopted by the National Association of Insurance Commissioners, with the commissioner as evidence of its submission to this state’s authority to examine its books and records, pursuant to W. Va. Code §33-2-9.
4.2. The provisions of this section relating to surplus as regards policyholders shall not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
4.3. As used in this section, “substantially similar” standards means credit for reinsurance standards that the commissioner determines equal or exceed the standards of W. Va. Code §33-4-15a and this rule.
W. Va. Code R. § 114-40-5 Reinsurers Maintaining Trust Funds
5.1. Pursuant to W. Va. Code §33-4-15a(b)(2)(D), the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer which, as of any date on which statutory financial statement credit for reinsurance is claimed, and thereafter for so long as credit for reinsurance is claimed, maintains a trust fund in an amount prescribed in this section in a qualified United States financial institution as defined in W. Va. Code §33-4-15a(d)(2), for the payment of the valid claims of its United States domiciled ceding insurers, their assigns and successors in interest. The assuming insurer shall report annually to the commissioner substantially the same information as that required to be reported on the National Association of Insurance Commissioners annual statement form by licensed insurers, to enable the commissioner to determine the sufficiency of the trust fund.
5.2. The following requirements apply to the following categories of assuming insurer:
5.2.1. The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer’s liabilities attributable to reinsurance ceded by United States domiciled insurers, and in addition, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000, except as provided in subdivision 2 of this subsection;
5.2.2. At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for a least three full years, the commissioner with principal regulatory oversight of the trust may authorize at reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including when applicable the lines of business involved, the stability of the incurred loss estimates and the effect of the surplus requirements on the assuming insurer’s liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than thirty percent (30%) of the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust. 5.2.3.
5.2.3.a. The trust fund for a group, including incorporated and individual unincorporated underwriters, shall consist of:
5.2.3.a.1. For reinsurance ceded under reinsurance agreements with an inception, amendment or renewal date on or after January 1, 1993, funds in trust in an amount not less than the respective underwriters’ several liabilities attributable to business ceded by United States domiciled ceding insurers to any underwriter of the group;
5.2.3.a.2. For reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this rule, funds in trust in an amount not less than the respective underwriters’ several insurance and reinsurance liabilities attributable to business written in the United States; and
5.2.3.a.3. In addition to these trusts, the group shall maintain a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all the years of account.
5.2.3.b. The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group’s domiciliary regulator as are the unincorporated members. The group shall, within ninety (90) days after its financial statements are due to be filed with the group’s domiciliary regulator, provide to the commissioner:
5.2.3.b.1. An annual certification by the group’s domiciliary regulator of the solvency of each underwriter member of the group; or
5.2.3.b.2. If a certification is unavailable, a financial statement, prepared by independent public accountants, of each underwriter member of the group. 5.2.4.
5.2.4.a. The trust fund for a group of incorporated insurers under common administration, whose members possess aggregate policyholders surplus of $10,000,000,000 (calculated and reported in substantially the same manner as prescribed by the annual statement instructions and Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners) and which has continuously transacted an insurance business outside the United States for at least three (3) years immediately prior to making application for accreditation, shall:
5.2.4.a.1. Consist of funds in trust in an amount not less than the assuming insurers’ several liabilities attributable to business ceded by United States domiciled ceding insurers to any members of the group pursuant to reinsurance contracts issued in the name of such group;
5.2.4.a.2. Maintain a joint trusteed surplus of which $100,000,000 shall be held jointly for the benefit of United States domiciled ceding insurers of any member of the group; and
5.2.4.a.3. File a properly executed Form AR-1, as adopted by the National Association of Insurance Commissioners, with the commissioner as evidence of the submission to this state’s authority to examine the books and records, pursuant to W. Va. Code §33-2-9, of any of its members and shall certify that any member examined shall bear the expense of the examination.
5.2.4.b. Within ninety days after the statements are due to be filed with the group’s domiciliary regulator, the group shall file with the commissioner an annual certification of each underwriter member’s solvency by the member’s domiciliary regulators, and financial statements, prepared by independent public accountants, of each underwriter member of the group. 5.3.
5.3.1. Credit for reinsurance shall not be granted unless the form of the trust and any amendments to the trust have been approved by either the commissioner of the state where the trust is domiciled or the commissioner of another state who, pursuant to the terms of the trust instrument, has accepted responsibility for regulatory oversight of the trust. The form of the trust and any trust amendments also shall be filed with the commissioner of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that:
5.3.1.a. Contested claims are valid and enforceable out of funds in trust to the extent remaining unsatisfied thirty (30) days after entry of the final order of any court of competent jurisdiction in the United States;
5.3.1.b. Legal title to the assets of the trust shall be vested in the trustee for the benefit of the grantor’s United States ceding insurers, their assigns and successors in interest;
5.3.1.c. The trust is subject to examination as determined by the commissioner;
5.3.1.d. The trust shall remain in effect for as long as the assuming insurer, or any member or former member of a group of insurers, has outstanding obligations under reinsurance agreements subject to the trust; and
5.3.1.e. No later than February 28 of each year the trustee of the trust shall report to the commissioner in writing setting forth the balance in the trust and listing the trust’s investments at the preceding year-end, and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the following December 31.
5.3.2. Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by this section or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation or similar proceedings under the laws of its country or state of domicile, the trustee shall comply with an order of the commissioner with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner with regulatory oversight over the trust or other designated receiver all of the assets of the trust fund.
5.3.3. The assets shall be distributed by and claims shall be filed with and valued by the commissioner with regulatory oversight over the trust in accordance with the laws of the state in which the trust is domiciled applicable to the liquidation of domestic insurance companies.
5.3.4. If the commissioner with regulatory oversight over the trust determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the United States beneficiaries of the trust, the commissioner with regulatory oversight over the trust shall return the assets, or any part thereof, to the trustee for distribution in accordance with the trust agreement.
5.3.5. The grantor shall waive any right otherwise available to it under United States law that is inconsistent with this subsection.
5.4. For purposes of this section, the term “liabilities” means the assuming insurer’s gross liabilities attributable to reinsurance ceded by United States domiciled insurers excluding liabilities that are otherwise secured by acceptable means, and includes:
5.4.1. For business ceded by domestic insurers authorized to write accident and sickness, and property and casualty insurance:
5.4.1.a. Losses and allocated loss expenses paid by the ceding insurer, recoverable from the assuming insurer;
5.4.1.b. Reserves for losses reported and outstanding;
5.4.1.c. Reserves for losses incurred but not reported;
5.4.1.d. Reserves for allocated loss expenses; and
5.4.2.e. Unearned premiums.
5.4.2. For business ceded by domestic insurers authorized to write life, accident and sickness and annuity insurance:
5.4.2.a. Aggregate reserves for life policies and contracts net of policy loans and net due and deferred premiums;
5.4.2.b. Aggregate reserves for accident and sickness policies;
5.4.2.c. Deposit funds and other liabilities without life or disability contingencies; and
5.4.2.d. Liabilities for policy and contract claims.
5.5. Assets deposited in trusts established pursuant to W. Va. Code §33-4-15a(b) and this section shall be valued according to their current fair market value and shall consist only of cash in United States dollars; certificates of deposit issued by a United States financial institution as defined in W. Va. Code §33-4-15a(d)(1); clean, irrevocable, unconditional and “evergreen” letters of credit issued or confirmed by a qualified United States financial institution, as defined in W. Va. Code §33-4-15a(d)(1); and investments of the type specified in this subsection. However, investments in or issued by an entity controlling, controlled by or under common control with either the grantor or beneficiary of the trust shall not exceed five percent (5%) of total investments. No more than twenty percent (20%) of the total of the investments in the trust may be foreign investments authorized under paragraph e of subdivision 1; subdivision 3; paragraph b of subdivision 6; or subdivision 7 of this subsection, and no more than ten percent (10%) of the total of the investments in the trust may be securities denominated in foreign currencies. For purposes of applying the preceding sentence, a depository receipt denominated in United States dollars and representing rights conferred by a foreign security shall be classified as a foreign investment denominated in a foreign currency. The assets of a trust established to satisfy the requirements of W. Va. Code §33-4-15a(b) shall be invested only as follows:
5.5.1. Government obligations that are not in default as to principal or interest, that are valid and legally authorized and that are issued, assumed or guaranteed by:
5.5.1.a. The United States or by any agency or instrumentality of the United States;
5.5.1.b. A state of the United States;
5.5.1.c. A territory, possession or other governmental unit of the United States;
5.5.1.d. An agency or instrumentality of a governmental unit referred to in paragraphs b and c of this subdivision if the obligations are by law (statutory or otherwise) payable, as to both principal and interest, from taxes levied or by law required to be levied or from adequate special revenues pledged or otherwise appropriated or by law required to be provided for making these payments, but shall not be obligations eligible for investment under this subdivision if payable solely out of special assessments on properties benefitted by local improvements; or
5.5.1.e. The government of any other country that is a member of the Organization for Economic Cooperation and Development and whose government obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners;
5.5.2. Obligations that are issued in the United States, or that are dollar denominated and issued in a non-U.S. market, by a solvent United States institution (other than an insurance company) or that are assumed or guaranteed by a solvent United States institution (other than an insurance company) and that are not in default as to principal or interest if the obligations:
5.5.2.a. Are rated A or higher (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners, or if not so rated, are similar in structure and other material respects to other obligations of the same institution that are so rated;
5.5.2.b. Are insured by at least one authorized insurer (other than the investing insurer or a parent, subsidiary or affiliate of the investing insurer) licensed to insure obligations in this state and, after considering the insurance, are rated AAA (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners; or
5.5.2.c. Have been designated as Class One or Class Two by the Securities Valuation Office of the National Association of Insurance Commissioners;
5.5.3. Obligations issued, assumed or guaranteed by a solvent non-U.S. institution chartered in a country that is a member of the Organization for Economic Cooperation and Development or obligations of U.S. corporations issued in a non-U.S. currency, provided that in either case the obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners;
5.5.4. An investment made pursuant to the provisions of subdivisions 1, 2, or 3 of this subsection is subject to the following additional limitations:
5.5.4.a. An investment in or loan upon the obligations of an institution other than an institution that issues mortgage-related securities shall not exceed five percent (5%) of the assets of the trust;
5.5.4.b. An investment in any one mortgage-related security shall not exceed five percent (5%) of the assets of the trust;
5.5.4.c. The aggregate total investment in mortgage-related securities shall not exceed twenty-five percent (25%) of the assets of the trust; and
5.5.4.d. Preferred or guaranteed shares issued or guaranteed by a solvent U.S. institution are permissible investments if all of the institution's obligations are eligible as investments under paragraphs a and c, subdivision 2 of this subsection, but shall not exceed two percent (2%) of the assets of the trust.
5.5.5. As used in this rule:
5.5.5.a. “Mortgage-related security” means an obligation that is rated AA or higher (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners and that either:
5.5.5.a.1. Represents ownership of one or more promissory notes or certificates of interest or participation in the notes (including any rights designed to assure servicing of, or the receipt or timeliness of receipt by the holders of the notes, certificates, or participation of amounts payable under, the notes, certificates or participation), that:
5.5.5.a.1.A. Are directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed residential and commercial structure, or on a residential manufactured home as defined in 42 U.S.C. Section 5402(6), whether the manufactured home is considered real or personal property under the laws of the state in which it is located; and
5.5.5.a.1.B. Were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution that is supervised and examined by a federal or state housing authority, or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. Sections 1709 and 1715b, or, where the notes involve a lien on the manufactured home, by an institution or by a financial institution approved for insurance by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. Section 1703; or
5.5.5.a.2. Is secured by one or more promissory notes or certificates of deposit or participations in the notes (with or without recourse to the insurer of the notes) and, by its terms, provides for payments of principal in relation to payments, or reasonable projections of payments, or notes meeting the requirements of parts A and B, subparagraph 1 of this paragraph;
5.5.5.b. “Promissory note,” when used in connection with a manufactured home, also includes a loan, advance or credit sale as evidenced by a retail installment sales contract or other instrument.
5.5.6. The following apply to equity interests:
5.5.6.a. Investments in common shares or partnership interests of a solvent U.S. institution are permissible if:
5.5.6.a.1. Its obligations and preferred shares, if any, are eligible as investments under this subsection; and
5.5.6.a.2. The equity interests of the institution (except an insurance company) are registered on a national securities exchange as provided in the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a to 78kk or otherwise registered pursuant to that Act, and if otherwise registered, price quotations for them are furnished through a nationwide automated quotations system approved by the Financial Industry Regulatory Authority, or successor organization. A trust may not invest in equity interests under this paragraph an amount exceeding one percent (1%) of the assets of the trust even though the equity interests are not so registered and are not issued by an insurance company;
5.5.6.b. Investments in common shares of a solvent institution organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development are permissible if:
5.5.6.b.1. All its obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners; and
5.5.6.b.2. The equity interests of the institution are registered on a securities exchange regulated by the government of a country that is a member of the Organization for Economic Cooperation and Development;
5.5.6.c. An investment in or loan upon any one institution’s outstanding equity interests shall not exceed one percent (1%) of the assets of the trust. The cost of an investment in equity interests made pursuant to this paragraph, when added to the aggregate cost of other investments in equity interests then held pursuant to this paragraph, shall not exceed ten percent (10%) of the assets in the trust;
5.5.7. Obligations issued, assumed or guaranteed by a multinational development bank, provided the obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners.
5.5.8. The following apply to investment companies:
5.5.8.a. Securities of an investment company registered pursuant to the Investment Company Act of 1940, 15 U.S.C. § 80a, are permissible investments if the investment company:
5.5.8.a.1. Invests at least ninety percent (90%) of its assets in the types of securities that qualify as an investment under subdivisions 1, 2, or 3 of this subsection or invests in securities that are determined by the commissioner to be substantively similar to the types of securities set forth in subdivisions 1, 2, or 3 of this subsection; or
5.5.8.a.2. Invests at least ninety percent (90%) of its assets in the types of equity interests that qualify as an investment under paragraph a, subdivision 6 of this subsection;
5.5.8.b. Investments made by a trust in investment companies under this paragraph shall not exceed the following limitations:
5.5.8.b.1. An investment in an investment company qualifying under subparagraph 1, paragraph a of this subdivision shall not exceed ten percent (10%) of the assets in the trust and the aggregate amount of investment in qualifying investment companies shall not exceed twenty-five percent (25%) of the assets in the trust; and
5.5.8.b.2. Investments in an investment company qualifying under subparagraph 2, paragraph a of this subdivision shall not exceed five percent (5%) of the assets in the trust and the aggregate amount of investment in qualifying investment companies shall be included when calculating the permissible aggregate value of equity interests pursuant to paragraph a, subdivision 6 of this subsection.
5.5.9. The following apply to letters of credit:
5.5.9.a. In order for a letter of credit to qualify as an asset of the trust, the trustee has the right and the obligation pursuant to the deed of trust or some other binding agreement (as duly approved by the commissioner), to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.
5.5.9.b. The trust agreement shall provide that the trustee is liable for its negligence, willful misconduct or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where the draw would be required is considered to be negligence and/or willful misconduct.
5.5.10. A specific security provided to a ceding insurer by an assuming insurer pursuant to section 9 of this rule shall be applied, until exhausted, to the payment of liabilities of the assuming insurer to the ceding insurer holding the specific security prior to, and as a condition precedent for, presentation of a claim by the ceding insurer for payment by a trustee of a trust established by the assuming insurer pursuant to this section.
W. Va. Code R. § 114-40-6 Certified Reinsurers
6.1. Pursuant to W. Va. Code §33-4-15a(b)(2)(E), the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that has been certified as a reinsurer in this state at all times for which statutory financial statement credit for reinsurance is claimed under this section. The credit allowed shall be based upon the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified reinsurer by the commissioner. The security shall be in a form consistent with the provisions of W. Va. Code §§33-4-15a(b)(2)(E) and 33-4-15a(c), and section 10, 11, or 12 of this rule. The amount of security required in order for full credit to be allowed shall correspond with the following requirements:
6.1.1. Ratings Security Required Secure – 1 0% Secure – 2 10% Secure – 3 20% Secure – 4 50% Secure – 5 75% Vulnerable – 6 100%
6.1.2. Affiliated reinsurance transactions shall receive the same opportunity for reduced security requirements as all other reinsurance transactions.
6.1.3. The commissioner shall require the certified reinsurer to post, for the benefit of the ceding insurer or its estate, one hundred percent (100%) security upon the entry of an order of rehabilitation, liquidation or conservation against the ceding insurer.
6.1.4. In order to facilitate the prompt payment of claims, a certified reinsurer shall not be required to post security for catastrophe recoverables for a period of one year from the date of the first instance of a liability reserve entry by the ceding company as a result of a loss from a catastrophic occurrence as recognized by the commissioner. The one year deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner. Reinsurance recoverables for only the following lines of business as reported on the National Association of Insurance Commissioners annual financial statement related specifically to the catastrophic occurrence will be included in the deferral:
6.1.4.a. Line 1: Fire;
6.1.4.b. Line 2: Allied Lines;
6.1.4.c. Line 3: Farmowners multiple peril;
6.1.4.d. Line 4: Homeowners multiple peril;
6.1.4.e. Line 5: Commercial multiple peril;
6.1.4.f. Line 9: Inland Marine;
6.1.4.g. Line 12: Earthquake; and
6.1.4.h. Line 21: Auto physical damage.
6.1.5. Credit for reinsurance under this section shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer. Any reinsurance contract entered into prior to the effective date of the certification of the assuming insurer that is subsequently amended after the effective date of the certification of the assuming insurer, or a new reinsurance contract, covering any risk for which collateral was provided previously, shall only be subject to this section with respect to losses incurred and reserves reported from and after the effective date of the amendment or new contract.
6.1.6. Nothing in this section shall prohibit the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this section.
6.2. Certification Procedure.
6.2.1. The commissioner shall post notice on the insurance department’s website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The commissioner may not take final action on the application until at least thirty (30) days after posting the notice required by this subdivision.
6.2.2. The commissioner shall issue written notice to an assuming insurer that has made application and been approved as a certified reinsurer. Included in such notice shall be the rating assigned the certified reinsurer in accordance with subsection 6.1 of this section. The commissioner shall publish a list of all certified reinsurers and their ratings.
6.2.3. In order to be eligible for certification, the assuming insurer shall meet the following requirements:
6.2.3.a. The assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the commissioner pursuant to subsection 6.3 of this section.
6.2.3.b. The assuming insurer must maintain capital and surplus, or its equivalent, of no less than $250,000,000, calculated in accordance with paragraph h, subdivision 4 of this subsection. This requirement may also be satisfied by an association including incorporated and individual unincorporated underwriters having minimum capital and surplus equivalents (net of liabilities) of at least $250,000,000 and a central fund containing a balance of at least $250,000,000.
6.2.3.c. The assuming insurer must maintain financial strength ratings from two or more rating agencies deemed acceptable by the commissioner. These ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information. These financial strength ratings will be one factor used by the commissioner in determining the rating that is assigned to the assuming insurer. Acceptable rating agencies include the following:
6.2.3.c.1. Standard & Poor’s;
6.2.3.c.2. Moody’s Investors Service;
6.2.3.c.3. Fitch Ratings;
6.2.3.c.4. A.M. Best Company; or
6.2.3.c.5. Any other nationally recognized statistical rating organization.
6.2.3.d. The certified reinsurer must comply with any other requirements reasonably imposed by the commissioner.
6.2.4. Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating. Factors that may be considered as part of the evaluation process include, but are not limited to, the following:
6.2.4.a. The certified reinsurer’s financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned will correspond to its financial strength rating as outlined in the table below. The commissioner shall use the lowest financial strength rating received from an approved rating agency in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies will result in loss of eligibility for certification:
Ratings Best S&P Moody’s Fitch Secure – 1 A++ AAA Aaa AAA Secure – 2 A+ AA+, AA, AA- Aa1, Aa2, Aa3 AA+, AA, AA- Secure – 3 A A+, A A1, A2 A+, A Secure – 4 A- A- A3 A- Secure – 5 B++, B+ BBB+, BBB, BBB- Baa1, Baa2, Baa3 BBB+, BBB, BBB- Vulnerable - 6 B, B-C++, C+, C, C-, D, E, F BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, R Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, C BB+, BB, BB-, B+, B, B-, CCC+, CC, CCC-, DD
6.2.4.b. The business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations.
6.2.4.c. For certified reinsurers domiciled in the United States, a review of the most recent applicable National Association of Insurance Commissioners Annual Statement Blank, either Schedule F (for property/casualty reinsurers) or Schedule S (for life and health reinsurers);
6.2.4.d. For certified reinsurers not domiciled in the United States, a review annually of Form CR-F (for property/casualty reinsurers) or Form CR-S (for life and health reinsurers), as adopted by the National Association of Insurance Commissioners;
6.2.4.e. The reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers’ Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than ninety (90) days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership;
6.2.4.f. Regulatory actions against the certified reinsurer;
6.2.4.g. The report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in paragraph h of this subdivision;
6.2.4.h. For certified reinsurers not domiciled in the United States, audited financial statements, regulatory filings, and actuarial opinion (as filed with the non-U.S. jurisdiction supervisor, with a translation into English). Upon the initial application for certification, the commissioner will consider audited financial statements for the last two (2) years filed with its non-United States jurisdiction supervisor;
6.2.4.i. The liquidation priority of obligations to a ceding insurer in the certified reinsurer’s domiciliary jurisdiction in the context of an insolvency proceeding;
6.2.4.j. A certified reinsurer’s participation in any solvent scheme of arrangement, or similar procedure, which involves United States ceding insurers. The commissioner shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and
6.2.4.k. Any other information deemed relevant by the commissioner.
6.2.5. Based on the analysis conducted under paragraph e, subdivision 4 of this subsection of a certified reinsurer’s reputation for prompt payment of claims, the commissioner may make appropriate adjustments in the security the certified reinsurer is required to post to protest its liabilities to United States ceding insurers, provided that the commissioner shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level under paragraph a, subdivision 4 of this subsection if the commissioner finds that:
6.2.5.a. More than fifteen percent (15%) of the certified reinsurer’s ceding insurance clients have overdue reinsurance recoverables on paid losses of ninety (90) days or more which are not in dispute and which exceed $100,000 for each cedent; or
6.2.5.b. The aggregate amount of reinsurance recoverables on paid losses which are not in dispute that are overdue by ninety (90) days or more exceeds $50,000,000.
6.2.6. The assuming insurer must submit a properly executed Form CR-1, as adopted by the National Association of Insurance Commissioners, as evidence of its submission to the jurisdiction of this state, appointment of the commissioner as an agent for service of process in this state, and agreement to provide security for one hundred percent (100%) of the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgement. The commissioner shall not certify any assuming insurer that is domiciled in a jurisdiction that the commissioner has determined does not adequately and promptly enforce final United States judgements or arbitration awards.
6.2.7. The certified reinsurer must agree to meet applicable information filing requirements as determined by the commissioner, both with respect to an initial application for certification and on an ongoing basis. All information submitted by certified reinsurers which is not otherwise public information subject to disclosure is exempted from disclosure under Chapter 29B of the West Virginia Code and shall be withheld from public disclosure. The applicable information filing requirements are as follows:
6.2.7.a. Notification within ten (10) days of any regulatory actions taken against the certified reinsurer, any change in the provisions of its domiciliary license or any change in rating by an approved rating agency, including a statement describing such changes and the reasons therefore;
6.2.7.b. Annually, Form CR-F or CR-S, as adopted by the National Association of Insurance Commissioners and as applicable;
6.2.7.c. Annually, the report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in paragraph d of this subdivision;
6.2.7.d. Annually, the most recent audited financial statements, regulatory filings, and actuarial opinion (as filed with the certified reinsurer’s supervisor, with a translation into English). Upon the initial certification, audited financial statements for the last two (2) years filed with the certified reinsurer’s supervisor;
6.2.7.e. At least annually, an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from United States domestic ceding insurers;
6.2.7.f. A certification from the certified reinsurer’s domestic regulator that the certified reinsurer is in good standing and maintains capital in excess of the jurisdiction’s highest regulatory action level; and
6.2.7.g. Any other information that the commissioner may reasonably require.
6.2.8. Change in Rating or Revocation of Certification.
6.2.8.a. In the case of a downgrade by a rating agency or other disqualifying circumstance, the commissioner shall upon written notice assign a new rating to the certified reinsurer in accordance with the requirements of paragraph a, subdivision 4 of this subsection.
6.2.8.b. The commissioner shall have the authority to suspend, revoke, or otherwise modify a certified reinsurer’s certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this section, or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, lead the commissioner to reconsider the certified reinsurer’s ability or willingness to meet its contractual obligations.
6.2.8.c. If the rating of a certified reinsurer is upgraded by the commissioner, the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the commissioner shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the commissioner, the commissioner shall require the certified reinsure to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer.
6.2.8.d. Upon revocation of the certification of a certified reinsurer by the commissioner, the assuming insurer shall be required to post security in accordance with section 9 of this rule in order for the ceding insurer to continue to take credit for reinsurance ceded to the assuming insurer. If funds continue to be held in trust in accordance with section 5 of this rule, the commissioner may allow additional credit equal to the ceding insurer’s pro rata share of such funds, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration. Notwithstanding the change of a certified reinsurer’s rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of three (3) months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the commissioner to be at high risk of uncollectibility.
6.3. Qualified Jurisdictions.
6.3.1. If, upon conducting an evaluation under this section with respect to the reinsurance supervisory system of any non-U.S. assuming insurer, the commissioner determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the commissioner shall publish notice and evidence of such recognition in an appropriate manner. The commissioner may establish a procedure to withdraw recognition of those jurisdictions that are not longer qualified.
6.3.2. In order to determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner shall evaluate the reinsurance supervisory system of the non-U.S. jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits and the extent of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the United States. The commissioner shall determine the appropriate approach for evaluating the qualifications of such jurisdictions, and create and publish on the commissioner’s webpage a list of jurisdictions whose reinsurers may be approved by the commissioner as eligible for certification. A qualified jurisdiction must agree to share information and cooperate with the commissioner with respect to all certified reinsurers domiciled within that jurisdiction. Additional factors to be considered in determining whether to recognized a qualified jurisdiction, in the discretion of the commissioner, include but are not limited to the following:
6.3.2.a. The framework under which the assuming insurer is regulated.
6.3.2.b. The structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance.
6.3.2.c. The substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction.
6.3.2.d. The form and substance of financial reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used.
6.3.2.e. The domiciliary regulator’s willingness to cooperate with United States regulators in general and the commissioner in particular.
6.3.2.f. The history of performance by assuming insurers in the domiciliary jurisdiction.
6.3.2.g. Any documented evidence of substantial problems with the enforcement of final United States judgments in the domiciliary jurisdiction. A jurisdiction will not be considered to be a qualified jurisdiction if the commissioner has determined that it does not adequately and promptly enforce final United States judgements or arbitration awards.
6.3.2.h. Any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors or successor organization.
6.3.2.i. Any other matters deemed relevant by the commissioner.
6.3.3. A list of qualified jurisdictions shall be published through the National Association of Insurance Commissioners’ committee process. The commissioner shall consider this list in determining qualified jurisdictions. If the commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification with respect to the criteria provided under subdivision 2 of this subsection.
6.3.4. United States jurisdictions that meet the requirements for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program shall be recognized as qualified jurisdictions.
6.4. Recognition of Certification Issued by a National Association of Insurance Commissioners Accredited Jurisdiction.
6.4.1. If an applicant for certification has been certified as a reinsurer in a National Association of Insurance Commissioners’ accredited jurisdiction, the commissioner has the discretion to defer to that jurisdiction’s certification, and to defer to the rating assigned by that jurisdiction, if the assuming insurer submits a properly executed Form CR-1, as adopted by the National Association of Insurance Commissioners, and such additional information as the commissioner requires. The assuming insurer shall be considered to be a certified reinsurer in this state.
6.4.2. Any change in the certified reinsurer’s status or rating in the other jurisdiction shall apply automatically in this state as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the commissioner of any change in its status or rating within ten (10) days after receiving notice of the change.
6.4.3. The commissioner may withdraw recognition of the other jurisdiction’s rating at any time and assign a new rating in accordance with subdivision 8, subsection 6.2 of this section.
6.4.4. The commissioner may withdraw recognition of the other jurisdiction’s certification at any time, with written notice to the certified reinsurer. Unless the commissioner suspends or revokes the certified reinsurer’s certification in accordance with subdivision 8, subsection 6.2 of this section, the certified reinsurer’s certification shall remain in good standing in this state for a period of three (3) months, which shall be extended if additional time is necessary to consider the assuming insurer’s application for certification in this state.
6.5. Mandatory Funding Clause. In addition to the clauses required under section 13 of this rule, reinsurance contracts entered into or renewed under this section shall include a proper funding clause, which requires the certified reinsurer to provide and maintain security in an amount sufficient to avoid the imposition of any financial statement penalty on the ceding insurer under this section for reinsurance ceded to the certified reinsurer.
6.6. The commissioner shall comply with all reporting and notification requirements that may be established by the National Association of Insurance Commissioners with respect to certified reinsures and qualified jurisdictions.
W. Va. Code R. § 114-40-7 Reciprocal Jurisdictions
7.1. Pursuant to W. Va. Code §33-4-15a(b)(2)(F), the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is licensed to write reinsurance by, and has its head office or is domiciled in, a reciprocal jurisdiction, and which meets the other requirements of this rule.
7.2. A “reciprocal jurisdiction” is a jurisdiction, as designated by the commissioner pursuant to subsection 7.4 of this section, that meets one of the following:
7.2.1. A non-U.S. jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this subsection, a “covered agreement” is an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §§ 313 and 314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance;
7.2.2. A U.S. jurisdiction that meets the requirements for accreditation under the National Association of Insurance Commissioners’ financial standards and accreditation program; or
7.2.3. A qualified jurisdiction, as determined by the commissioner pursuant to W. Va. Code §33-4-15a(b)(2)(E)(iii) and subsection 6.3 of this rule, which is not otherwise described in subdivision 1 or 2 of this subsection and which the commissioner determines meets all of the following additional requirements:
7.2.3.a. Provides that an insurer which has its head office or is domiciled in such qualified jurisdiction shall receive credit for reinsurance ceded to a U.S.-domiciled assuming insurer in the same manner as credit for reinsurance is received for reinsurance assumed by insurers domiciled in such qualified jurisdiction;
7.2.3.b. Does not require a U.S.-domiciled assuming insurer to establish or maintain a local presence as a condition for entering into a reinsurance agreement with any ceding insurer subject to regulation by the non-U.S. jurisdiction or as a condition to allow the ceding insurer to recognize credit for such reinsurance;
7.2.3.c. Recognizes the U.S. state regulatory approach to group supervision and group capital, by providing written confirmation by a competent regulatory authority, in such qualified jurisdiction, that insurers and insurance groups that are domiciled or maintain their headquarters in this state or another jurisdiction accredited by the National Association of Insurance Commissioners shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the commissioner or the commissioner of the domiciliary state and will not be subject to group supervision at the level of the worldwide parent undertaking of the insurance or reinsurance group by the qualified jurisdiction; and
7.2.3.d. Provides written confirmation by a competent regulatory authority in such qualified jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such qualified jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the National Association of Insurance Commissioners.
7.3. Credit shall be allowed when the reinsurance is ceded from an insurer domiciled in this state to an assuming insurer meeting each of the following conditions:
7.3.1. The assuming insurer must be licensed to transact reinsurance by, and have its head office or be domiciled in, a reciprocal jurisdiction.
7.3.2. The assuming insurer must have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated on at least an annual basis as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, and confirmed as set forth in subdivision 7 of this subsection according to the methodology of its domiciliary jurisdiction, in the following amounts:
7.3.2.a. No less than $250,000,000; or
7.3.2.b. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters:
7.3.2.b.1. Minimum capital and surplus equivalents (net of liabilities) or own funds of the equivalent of at least $250,000,000; and
7.3.2.b.2. A central fund containing a balance of the equivalent of at least $250,000,000.
7.3.3. The assuming insurer must have and maintain on an ongoing basis a minimum solvency or capital ratio, as applicable, as follows:
7.3.3.a. If the assuming insurer has its head office or is domiciled in a reciprocal jurisdiction as defined in subdivision 1, subsection 7.2 of this section, the ratio specified in the applicable covered agreement;
7.3.3.b. If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in subdivision 2, subsection 7.2 of this section, a risk-based capital (RBC) ratio of three hundred percent (300%) of the authorized control level, calculated in accordance with the formula developed by the National Association of Insurance Commissioners; or
7.3.3.c. If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in subdivision 3, subsection 7.2 of this section, after consultation with the Reciprocal Jurisdiction and considering any recommendations published through the National Association of Insurance Commissioners committee process, such solvency or capital ratio as the commissioner determines to be an effective measure of solvency.
7.3.4. The assuming insurer must agree to and provide adequate assurance, in the form of a properly executed Form RJ-1, as adopted by the National Association of Insurance Commissioners, of its agreement to the following:
7.3.4.a. The assuming insurer must agree to provide prompt written notice and explanation to the commissioner if it falls below the minimum requirements set forth in subdivision 2 or 3 of this subsection, or if any regulatory action is taken against it for serious noncompliance with applicable law.
7.3.4.b. The assuming insurer must consent in writing to the jurisdiction of the courts of this state and to the appointment of the West Virginia Secretary of State as agent for service of process.
7.3.4.b.1. The commissioner may also require that such consent be provided and included in each reinsurance agreement under the commissioner’s jurisdiction.
7.3.4.b.2. Nothing in this provision shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws.
7.3.4.c. The assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained.
7.3.4.d. Each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to one hundred percent (100%) of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its estate, if applicable.
7.3.4.e. The assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement, which involves this state’s ceding insurers, and agrees to notify the ceding insurer and the commissioner and to provide one hundred percent (100%) security to the ceding insurer consistent with the terms of the scheme, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of W. Va. Code §33-4-15a(b)(2)(E), W. Va. Code §33-4-15a(c) and section 10, 11 or 12 of this rule. For purposes of this rule, the term “solvent scheme of arrangement” means a foreign or alien statutory or regulatory compromise procedure subject to requisite majority creditor approval and judicial sanction in the assuming insurer’s home jurisdiction either to finally commute liabilities of duly noticed classed members or creditors of a solvent debtor, or to reorganize or restructure the debts and obligations of a solvent debtor on a final basis, and which may be subject to judicial recognition and enforcement of the arrangement by a governing authority outside the ceding insurer’s home jurisdiction.
7.3.4.f. The assuming insurer must agree in writing to meet the applicable information filing requirements as set forth in subdivision 5 of this subsection.
7.3.5. The assuming insurer or its legal successor must provide, if requested by the commissioner, on behalf of itself and any legal predecessors, the following documentation to the commissioner:
7.3.5.a. For the two years preceding entry into the reinsurance agreement and on an annual basis thereafter, the assuming insurer’s annual audited financial statements, in accordance with the applicable law of the jurisdiction of its head office or domiciliary jurisdiction, as applicable, including the external audit report;
7.3.5.b. For the two years preceding entry into the reinsurance agreement, the solvency and financial condition report or actuarial opinion, if filed with the assuming insurer’s supervisor;
7.3.5.c. Prior to entry into the reinsurance agreement and not more than semi-annually thereafter, an updated list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the United States; and
7.3.5.d. Prior to entry into the reinsurance agreement and not more than semi-annually thereafter, information regarding the assuming insurer’s assumed reinsurance by ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer to allow for the evaluation of the criteria set forth in subdivision 6 of this subsection.
7.3.6. The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment will be evidenced if any of the following criteria is met:
7.3.6.a. More than fifteen percent (15%) of the reinsurance recoverables from the assuming insurer are overdue and in dispute as reported to the commissioner;
7.3.6.b. More than fifteen percent (15%) of the assuming insurer’s ceding insurers or reinsurers have overdue reinsurance recoverable on paid losses of 90 days or more which are not in dispute and which exceed for each ceding insurer $100,000, or as otherwise specified in a covered agreement; or
7.3.6.c. The aggregate amount of reinsurance recoverable on paid losses which are not in dispute, but are overdue by 90 days or more, exceeds $50,000,000, or as otherwise specified in a covered agreement.
7.3.7. The assuming insurer’s supervisory authority must confirm to the commissioner on an annual basis that the assuming insurer complies with the requirements set forth in subdivisons 2 and 3 of this subsection.
7.3.8. Nothing in this provision precludes an assuming insurer from providing the commissioner with information on a voluntary basis.
7.4. The commissioner shall timely create and publish a list of reciprocal jurisdictions.
7.4.1. A list of reciprocal jurisdictions is published through the National Association of Insurance Commissioners committee process. The commissioner’s list shall include any reciprocal jurisdiction as defined under subdivisions 1 and 2, subsection 7.2 of this section, and shall consider any other reciprocal jurisdiction included on the National Association of Insurance Commissioners’ list. The commissioner may approve a jurisdiction that does not appear on the National Association of Insurance Commissioners’ list of reciprocal jurisdictions as provided by applicable law, rule or in accordance with criteria published through the National Association of Insurance Commissioners committee process.
7.4.2. The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets one or more of the requirements of a reciprocal jurisdiction, as provided by applicable law, rule, or in accordance with a process published through the National Association of Insurance Commissioners committee process, except that the commissioner shall not remove from the list a reciprocal jurisdiction as defined under subdivisions 1 and 2, subsection 7.2 of this section. Upon removal of a reciprocal jurisdiction from this list credit for reinsurance ceded to an assuming insurer domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to W. Va. Code §33-4-15a or this rule.
7.5. The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this section and to which cessions shall be granted credit in accordance with this section.
7.5.1. If a National Association of Insurance Commissioners accredited jurisdiction has determined that the conditions set forth in subsection 7.3 of this section have been met, the commissioner has the discretion to defer to that jurisdiction’s determination, and add such assuming insurer to the list of assuming insurers to which cessions shall be granted credit in accordance with this subsection. The commissioner may accept financial documentation filed with another National Association of Insurance Commissioners accredited jurisdiction or with the National Association of Insurance Commissioners in satisfaction of the requirements of subsection 7.3 of this section.
7.5.2. When requesting that the commissioner defer to another National Association of Insurance Commissioners accredited jurisdiction’s determination, an assuming insurer must submit a properly executed Form RJ-1, as adopted by the National Association of Insurance Commissioners, and additional information as the commissioner may require. A state that has received such a request will notify other states through the National Association of Insurance Commissioners committee process and provide relevant information with respect to the determination of eligibility.
7.6. If the commissioner determines that an assuming insurer no longer meets one or more of the requirements under this section, the commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this section.
7.6.1. While an assuming insurer’s eligibility is suspended, no reinsurance agreement issued, amended or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer’s obligations under the contract are secured in accordance with section 9 of this rule.
7.6.2. If an assuming insurer’s eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer’s obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of section 9 of this rule.
7.7. Before denying statement credit or imposing a requirement to post security with respect to subsection 7.6 of this section or adopting any similar requirement that will have substantially the same regulatory impact as security, the commissioner shall:
7.7.1. Communicate with the ceding insurer, the assuming insurer, and the assuming insurer’s supervisory authority that the assuming insurer no longer satisfies one of the conditions listed in subsection 7.3 of this section;
7.7.2. Provide the assuming insurer with 30 days from the initial communication to submit a plan to remedy the defect, and 90 days from the initial communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection;
7.7.3. After the expiration of 90 days or less, as set out in subdivision 2 of this subsection, if the commissioner determines that no or insufficient action was taken by the assuming insurer, the commissioner may impose any of the requirements as set out in this subsection; and
7.7.4. Provide a written explanation to the assuming insurer of any of the requirements set out in this subsection.
7.8. If subject to a legal process of rehabilitation, liquidation or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding liabilities.
W. Va. Code R. § 114-40-8 Credit for Reinsurance Required by Law
Pursuant to W. Va. Code §33-4-15a(b)(2)(G), the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of W. Va. Code §§33-4-15a(b)(2)(A); 33-4-15a(b)(2)(B); 33-4-15a(b)(2)(C); 33-4-15a(b)(2)(D); 33-4-15a(b)(2)(E); and 33-4-15a(b)(2)(F), but only as to the insurance of risks located in jurisdictions where the reinsurance is required by the applicable law or regulation of that jurisdiction. As used in this section, “jurisdiction” means a state, district or territory of the United States and any lawful national government.
W. Va. Code R. § 114-40-9 Asset or Reduction From Liability for Reinsurance Ceded to an Unauthorized Assuming Insurer Not Meeting the Requirements of Sections 2 through 8
9.1. Pursuant to W. Va. Code §33-4-15a(c), the commissioner shall allow a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of W. Va. Code §33-4-15a(b) in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the exclusive benefit of the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under the reinsurance contract. The security must be held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer or, in the case of a trust, held in a qualified United States financial institution as defined in W. Va. Code §33-4-15a(d)(2). This security may be in the form of any of the following:
9.1.1. Cash;
9.1.2. Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted assets;
9.1.3. Clean, irrevocable, unconditional and “evergreen” letters of credit issued or confirmed by a qualified United States institution, as defined in W. Va. Code §33-4-15a(d)(1), effective no later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance (or confirmation) shall, notwithstanding the issuing (or confirming) institution’s subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs; or
9.1.4. Any other form of security acceptable to the commissioner.
9.2. An admitted asset or a reduction from liability for reinsurance ceded to an unauthorized assuming insurer pursuant to this section shall be allowed only when the requirements of section 13 and the applicable portions of sections 10, 11, or 12 of this rule are satisfied.
W. Va. Code R. § 114-40-10 Trust Agreements Qualified Under Section 9
10.1. As used in this section:
10.1.1. “Beneficiary” means the entity for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver (including a conservator, rehabilitator or liquidator).
10.1.2. “Grantor” means the entity that has established a trust for the sole benefit of the beneficiary. When established in conjunction with a reinsurance agreement, the grantor is the unlicensed, unaccredited assuming insurer.
10.1.3. “Obligations,” as used in subdivision 11, subsection 10.2 of this section means:
10.1.3.a. Reinsured losses and allocated loss expenses paid by the ceding company, but not recovered from the assuming insurer;
10.1.3.b. Reserves for reinsured losses reported and outstanding;
10.1.3.c. Reserves for reinsured losses incurred but not reported; and
10.1.3.d. Reserves for allocated reinsured loss expenses and unearned premiums.
10.2. Required conditions.
10.2.1. The trust agreement shall be entered into between the beneficiary, the grantor and a trustee, which shall be a qualified United States financial institution as defined in W. Va. Code §33-4-15a(d)(2).
10.2.2. The trust agreement shall create a trust account into which assets shall be deposited.
10.2.3. All assets in the trust account shall be held by the trustee at the trustee’s office in the United States.
10.2.4. The trust agreement shall provide that:
10.2.4.a. The beneficiary has the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;
10.2.4.b. No other statement or document is required to be presented to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets;
10.2.4.c. It is not subject to any conditions or qualifications outside of the trust agreement; and
10.2.4.d. It shall not contain references to any other agreements or documents except as provided for under subdivisions 11 and 12 of this subsection.
10.2.5. The trust agreement shall be established for the sole benefit of the beneficiary.
10.2.6. The trust agreement shall require the trustee to:
10.2.6.a. Receive assets and hold all assets in a safe place;
10.2.6.b. Determine that all assets are in a form that the beneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate any such assets, without consent or signature from the grantor or any other person or entity;
10.2.6.c. Furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;
10.2.6.d. Notify the grantor and the beneficiary within ten (10) days, of any deposits to or withdrawals from the trust account;
10.2.6.e. Upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and
10.2.6.f. Allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset upon condition that the proceeds are paid into the trust account.
10.2.7. The trust agreement shall provide that at least thirty (30) days, but not more than forty-five (45) days, prior to termination of the trust account, written notification of termination shall be delivered by the trustee to the beneficiary.
10.2.8. The trust agreement shall be made subject to and governed by the laws of the state in which the trust is domiciled.
10.2.9. The trust agreement shall prohibit invasion of the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee. In order for a letter of credit to qualify as an asset of the trust, the trustee has the right and the obligation pursuant to the deed of trust or some other binding agreement (as duly approved by the commissioner), to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.
10.2.10. The trust agreement shall provide that the trustee is liable for its own negligence, willful misconduct or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where the draw would be required is considered to be negligence and/or willful misconduct.
10.2.11. Notwithstanding other provisions of this rule, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities and accident and health, where it is customary practice to provide a trust agreement for a specific purpose, a trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the following purposes:
10.2.11.a. To pay or reimburse the ceding insurer for the assuming insurer’s share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;
10.2.11.b. To make payment to the assuming insurer of any amounts held in the trust account that exceed one hundred and two percent (102%) of the actual amount required to fund the assuming insurer’s obligations under the specific reinsurance agreement; or
10.2.11.c. Where the ceding insurer has received notification of termination of the trust account and where the assuming insurer’s entire obligations under the specific reinsurance agreement remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institution as defined in W. Va. Code §33-4-15a(d)(2) apart from its general assets, in trust for those uses and purposes specified in paragraphs a and b of this subdivision as may remain executory after such withdrawal and for any period after the termination date.
10.2.12. Notwithstanding other provisions of this rule, when a trust agreement is established to meet the requirements of Section 9 of this rule in conjunction with a reinsurance agreement covering life, annuities or accident and health risks, where it is customary to provide a trust agreement for a specific purpose, a trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the following purposes:
10.2.12.a. To pay or reimburse the ceding insurer for:
10.2.12.a.1. The assuming insurer’s share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and
10.2.12.a.2. The assuming insurer’s share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement;
10.2.12.b. To pay to the assuming insurer amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; or
10.2.12.c. Where the ceding insurer has received notification of termination of the trust and where the assuming insurer’s entire obligations under the specific reinsurance agreement remain unliquidated and discharged ten (10) days prior to the termination date, to withdraw amounts equal to the assuming insurer’s share of liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institution apart from its general assets, in trust for the uses and purposes specified in paragraphs a and b of this subdivision as may remain executory after withdrawal and for any period after the termination date.
10.2.13. Either the reinsurance agreement or the trust agreement must stipulate that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States bank and payable in United States dollars, and investments permitted by Chapter 33 of the West Virginia Code, or any combination thereof, provided investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed five percent (5%) of total investments. The agreement may further specify the types of investments to be deposited. If the reinsurance agreement covers life, annuities or accident and sickness risks, then the provisions required by this subdivision must be included in the reinsurance agreement.
10.3. Permitted conditions.
10.3.1. The trust agreement may provide that the trustee may resign upon delivery of a written notice of resignation, effective not less than ninety (90) days after the beneficiary and grantor receive the notice and that the trustee may be removed by the grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective not less than ninety (90) days after the trustee and the beneficiary receive the notice, provided that no such resignation or removal shall be effective until a successor trustee has been duly appointed and approved by the beneficiary and the grantor and all assets in the trust have been duly transferred to the new trustee.
10.3.2. The grantor may have the full and unqualified right to vote any shares of stock in the trust account and to receive from time to time payments of any dividends or interest upon any shares of stock or obligations included in the trust account. Any interest or dividends shall be either forwarded promptly upon receipt to the grantor or deposited in a separate account established in the grantor’s name.
10.3.3. The trustee may be given authority to invest, and accept substitutions of, any funds in the account, provided that no investment or substitution shall be made without prior approval of the beneficiary, unless the trust agreement specifies categories of investments acceptable to the beneficiary and authorizes the trustee to invest funds and to accept substitutions that the trustee determines are at least equal in current fair market value to the assets withdrawn and that are consistent with the restrictions in paragraph b, subdivision 1, subsection 10.4 of this section.
10.3.4. The trust agreement may provide that the beneficiary may at any time designate a party to which all or part of the trust assets are to be transferred. The transfer may be conditioned upon the trustee receiving, prior to or simultaneously, other specified assets.
10.3.5. The trust agreement may provide that, upon termination of the trust account, all assets not previously withdrawn by the beneficiary shall, with written approval by the beneficiary, be delivered over to the grantor.
10.4. Additional conditions applicable to reinsurance agreements.
10.4.1. A reinsurance agreement may contain provisions that:
10.4.1.a. Require the assuming insurer to enter into a trust agreement and to establish a trust account for the benefit of the ceding insurer, and specifying what the agreement is to cover;
10.4.1.b. Require the assuming insurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever necessary negotiate these assets without consent or signature from the assuming insurer or any other entity;
10.4.1.c. Require that all settlements of account between the ceding insurer and the assuming insurer be made in cash or its equivalent; and
10.4.1.d. Stipulate that the assuming insurer and the ceding insurer agree that the assets in the trust account, established pursuant to the provisions of the reinsurance agreement, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the reinsurance agreement, and shall be utilized and applied by the ceding insurer or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of such company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, only for the following purposes:
10.4.1.d.1. To pay or reimburse the ceding insurer for:
10.4.1.d.1.A. The assuming insurer’s share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement because of cancellations of such policies;
10.4.1.d.1.B. The assuming insurer’s share of surrenders and benefits or losses paid by the ceding insurer pursuant to the provisions of the policies reinsured under the reinsurance agreement; and
10.4.1.d.1.C. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer.
10.4.1.d.2. To make payment to the assuming insurer of amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer.
10.4.2. The reinsurance agreement may also contain provisions that:
10.4.2.a. Give the assuming insurer the right to seek approval from the ceding insurer, which shall not be unreasonably or arbitrarily withheld, to withdraw from the trust account all or any part of the trust assets and transfer those assets to the assuming insurer, provided:
10.4.2.a.1. The assuming insurer shall, at the time of withdrawal, replace the withdrawn assets with other qualified assets having a current fair market value equal to the market value of the assets withdrawn so as to maintain at all times the deposit in the required amount, or
10.4.2.a.2. After withdrawal and transfer, the current fair market value of the trust account is no less than one hundred and two percent (102%) of the required amount.
10.4.2.b. Provide for the return of any amount withdrawn in excess of the actual amounts required for in paragraph d, subdivision 1 of this subsection, and for interest payments at a rate not in excess of the prime rate of interest on such amounts;
10.4.2.c. Permit the award by any arbitration panel or court of competent jurisdiction of:
10.4.2.c.1. Interest at a rate different from that provided in paragraph b of this subdivision,
10.4.2.c.2. Court or arbitration costs,
10.4.2.c.3. Attorney’s fees; and
10.4.2.c.4. Any other reasonable expenses.
10.4.3. Financial reporting. A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with the commissioner in compliance with the provisions of this rule when established on or before the date of filing of the financial statement of the ceding insurer. Further, the reduction for the existence of an acceptable trust account may be up to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but the reduction shall be no greater than the specific obligations under the reinsurance agreement that the trust account was established to secure.
10.4.4. Existing agreements. Notwithstanding the effective date of this rule, any trust agreement or underlying reinsurance agreement in existence prior to January 1, 2019, will continue to be acceptable until the expiration or renewal date of the agreement, at which time the agreement will have to be in full compliance with this rule for the trust agreement to be acceptable.
10.4.5. The failure of any trust agreement to specifically identify the beneficiary as defined in subdivision 1, subsection 10.1 of this section shall not be construed to affect any actions or rights that the commissioner may take or possess pursuant to the provisions of the laws of this state.
W. Va. Code R. § 114-40-11 Letters of Credit Qualified Under Section 9
11.1. The letter of credit must be clean, irrevocable, unconditional and issued or confirmed by a qualified United States financial institution as defined in W. Va. Code §33-4-15a(d)(1). The letter of credit shall contain an issue date and date of expiration and shall stipulate that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds and that no other document need be presented. The letter of credit shall also indicate that it is not subject to any condition or qualifications outside of the letter of credit. In addition, the letter of credit itself shall not contain reference to any other agreements, documents or entities, except as provided in subdivision 1, subsection 11.8 of this section. As used in this section, “beneficiary” means the domestic insurer for whose benefit the letter of credit has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver (including a conservator, rehabilitator or liquidator).
11.2. The heading of the letter of credit may include a boxed section containing the name of the applicant and other appropriate notations to provide a reference for the letter of credit. The boxed section shall be clearly marked to indicate that such information is for internal identification purposes only.
11.3. The letter of credit shall contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent upon reimbursement with respect thereto.
11.4. The term of the letter of credit shall be for at least one year and shall contain an “evergreen clause” that prevents the expiration of the letter of credit without due notice from the issuer. The “evergreen clause” shall provide for a period of no less than thirty (30) days’ notice prior to the expiration date or nonrenewal.
11.5. The letter of credit shall state whether it is subject to and governed by the laws of this state or the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce Publication 600 (UCP 600) or International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98), or any successor publication, and all drafts drawn under the letter of credit shall be presentable at an office in the United States of a qualified United States financial institution.
11.6. If the letter of credit is made subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce Publication 600 (UCP 600) or International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98), or any successor publication, then the letter of credit shall specifically address and provide for an extension of time to draw against the letter of credit in the event that one or more of the occurrences specified in Article 36 of Publication 600 or any other successor publication, occur.
11.7. If the letter of credit is issued by a financial institution authorized to issue letters of credit, other than a qualified United States financial institution as described in subsection 11.1 of this section, then the following additional requirements shall be met:
11.7.1. The issuing financial institution shall formally designate the confirming qualified United States financial institution as its agent for the receipt and payment of the drafts; and
11.7.2. The “evergreen clause” shall provide for thirty (30) days’ notice prior to the expiration date for nonrenewal.
11.8. Reinsurance agreement provisions.
11.8.1. The reinsurance agreement in conjunction with which the letter of credit is obtained may contain provisions that:
11.8.1.a. Require the assuming insurer to provide letters of credit to the ceding insurer and specify what they are to cover;
11.8.1.b. Stipulate that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer pursuant to the provisions of the reinsurance agreement may be drawn upon at any time, notwithstanding any other provisions in the agreement, and shall be utilized by the ceding insurer or its successors in interest only for one or more of the following reasons:
11.8.1.b.1. To pay or reimburse the ceding insurer for:
11.8.1.b.1.A. The assuming insurer’s share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurers, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of such policies;
11.8.1.b.1.B. The assuming insurer’s share, under the specific reinsurance agreement, of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurers, under the terms and provisions of the policies reinsured under the reinsurance agreement; and
11.8.1.b.1.C. Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer;
11.8.1.b.2. Where the letter of credit will expire without renewal or be reduced or replaced by a letter of credit for a reduced amount and where the assuming insurer’s entire obligations under the reinsurance agreement remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to the assuming insurer’s share of the liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer and exceed the amount of any reduced or replacement letter of credit, and deposit those amounts in a separate account in the name of the ceding insurer in a qualified United States financial institution apart from its general assets, in trust for the uses and purposes specified in this subsection as may remain after withdrawal and for any period after the termination date.
11.8.1.c. All of the provisions of subdivision 1 of this subsection shall be applied without diminution because of insolvency on the part of the ceding insurer or assuming insurer.
11.8.2. Nothing contained in subdivision 1 of this subsection precludes the ceding insurer and assuming insurer from providing for:
11.8.2.a. An interest payment, at a rate not in excess of the prime rate of interest, on the amounts held pursuant to paragraph b, subdivision 1 of this subsection; or
11.8.2.b. The return of any amounts drawn down on the letters of credit in excess of the actual amounts required by this subsection or any amounts that are subsequently determined not to be due.
W. Va. Code R. § 114-40-12 Other Security
A ceding insurer may take credit for unencumbered funds withheld by the ceding insurer in the United States which are subject to withdrawal solely by the ceding insurer and under its exclusive control.
W. Va. Code R. § 114-40-13 Reinsurance Contract
13.1. Credit will not be granted, nor an asset or reduction from liability allowed, to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of sections 2, 3, 4, 5, 6, 7 or 9 of this rule or otherwise in compliance with W. Va. Code §33-4-15a(b) after the adoption of this rule unless the reinsurance agreement:
13.1.1. Includes a proper insolvency clause, which stipulates that reinsurance is payable directly to the liquidator or successor without diminution regardless of the status of the ceding company, pursuant to W. Va. Code §33-4-15(c);
13.1.2. Includes a provision pursuant to W. Va. Code §33-4-15a(b)(2) whereby the assuming insurer, if an unauthorized assuming insurer, has submitted to the jurisdiction of an alternative dispute resolution panel or court of competent jurisdiction within the United States, has agreed to comply with all requirements necessary to give the court or panel jurisdiction, has designated an agent upon whom service of process may be effected, and has agreed to abide by the final decision of the court or panel; and
13.1.3. Includes a proper reinsurance intermediary clause, if applicable, which stipulates that the credit risk for the intermediary is carried by the assuming insurer.
W. Va. Code R. § 114-40-14 Contracts Affected
All new and renewal reinsurance transactions entered into after the effective date of this rule shall conform to the requirements of W. Va. Code §33-4-15a and this rule if credit is to be given to the ceding insurer for the reinsurance.
W. Va. Code R. § 114-40-15 Fees
The commissioner may charge reasonable fees, as described in W. Va. Code §33-3-13, regarding the filing of any document required of a reinsurer. Such fees are to be used by the commissioner for the operation of his or her office.
Series 41 Actuarial Opinion And Memorandum Rule
W. Va. Code R. § 114-41-1 General
1.1. Scope. -- This legislative rule applies to all life insurance companies and fraternal benefit societies doing business in this State and to all life insurance companies and fraternal benefit societies which are authorized to reinsure life insurance, annuities or accident and health insurance businesses in this State. This rule is based on the “Actuarial Opinion and Memorandum Regulation (Model 822)” adopted by the National Association of Insurance Commissioners in 1991 and amended in 2009.
1.1.a. This rule will be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the Commissioner has the authority to specify specific methods of actuarial analysis and actuarial assumptions when, in the Commissioner’s judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items.
1.1.b. This rule is applicable to all annual statements filed with the Commissioner.
1.1.c. Notwithstanding the foregoing, the Commissioner may require any company otherwise exempt pursuant to this rule to submit a statement of actuarial opinion and to prepare a memorandum in support of the opinion in accordance with section 5 and 6 of this rule if, in the opinion of the Commissioner, an asset adequacy analysis is necessary with respect to the company.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-7-9(n).
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- July 1, 2011.
W. Va. Code R. § 114-41-2 Purpose
2.1. The purpose of this rule is to prescribe:
2.1.a. Requirements for statements of actuarial opinion that are to be submitted in accordance with the Standard Valuation Law, W. Va. Code §33-7-9(c), and for memoranda in support thereof;
2.1.b. Rules applicable to the appointment of an appointed actuary; and
2.1.c. Guidance as to the meaning of “adequacy of reserves.”
W. Va. Code R. § 114-41-3 Definitions
3.1. “Actuarial Opinion” means the opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with Section 6 of this rule and with applicable Actuarial Standards of Practice.
3.2. “Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.
3.3. “Annual Statement” means that statement required by W. Va. Code §33-4-14 to be filed annually by the company with the office of the Commissioner.
3.4. “Appointed Actuary” means any individual who is appointed or retained in accordance with the requirements set forth in subsection 4.3 of this rule to provide the actuarial opinion and supporting memorandum as required by the Standard Valuation Law, W. Va. Code §33-7-9(c).
3.5. “Asset Adequacy Analysis” means an analysis that meets the standards and other requirements referred to in subsection 4.4 of this rule.
3.6. “Commissioner” means the Insurance Commissioner of West Virginia.
3.7. “Company” means a life insurance company, fraternal benefit society or reinsurer subject to the provisions of this rule.
3.8. “Qualified Actuary” means any individual who meets the requirements set forth in subsection 4.2 of this rule.
W. Va. Code R. § 114-41-4 General Requirements
4.1. Submission of Statement of Actuarial Opinion.
The annual statement shall include on or attached to page 1, the statement of an appointed actuary, entitled “Statement of Actuarial Opinion,” setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with section 6 of this rule. Upon written request by the company, the Commissioner may grant an extension of the date for submission of the statement of actuarial opinion.
4.2. A “qualified actuary” is an individual who:
4.2.a. Is a member in good standing of the American Academy of Actuaries;
4.2.b. Is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements;
4.2.c. Is familiar with the valuation requirements applicable to life and health insurance companies;
4.2.d. Has not been found by the Commissioner (or if so found has subsequently been reinstated as a qualified actuary), following appropriate notice and hearing to have:
4.2.d.1. Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as a qualified actuary;
4.2.d.2. Been found guilty of fraudulent or dishonest practices;
4.2.d.3. Demonstrated his or her incompetency, lack of cooperation, or untrustworthiness to act as a qualified actuary;
4.2.d.4. Submitted to the Commissioner during the past five (5) years, pursuant to this rule, an actuarial opinion or memorandum that the Commissioner rejected because it did not meet the provisions of this rule including standards set by the Actuarial Standards Board; or
4.2.d.5. Resigned or been removed as an actuary within the past five (5) years as a result of acts or omissions indicated in any adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standards; and
4.2.e. Has not failed to notify the Commissioner of any action taken by any commissioner of any other state similar to that under subdivision (d) of this subsection.
4.3. “Appointed actuary” is a qualified actuary who is appointed or retained, either directly by or by the authority of the board of directors through an executive officer of the company other than the qualified actuary, to prepare the statement of actuarial opinion required by this rule. The company shall give the Commissioner timely written notice of the name, title (and, in the case of a consulting actuary, the name of the firm) and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in the notice that the person meets the requirements set forth in subsection 4.2 of this rule. Once the company furnishes notice, no further notice is required with respect to this appointed actuary, provided that the company gives the Commissioner timely written notice in the event the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements set for in subsection 4.2 of this rule. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall state that fact and give the reasons for replacement.
4.4. Standards for Asset Adequacy Analysis. The asset adequacy analysis required by this rule:
4.4.a. Shall conform to the standards of practice as promulgated from time to time by the Actuarial Standards Board and on any additional standards under this rule, the standards are to form the basis of the statement of actuarial opinion in accordance with this rule; and
4.4.b. Shall be based on methods of analysis as are considered appropriate for such purposes by the Actuarial Standards Board.
4.5. Liabilities to be Covered.
4.5.a. Under authority of the Standard Valuation Law, W. Va. Code §33-7-9(c), the statement of actuarial opinion applies to all in force business on the statement date regardless of when or where issued, e.g., reserves of Exhibits 8, 9, and 10, and claim liabilities in Exhibit 11, Part I and equivalent items in the separate account statement or statements.
4.5.b. If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in the Standard Valuation Law, W. Va. Code §§33-7-9(g), (h), (k), (l) and (m), the company shall establish the additional reserve.
4.5.c. Additional reserves established under subdivision b of this subsection and determined not necessary in subsequent years may be released. Any amounts released shall be disclosed in the actuarial opinion for the applicable year. The release of the reserves would not be considered an adoption of a lower standard of valuation.
W. Va. Code R. § 114-41-5 Statement of Actuarial Opinion Based on an Asset Adequacy Analysis
5.1. General Description. The statement of actuarial opinion required by this section shall consist of:
5.1.a. A paragraph identifying the appointed actuary and his or her qualifications (see paragraphs 1 and 2, subdivision a, subsection 5.2 of this section);
5.1.b. A scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary’s work, including a tabulation delineating the reserves and related actuarial items that have been analyzed for asset adequacy and the method of analysis (see subdivision b, subsection 5.2 of this section) and identifying the reserves and related actuarial items covered by the opinion that have not been so analyzed;
5.1.c. A reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing date, procedures or assumptions, (e.g., anticipated cash flows from currently owned assets, including variation in cash flows according to economic scenarios;
5.1.d. An opinion paragraph expressing the appointed actuary’s opinion with respect to the adequacy of the supporting assets to mature the liabilities; and
5.1.e. One or more additional paragraphs will be needed in individual company cases as follows:
5.1.e.1. If the appointed actuary considers it necessary to state a qualification of his or her opinion;
5.1.e.2. If the appointed actuary must disclose an inconsistency in the method of analysis or basis of asset allocation used at the prior opinion date with that used for this opinion;
5.1.e.3. If the appointed actuary must disclose whether additional reserves as of the prior opinion date are released as of this opinion date, and the extent of the release; and
5.1.e.4. If the appointed actuary chooses to add a paragraph briefly describing the assumptions that form the basis for the actuarial opinion.
5.2. Recommended Language. The following paragraphs are to be included in the statement of actuarial opinion in accordance with this section. Language is that which in typical circumstances should be included in a statement of actuarial opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary should use language which clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this section.
5.2.a. The opening paragraph should generally indicate the appointed actuary’s relationship to the company and his or her qualifications to sign the opinion.
5.2.a.1. For a company actuary, the opening paragraph of the actuarial opinion should read as follows:
“I, [name of actuary], am [title] of [name of company] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of said insurer to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health companies.”
5.2.a.2. For a consulting actuary, the opening paragraph of the actuarial opinion should contain a sentence such as:
“I, [name and title of actuary], a member of the American Academy of Actuaries, am associated with the firm of [insert name of consulting firm]. I have been appointed by, or by the authority of, the Board of Directors of [name of company] to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies.”
5.2.b. The scope paragraph should contain a sentence such as the following: “I have examined the actuarial assumptions and actuarial methods used in determining reserves and related actuarial items listed below, as shown in the annual statement of the company, as prepared for filing with state regulatory officials, as of December 31, []. Tabulated below are those reserves and related actuarial items which have been subjected to asset adequacy analysis.” *See Table I 5.2.c.
5.2.c.1. If the appointed actuary has relied on other experts to develop certain portions of the analysis, the reliance paragraph should include a statement such as the following:
"I have relied on [name], [title] for [e.g., "anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios" or "certain critical aspects of the analysis performed in conjunction with forming my opinion"] as certified in the attached statement. I have reviewed the information relied upon for reasonableness."
5.2.c.2. A statement of reliance on other experts should be accompanied by a statement by each of the experts in the form prescribed by paragraph 5, subdivision f, subsection 5.2 of this rule.
5.2.d. If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph should include a statement such as the following:
"My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and such tests of the actuarial calculations as I considered necessary. I also reconciled the underlying basic asset and liability records to [exhibits and schedules listed as applicable] of the company's current annual statement." 5.2.e.
5.2.e.1. If the appointed actuary has not examined the underlying records, but has relied upon data (e.g., listings and summaries of policies in force or asset records) prepared by the company, the reliance paragraph should include a statement such as the following:
"In forming my opinion on [specify types of reserves] I relied upon data prepared by [name and title of company officer certifying in-force records or other data] as certified in the attached statements. I evaluated that data for reasonableness and consistency. I also reconciled that data to [exhibits and schedules to be listed as applicable] of the company's current annual statement. In other respects, my examination included review of the actuarial assumptions and actuarial methods used and tests of the calculations I considered necessary."
5.2.e.2. The section shall be accompanied by a statement by each person relied upon in the form prescribed by subsection 5.5 of this rule.
5.2.f. The opinion paragraph should include a statement such as the following:
"In my opinion the reserves and related actuarial values concerning the statement items identified above:
5.2.f.1. Are computed in accordance with presently accepted actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles;
5.2.f.2. Are based on actuarial assumptions that produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions;
5.2.f.3. Meet the requirements of the Insurance Law and regulation of the state of [state of domicile], and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed;
5.2.f.4. Are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year-end (with any exceptions noted below); and
5.2.f.5. Include provision for all actuarial reserves and related statement items which ought to be established.
The reserves and related items, when considered in light of the assets held by the company with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the company. (At the discretion of the Commissioner, this language may be omitted for an opinion filed on behalf of a company doing business only in this state and in no other state.)
The actuarial methods, considerations, and analyses used in forming my opinion conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis of this statement of opinion.
This opinion is updated annually as required by statute. To the best of my knowledge, there have been no material changes from the applicable date of the annual statement to the date of the rendering of this opinion which should be considered in reviewing this opinion. or The following material changes which occurred between the date of the statement for which this opinion is applicable and the date of this opinion should be considered in reviewing this opinion: (Describe the change or changes.) Note: Choose one of the above two paragraphs, whichever is applicable.
The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all the assumptions used in the analysis. ____________________ Signature of Appointed Actuary ____________________ Address of Appointed Actuary ____________________ Telephone Number of Appointed Actuary ____________________ Date
5.3. Assumptions for New Issues. The adoption for new issues or new claims or other new liabilities of an actuarial assumption that differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of this rule.
5.4. Adverse Opinions. If the appointed actuary is unable to form an opinion, then he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reasons for the opinion. This statement should follow the scope paragraph and precede the opinion paragraph.
5.5. Reliance on Data Furnished by Other Persons. If the appointed actuary relies on the certification of others on matters concerning the accuracy and completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion should so indicate the persons the actuary is relying upon and a precise identification of the items subject to reliance. In addition, the persons on whom the appointed actuary relies shall provide a certification that precisely identifies the items on which the person is providing information and a statement as to the accuracy, completeness or reasonableness, as applicable, of the items. This certification shall include the signature, title, company, address and telephone number of the person rendering the certification, as well as the date on which it is signed.
5.6. Alternate Option.
5.6.a. The Standard Valuation Law gives the Commissioner broad authority to accept the valuation of a foreign insurer when that valuation meets the requirements applicable to a company domiciled in this state in the aggregate. As an alternative to the statement set forth in paragraph 3 of the opinion paragraph in subdivision f of subsection 5.2 above, the Commissioner may make one or more of the following additional approaches available to the opining actuary:
5.6.a.1. A statement that the reserves "meet the requirements of the insurance laws and regulations of the State of [state of domicile] and the formal written standards and conditions of this state for filing an opinion based on the law of the state of domicile." If the Commissioner chooses to allow this alternative, a formal written list of standards and conditions shall be made available. If a company chooses to use this alternative, the standards and conditions in effect on July 1 of a calendar year shall apply to statements for that calendar year, and they shall remain in effect until they are revised or revoked. If no list is available, this alternative is not available.
5.6.a.2. A statement that the reserves "meet the requirements of the insurance laws and regulations of the State of [state of domicile] and I have verified that the company's request to file an opinion based on the law of the state of domicile has been approved and that any conditions required by the Commissioner for approval of that request have been met." If the Commissioner chooses to allow this alternative, a formal written statement of such allowance shall be issued no later than March 31 of the year it is first effective. It shall remain valid until rescinded or modified by the Commissioner. The rescission or modifications shall be issued no later than March 31 of the year they are first effective. Subsequent to that statement being issued, if a company chooses to use this alternative, the company shall file a request to do so, along with justification for its use, no later than April 30 of the year of the opinion to be filed. The request shall be deemed approved on October 1 of that year if the Commissioner has not denied the request by that date.
5.6.a.3. A statement that the reserves "meet the requirements of the insurance laws and regulations of the State of [state of domicile] and I have submitted the required comparison as specified by this state."
5.6.a.3.A. If the Commissioner chooses to allow this alternative, a formal written list of products (to be added to the table in subparagraph (ii) below) for which the required comparison shall be provided will be published. If a company chooses to use this alternative, the list in effect on July 1 of a calendar year shall apply to statements for that calendar year, and it shall remain in effect until it is revised or revoked. If no list is available, this alternative is not available.
5.6.a.3.B. If a company desires to use this alternative, the appointed actuary shall provide a comparison of the gross nationwide reserves held to the gross nationwide reserves that would be held under NAIC codification standards. Gross nationwide reserves are the total reserves calculated for the total company in force business directly sold and assumed, indifferent to the state in which the risk resides, without reduction for reinsurance ceded. The information provided shall be at least:
(1)
Product Type (2)
Death Benefit or Account Value (3)
Reserves Held (4)
Codification Reserves (5)
Codification Standard
5.6.a.3.C. The information listed shall include all products identified by either the state of filing or any other states subscribing to this alternative.
5.6.a.3.D. If there is no codification standard for the type of product or risk in force or if the codification standard does not directly address the type of product or risk in force, the appointed actuary shall provide detailed disclosure of the specific method and assumptions used in determining the reserves held.
5.6.a.3.E. The comparison provided by the company is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.
5.6.b. Notwithstanding the above, the Commissioner may reject an opinion based on the laws and regulations of the state of domicile and require an opinion based on the laws of this state. If a company is unable to provide the opinion within sixty (60) days of the request or such other period of time determined by the Commissioner after consultation with the company, the Commissioner may contract an independent actuary at the company's expense to prepare and file the opinion.
W. Va. Code R. § 114-41-6 Description of Actuarial Memorandum Including an Asset Adequacy Analysis and Regulatory Asset Adequacy Issues Summary
6.1. General.
6.1.a. In accordance with the Standard Valuation Law, W. Va. Code §33-7-9(c), the appointed actuary shall prepare a memorandum to the company describing the analysis done in support of his or her opinion regarding the reserves. The company shall make the memorandum available for examination by the Commissioner upon his or her request but shall be returned to the company after the examination and shall not be considered a record of the Insurance Commissioner or subject to automatic filing with the Commissioner.
6.1.b. In preparing the memorandum, the appointed actuary may rely on, and include as part of his or her own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of subsection 4.2 of this rule, with respect to the areas covered in the memoranda, and so stated in their memoranda.
6.1.c. If the Commissioner requests a memorandum and no memorandum exists or if the Commissioner finds that the analysis described in the memorandum fails to meet the standards of the Actuarial Standards Board or the standards and requirements of this rule, the Commissioner may designate a qualified actuary to review the opinion and prepare such supporting memorandum as is required for review. The reasonable and necessary expense of the independent review shall be paid by the company but shall be directed and controlled by the Commissioner.
6.1.d. The reviewing actuary shall have the same status as an examiner for purposes of obtaining data from the company and the work papers and documentation of the reviewing actuary shall be retained by the Commissioner; provided, however, that any information provided by the company to the reviewing actuary and included in the work papers shall be considered as material provided by the company to the Commissioner and shall be kept confidential to the same extent as is prescribed by law with respect to other material provided by the company to the Commissioner pursuant to W. Va. Code §33-2-9(1)(4). The reviewing actuary shall not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer pursuant to this rule for anyone of the current year of the preceding three (3) years.
6.1.e. In accordance with W. Va. Code §33-7-9(c), the appointed actuary shall prepare a regulatory asset adequacy issues summary, the contents of which are specified in subsection 6.3 of this section. The regulatory asset adequacy issues summary will be submitted no later than March 15 of the year following the year for which a statement of actuarial opinion based on asset adequacy is required. The regulatory asset adequacy issues summary is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.
6.2. Details of the Memorandum Section Documenting Asset Adequacy Analysis. When an actuarial opinion is provided, the memorandum shall demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in subsection 4.4 of this rule and any additional standards under this rule. It shall specify:
6.2.a. For reserves:
6.2.a.1. Product descriptions including market description, underwriting and other aspects of a risk profile and the specific risks the appointed actuary considers significant;
6.2.a.2. Source of liability in force;
6.2.a.3. Reserve method and basis;
6.2.a.4. Investment reserves;
6.2.a.5. Reinsurance arrangements;
6.2.a.6. Identification of any explicit or implied guarantees made by the general account in support of benefits provided through a separate account or under a separate account policy or contract and the methods used by the appointed actuary to provide for the guarantees in the asset adequacy analysis;
6.2.a.7. Documentation of assumptions to test reserves for the following:
6.2.a.7.A. Lapse rates (both base and excess);
6.2.a.7.B. Interest crediting rate strategy;
6.2.a.7.C. Mortality;
6.2.a.7.D. Policyholder dividend strategy;
6.2.a.7.E. Competitor or market interest rate;
6.2.a.7.F. Annuitization rates;
6.2.a.7.G. Commissions and expenses; and
6.2.a.7.H. Morbidity.
The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.
6.2.b. For assets;
6.2.b.1. Portfolio descriptions, including a risk profile disclosing the quality, distribution and types of assets;
6.2.b.2. Investment and disinvestment assumptions;
6.2.b.3. Source of asset data;
6.2.b.4. Asset valuation bases; and
6.2.b.5. Documentation of assumptions made for:
6.2.b.5.A. Default costs;
6.2.b.5.B. Bond call function;
6.2.b.5.C. Mortgage prepayment function;
6.2.b.5.D. Determining market value for assets sold due to disinvestment strategy; and
6.2.b.5.E. Determining yield on assets acquired through the investment strategy.
This documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.
6.2.c. Analysis basis:
6.2.c.1. Methodology;
6.2.c.2. Rationale for inclusion/exclusion of different blocks of business and how pertinent risks were analyzed;
6.2.c.3. Rationale for degree of rigor in analyzing different blocks of business (include in the rationale the level of “materiality” that was used in determining how rigorously to analyze different blocks of business);
6.2.c.4. Criteria for determining asset adequacy (include in the criteria the precise basis for determining if assets are adequate to cover reserves under “moderately adverse conditions” or other conditions as specified in relevant actuarial standards of practice); and
6.2.c.5. Whether the impact of federal income taxes was considered and the method of treating reinsurance in the asset adequacy analysis;
6.2.d. Summary of material changes in methods, procedures or assumptions from prior year’s asset adequacy analysis;
6.2.e. Summary of Results; and
6.2.f. Conclusions(s)
6.3. Details of the Regulatory Asset Adequacy Issues Summary.
6.3.a. The regulatory asset adequacy issues summary shall include:
6.3.a.1. Descriptions of the scenarios tested (including whether those scenarios are stochastic or deterministic) and the sensitivity testing done relative to those scenarios. If negative ending surplus results under certain tests in the aggregate, the actuary should describe those tests and the amount of additional reserve as of the valuation date which, if held, would eliminate the negative aggregate surplus values. Ending surplus values shall be determined by either extending the projection period until the in force and associated assets and liabilities at the end of the projection period are immaterial or by adjusting the surplus amount at the end of the projection period by an amount that appropriately estimates the value that can reasonably be expected to arise from the assets and liabilities remaining in force.
6.3.a.2. The extent to which the appointed actuary uses assumptions in the asset adequacy analysis that are materially different than the assumptions used in the previous asset adequacy analysis;
6.3.a.3. The amount of reserves and the identity of the product lines that had been subjected to asset adequacy analysis in the prior opinion but were not subject to analysis for the current opinion;
6.3.a.4. Comments on any interim results that may be of significant concern to the appointed actuary. For example, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods;
6.3.a.5. The methods used by the actuary to recognize the impact of reinsurance on the company’s cash flows, including both assets and liabilities, under each of the scenarios tested; and
6.3.a.6. Whether the actuary has been satisfied that all options, whether explicit or embedded, in any asset or liability (including but not limited to those affecting cash flows embedded in fixed income securities) and equity-like features in any investments have been appropriately considered in the asset adequacy analysis.
6.3.b. The regulatory asset adequacy issues summary shall contain the name of the company for which the regulatory asset adequacy issues summary is being supplied and shall be signed and dated by the appointed actuary rendering the actuarial opinion.
6.4. Conformity to Standards of Practice. The memorandum shall include a statement:
“Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, Which form the basis for this memorandum.”
6.5. Use of Assets Supporting the Interest Maintenance Reserve and the Asset Valuation Reserve.
6.5.a. The appointed actuary must use an appropriate allocation of assets in the amount of the Interest Maintenance Reserve (IMR), whether positive or negative, in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the Asset Valuation Reserve (AVR); these AVR assets may not be applied for any other risks with respect to reserve adequacy. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support.
6.5.b. The amount of the assets used for the AVR must be disclosed in the table of reserves and liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets shall be disclosed in the memorandum.
6.6. Documentation. The appointed actuary shall retain on file, for at least seven (7) years, sufficient documentation so that it will be possible to determine the procedures followed, the analyses performed, the bases for assumptions and the results obtained.
TABLE I
Asset Adequacy Tested Amounts Reserves and Liabilities Statement Item Formula Reserves (1)
Additional Actuarial Reserves(a) (2)
Analysis Method(b)
Other Amount (3)
Total Amount (1)+(2)+ (3)(4)
Exhibit 8 A Life Insurance B Annuities C Supplementary Contracts Involving Life Contingencies D Accidental Death Benefits E Disability - Active F Disability- Disabled G Miscellaneous Total (Exhibit 8 Item 1, Page 3)
Exhibit 9 A Active Life Reserve B Claim Reserve Total (Exhibit 9 Item 2, Page 3)
Exhibit 10 1 Premiums and Other Deposit Funds 1.1 Policyholder Premium (Page 3, Line 10.1) 1.2 Guaranteed Interest Contracts(Page 3, Line 10.2) 1.3 Other Contract Deposit Funds(Page 3, Line 10.3)
-
Supplementary Contracts Not Involving Life Contingencies (Page 3, Line 5)
-
Dividend and Coupon Accumulations (Page 3, Line 5)
Total Exhibit 10 Exhibit 11
Part 1. Life (Page 3, Line 4.1)
- Health (Page 3, Line 4.2)
Total Exhibit 11, Part 1 Separate Accounts (Page 3, Line 27)
TOTAL RESERVES
IMR (Page ___Line __)
AVR (Page ___Line __)
(c)
114CSR41
114CSR41
Series 41A Property And Casualty Actuarial Opinion
W. Va. Code R. § 114-41A-1 General
1.1. Scope. -- This rule applies to all property and casualty insurance companies and fraternal benefit societies doing business in this State and to all property and casualty insurance companies and fraternal benefit societies that are authorized to reinsure property and casualty businesses in this State. This rule is based on the “Property and Casualty Actuarial Opinion Model Law (Model 745),” as adopted by the National Association of Insurance Commissioners (NAIC) in 2003 and amended in 2009.
1.2. Authority. -- W. Va. Code §33-2-10.
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- June 10, 2011.
W. Va. Code R. § 114-41A-2 Actuarial Opinion of Reserves and Supporting Documentation
2.1. This section shall become operative with respect to reporting years ending on or after December 31, 2011.
2.2. Statement of Actuarial Opinion. Every property and casualty insurance company doing business in this state, unless otherwise exempted by the Insurance Commissioner of this state or the commissioner in the state where the company is domiciled, shall annually submit the opinion of an Appointed Actuary entitled "Statement of Actuarial Opinion." This opinion shall be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions.
2.3. Actuarial Opinion Summary.
2.3.a. Every property and casualty insurance company domiciled in this state that is required to submit a Statement of Actuarial Opinion shall annually submit an Actuarial Opinion Summary, written by the company's Appointed Actuary. This Actuarial Opinion Summary shall be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions and shall be considered as a document supporting the Actuarial Opinion required in subsection 2.2 of this rule.
2.3.b. A company licensed but not domiciled in this state shall provide the Actuarial Opinion Summary upon request.
2.4. Actuarial Report and Workpapers.
2.4.a. An Actuarial Report and underlying workpapers as required by the appropriate NAIC Property and Casualty Annual Statement Instructions shall be prepared to support each Actuarial Opinion.
2.4.b. If the insurance company fails to provide a supporting Actuarial Report and/or workpapers at the request of the Commissioner or the Commissioner determines that the supporting Actuarial Report or workpapers provided by the insurance company are otherwise unacceptable to the Commissioner, the Commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting Actuarial Report or workpapers.
2.5. The Appointed Actuary shall not be liable for damages to any person (other than to the insurance company and the commissioner) for any act, error, omission, decision or conduct with respect to the actuary's opinion, except in cases of fraud or willful misconduct on the part of the Appointed Actuary.
W. Va. Code R. § 114-41A-3 Confidentiality
3.1. The Statement of Actuarial Opinion shall be provided with the Annual Statement in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions and shall be treated as a public document.
3.2. In order to assist in the performance of the Commissioner's duties, he or she may:
3.2.a. Share documents, materials or other information, including confidential and privileged documents, materials or information, with the Actuarial Board for Counseling and Discipline (ABCD) so long as the material is required for the purpose of professional disciplinary proceedings, with other states, federal and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information and has the legal authority to maintain confidentiality;
3.2.b. Receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and
3.2.c. Enter into agreements governing sharing and use of information consistent with subsection 3.2 of this rule.
3.3. No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the Commissioner under this section or as a result of sharing as authorized in subsection 3.2 of this rule.
114CSR41A
114CSR41A
Series 42 Continuing Education for Individual Insurance Producers and Individual Insurance Adjusters
W. Va. Code R. § 114-42-1 General
1.1. Scope. -- This legislative rule establishes standards for continuing insurance education requirements and the sanctions to be imposed for failure to comply with such requirements.
1.2. Authority. -- W. Va. Code §§33-2-10, 33-12-35 and 33-12B-12.
1.3. Filing Date. -- June 6, 2022.
1.4. Effective Date. -- July 1, 2022.
1.5. Sunset Date. -- This rule shall terminate and have no further force or effect upon August 1, 2027.
W. Va. Code R. § 114-42-2 Definitions
In addition to the definitions in W. Va. Code §§33-12-8 and 33-12B-1, the following definitions apply:
2.1. “Approved course” means a course or program of instruction approved by the Commissioner and the Board of Insurance Agent Education for continuing insurance education credit.
2.2. “Biennium” means the two-year reporting period that is coextensive with the producer’s license or adjuster’s license period.
2.3. “Board” means the Board of Insurance Agent Education established pursuant to W. Va. Code §33-12-7 and referred to in W. Va. Code §33-12B-13.
2.4. “Cancelled license” means a producer or adjuster license which has been:
2.4.1. Voluntarily voided by request of the individual insurance producer or individual insurance adjuster and approved by the Commissioner; or
2.4.2. Terminated for failure to satisfy the mandatory continuing education requirements as of the last day of the reporting period following his or her suspension.
2.5. “Certificate of course completion” means a document acceptable to the Commissioner which signifies satisfactory completion of an approved course and reflects hours of credit earned.
2.6. “Commissioner” means the West Virginia Insurance Commissioner.
2.7. “Dual credit course” means a continuing insurance education course that has been approved by the Commissioner and the Board of Insurance Agent Education as a continuing insurance education credit for both individual insurance producers and individual insurance adjusters.
2.8. “Individual insurance producer” or “producer” means an individual licensed by the Commissioner to solicit, negotiate, effect or countersign insurance contracts on the insurer’s behalf.
2.9. “Individual insurance adjuster” or “adjuster” means an individual who investigates, negotiates, or settles insurance claims and includes a company adjuster, independent adjuster, or public adjuster, as defined in W. Va. Code §33-12B-1.
2.10. “Provider” means a person, corporation, professional association or its local affiliates, an insurance company or other entity which is approved by the Commissioner and provides approved continuing insurance education to individual insurance producers and/or individual insurance adjusters.
2.11. “Reporting period” means the applicable biennium during which an individual insurance producer or individual insurance adjuster must meet his or her continuing insurance education requirements in order to maintain his or her license as required by W. Va. Code §§33-12-8 or 33-12B-13.
2.12. “Suspended insurance producer” means an individual whose license to engage in the sale of insurance has been temporarily withdrawn until such time as the individual insurance producer has successfully completed his or her continuing insurance education requirements.
2.13. “Suspended insurance adjuster” means an individual whose license to adjust insurance claims has been temporarily withdrawn until such time as the individual insurance adjuster has successfully completed his or her continuing education requirements.
2.14. “Suspension of all licenses issued for any kind or kinds of insurance” means those licenses for which continuing insurance education is required pursuant to this rule, W. Va. Code §§33-12-1 et seq. and 33-12B-1 et seq.
W. Va. Code R. § 114-42-3 Applicability
3.1. This rule applies to resident, individual insurance producers who are licensed by the Commissioner to engage in the sale of one or more of the following types of insurance:
3.1.1. Life insurance, annuity contracts, variable annuity contracts and variable life insurance;
3.1.2. Sickness, accident and health insurance;
3.1.3. All lines of property and casualty insurance;
3.1.4. Preneed burial insurance contracts;
3.1.5. All other lines of insurance for which an examination is required by the Commissioner;
3.1.6. Individual insurance producers appointed on behalf of a licensed health maintenance organization; and
3.1.7. Individual insurance producers engaged in telemarketing insurance products.
3.2. This rule applies to all resident, individual insurance adjusters who are licensed by the Commissioner as public adjusters and to all resident individual insurance adjusters, including company adjusters and independent adjusters, licensed by the Commissioner with one or more of the following lines of authority:
3.2.1. Property and casualty;
3.2.2. Workers’ compensation; or
3.2.3. Crop.
W. Va. Code R. § 114-42-4 Exemptions
4.1. Continuing education requirements for individual insurance producers shall not apply to:
4.1.1. Persons holding resident licenses for any kind or kinds of insurance for which an examination is not required by the Commissioner;
4.1.2. Persons selling only limited lines credit insurance and limited lines insurance;
4.1.3. Any such limited or restricted license as the Commissioner may exempt;
4.1.4. Individual insurance producers whose licenses have expired pursuant to W. Va. Code §33-12-17;
4.1.5. Individual insurance producers who have voluntarily cancelled their licenses; and
4.1.6. Non-resident individual insurance producers.
4.2. Continuing education requirements for individual insurance adjusters shall not apply to:
4.2.1. Individual insurance adjusters not licensed for one full year prior to the end of the applicable continuing education biennium; or
4.2.2. Individual insurance adjusters holding nonresident adjuster licenses who have met substantially similar continuing education requirements of their designated home state and whose home state gives credit to resident adjusters of this state on the same basis.
4.3. The Commissioner shall, in consultation with the Board, develop a program regarding continuing education requirements for individual insurance adjusters during the transition to the new biennium period established pursuant to the 2021 amendments to this rule and such program shall be posted on the agency website.
W. Va. Code R. § 114-42-5 Continuing Insurance Education Course Requirements
5.1. A continuing insurance education course shall not qualify for use as continuing insurance education credit unless it is filed with and approved by the Commissioner and the Board.
5.2. A provider shall not implement any material change in a continuing insurance education course previously approved by the Commissioner until the change has been filed with and approved by the Commissioner and the Board.
5.3. The Commissioner will not give an individual insurance producer or individual insurance adjuster credit for any continuing insurance education course which is taken prior to the issuance of written approval by the Commissioner and the Board.
5.4. If a continuing insurance education course is taken more than once in a reporting period, the Commissioner will give the individual insurance producer or individual insurance adjuster credit only for the first time that the course was taken and completed during the applicable reporting period.
5.5. The Commissioner may withdraw approval of a continuing insurance education course for any of the following reasons:
5.5.1. The continuing insurance education course teaching methods or course content have been materially changed without being filed with or approved by the Commissioner and the Board;
5.5.2. The continuing insurance education course provider has certified to the Commissioner that an individual insurance producer or individual insurance adjuster has satisfactorily completed the course when the individual insurance producer or individual insurance adjuster has not done so;
5.5.3. The continuing insurance education course provider fails to certify to the Commissioner that the individual insurance producer or individual insurance adjuster has satisfactorily completed the course when, in fact, the individual insurance producer or individual insurance adjuster has done so; or
5.5.4. There is other good reason to withdraw approval of a continuing insurance education course.
5.6. In those instances where the Commissioner has withdrawn approval for a continuing insurance education course, individual insurance producers or individual insurance adjusters who successfully completed the course prior to the withdrawal of approval shall receive credit toward their continuing education requirements.
5.7. Scripted presentations for individual insurance producers involved in telemarketing insurance products pursuant to W. Va. Code §33-12-8 shall be filed with the Commissioner no later than the first day of each reporting period or at least sixty (60) days prior to doing business in the state, whichever comes first.
5.8. A continuing insurance education course may be approved by the Commissioner and the Board as a dual credit course for both individual insurance producers and individual insurance adjusters. An individual who holds both an individual insurance producer license and an individual insurance adjuster license may take a continuing insurance education course that is approved by the Commissioner and the Board as a dual credit course and apply it towards the continuing education credit requirements for both an individual producer license and individual adjuster license.
W. Va. Code R. § 114-42-6 Insurance Producer and Insurance Adjuster Continuing Insurance Education Exceptions; Extensions of Time; Cancelled License Procedures; and Reciprocity
6.1. The Commissioner shall refuse to renew the appointments or issue new appointments for those lines of insurance specified in section 3 of this rule to any individual insurance producer who does not satisfy the minimum continuing insurance education requirements.
6.2. An individual insurance producer or individual insurance adjuster who is required to complete more than six hours of continuing education biennially and who exceed the minimum continuing education requirement for the biennial reporting period may carry-over a maximum of six (6) credit hours into the next reporting period when the producer or adjuster has exceeded the minimum continuing education requirements for the current biennial reporting period.
6.3. Any individual insurance producer or individual insurance adjuster who has not complied with the continuing insurance education requirements by the end of the reporting period may thereafter obtain credits hours to be carried back to meet the requirements of the preceding reporting period. The Commissioner will assess a late submission fee of five dollars ($5.00) for each continuing insurance education credit hour obtained and submitted after the reporting period which are to be carried back to satisfy the requirements of the preceding reporting period.
6.4. A continuing insurance education course shall not qualify for use as continuing insurance education credit unless it is filed with and approved by the Commissioner and the Board.
6.5. An individual insurance producer or individual insurance adjuster who has an active annual membership in an organization or association recognized and approved by the Commissioner as a state, regional or national professional insurance organization or association may be approved by the Commissioner for up to two (2) credit hours of continuing insurance education in each biennial reporting period.
6.5.1. In determining whether to approve an organization’s application for approval under this subsection, the Commissioner should consider:
6.5.1.a. The purpose and goals of the organization;
6.5.1.b. The extent to which the organization makes educational opportunities available to its members;
6.5.1.c. The degree to which the members participates in educational programs;
6.5.1.d. The extent to which the organization’s educational programs and materials advance the knowledge of insurance-related topics; and
6.5.1.e. Any other criteria that the Commissioner deems advisable.
6.5.2. There shall not be more than one (1) credit hour of continuing insurance education awarded to an individual insurance producer or individual insurance adjuster for per twelve (12) consecutive months’ active membership in a professional insurance organization during a biennial reporting period.
6.5.3. Credit for continuing insurance education pursuant to this subsection may only be awarded to individual insurance producers or individual insurance adjusters who are required to complete more than six (6) hours of continuing education biennially. Requests for approval of credit pursuant to this subsection and for recognition and approval as an eligible organization must be made in the manner prescribed by the Commissioner on forms available on the West Virginia Offices of the Insurance Commissioner’s website.
6.6. The Commissioner may, upon application and for good cause shown, grant an individual insurance producer or individual insurance adjuster an extension of time in which to meet the continuing insurance education requirements. Extensions may be granted for the following reasons:
6.6.1. The individual insurance producer or individual insurance adjuster has been engaged in active military duty outside the state for at least twelve (12) months during the biennium;
6.6.2. The individual insurance producer or individual insurance adjuster was or has become physically or mentally temporarily or permanently disabled by injury, illness or disease and was unable to perform adequately the duties required of him or her as a licensed individual insurance producer or individual insurance adjuster for a period of at least twelve (12) months during the biennium; or
6.6.3. Any such other reason as the Commissioner may determine on a case-by-case basis as constituting good cause.
6.7. An individual insurance producer or individual insurance adjuster should submit a request for an extension of time in which to meet the continuing insurance education requirements to the Commissioner in writing at least thirty (30) days prior to the last day of the reporting period and shall include in the request an explanation together with reasonable verification of the hardship rendering an extension necessary.
6.8. Individual insurance producers who have a cancelled license or an expired license pursuant to W. Va. Code §33-12-17 shall successfully complete pre-licensing education and examination before qualifying for a new license, and shall thereafter successfully complete the continuing insurance education credits required pursuant to W. Va. Code §33-12-1 et seq. and the guidelines established by the Board. Individual insurance adjusters who have a cancelled license or an expired license pursuant to W. Va. Code §33-12B-13 shall successfully complete examination before qualifying for a new license, and shall thereafter successfully complete the continuing insurance education credits required pursuant to W. Va. Code §33-12B-1 et seq. and the guidelines established by the Board.
6.8.1. No individual insurance producer or individual insurance adjuster may allow his or her license to expire as a means to circumvent the mandatory continuing education requirements.
6.9. The Commissioner shall recognize the continuing insurance education requirements obtained by an individual insurance producer during the reporting period through an approved provider of another state only in those instances where all the following conditions are met:
6.9.1. The individual insurance producer is a former resident, individual insurance producer who was licensed and in good standing in this state at the time his or her license was surrendered;
6.9.2. The individual insurance producer is currently licensed in good standing in another state and has been so licensed since leaving West Virginia; and
6.9.3. The individual insurance producer is in the process of establishing residency in West Virginia and has requested to have his or her resident individual insurance producer’s license reinstated.
6.10. The Commissioner shall recognize the continuing insurance education requirements obtained by an individual insurance adjuster during the reporting period through an approved provider of another state only in those instances where both of the following conditions are met:
6.10.1. The individual insurance adjuster obtained the continuing insurance education through an approved provider of another state while a resident adjuster in that state; and
6.10.2. The individual insurance adjuster has since established residency in West Virginia and is licensed and in good standing in West Virginia.
W. Va. Code R. § 114-42-7 Proof of Completion
7.1. Upon completion of a continuing insurance education course, the provider shall certify to the Commissioner the names of all individual insurance producers or individual insurance adjusters who satisfactorily completed the continuing insurance education course. The certification shall be in the form prescribed by the Commissioner.
7.1.1. The continuing education attendance certification roster shall be mailed by the provider to the Commissioner within thirty (30) days after the continuing insurance education course is completed. The provider shall submit a self-study course certification roster to the Commissioner within thirty (30) days of receipt of the completed course from the individual insurance producer or individual insurance adjuster.
7.1.2. The provider of the continuing insurance education course or a self-study continuing education course shall furnish a certificate of satisfactory completion to the individual insurance producer or individual insurance adjuster completing the course. The individual insurance producer or individual insurance adjuster shall retain a copy of the certificate for not less than four (4) years from the date the course is completed.
7.1.3. The provider shall retain a copy of a certification roster of attendance and self-study courses submitted for not less than four (4) years from the date the course is completed.
7.2. Providers of continuing insurance education courses and individual insurance producers or individual insurance adjusters shall make available to the Commissioner or his or her designee copies of certificates upon request of the Commissioner.
7.3. The Commissioner shall assess a late fee against a provider submitting a course certification roster outside the time period provided for in section 7.1 of this rule in the amount of twenty-five dollars ($25.00) for each individual insurance producer and/or individual insurance adjuster listed on the certification roster who satisfactorily completed the continuing insurance education course.
7.4. The Commissioner may disapprove the course(s) or program(s) of instruction developed or sponsored by a provider who establishes a pattern or practice of failure to comply with this rule or who fails to pay any fee assessed under this rule. The provider shall pay all applicable fees before the Commissioner may complete approval or re-approval of the courses or programs of instruction developed or sponsored by the provider.
W. Va. Code R. § 114-42-8 Disciplinary Process
8.1. No later than sixty (60) days prior to the end of the reporting period, the Commissioner shall provide written notification to individual insurance producers and individual insurance adjusters subject to continuing insurance education requirements advising them as to the status of their continuing insurance education credits.
8.1.1. The Commissioner shall provide the notification to each individual insurance producer or individual insurance adjuster by electronic mail or by regular mail, if requested, addressed to the individual insurance producer at the last respective address appearing for the individual insurance producer in the records of the Commissioner.
8.1.2. Individual insurance producers who sell only preneed burial insurance contracts shall file with the Commissioner an affidavit, on a form to be provided by the Commissioner, verifying that the individual insurance producer is not engaged in the sale of any other type of insurance product.
8.1.3. Individual insurance producers engaged solely in telemarketing insurance products by a scripted presentation which has been filed with and approved by the Commissioner shall file an affidavit, on a form to be provided by the Commissioner, verifying that the individual insurance producer is not engaged in the sale of any other type of insurance product.
8.2. Any individual insurance producer or individual insurance adjuster who does not anticipate pursuing the required continuing insurance education requirements may elect to cancel his or her license prior to the end of the reporting period by submitting a written request to the Commissioner. Cancellation of a license revokes any privilege the individual insurance producer or individual insurance adjuster may have had to reinstate his or her license without completion of a pre-licensing insurance education course and/or examination.
8.2.1. Each request for cancellation of a license shall include the individual insurance producer’s or individual insurance adjuster’s name, address, license number, telephone number and reason for cancellation.
8.2.2. Cancellation of a license prohibits an individual insurance producer from further transacting insurance in West Virginia without successful completion of pre-licensing education and examination, and prohibits an individual insurance adjuster from further adjusting insurance claims in West Virginia without successful completion of examination.
8.3. Any individual insurance producer or individual insurance adjuster who has not met the continuing insurance education requirements for any reporting period may agree to a voluntary suspension of his or her license until such time as the continuing insurance education requirements have been met.
8.3.1. Each request for a voluntary suspension of a license shall include the individual insurance producer’s or individual insurance adjuster’s name, address, license number and telephone number.
8.3.2. An individual insurance producer may not transact insurance in West Virginia during the suspension period, and an individual insurance adjuster may not adjust insurance claims in West Virginia during the suspension period.
8.3.3. Any individual insurance producer who does not satisfy the mandatory continuing education requirements as of the last day of the reporting period following his or her voluntary suspension shall have his or her license automatically cancelled pursuant to the provisions of W. Va. Code §33-12-8(h). Any individual insurance adjuster who does not satisfy the mandatory continuing education requirements as of the last day of the reporting period following his or her suspension shall have his or her license automatically terminated pursuant to the provisions of W. Va. Code §33-12B-13(i).
8.4. The Commissioner will issue a notice automatically suspending the license of any individual insurance producer or individual insurance adjuster failing to meet continuing insurance education requirements who has not been granted an extension of time within which to comply, or who has submitted to the Commissioner a false or fraudulent certificate of compliance. The license shall remain suspended until such time as the individual insurance producer or individual insurance adjuster has demonstrated to the satisfaction of the Commissioner that he or she has complied with all requirements of this rule and all other applicable laws.
8.4.1. The individual insurance producer or individual insurance adjuster will have an opportunity to request a hearing on a notice of suspension resulting from his or her failure to meet continuing insurance education requirements. The effect of the notice of suspension will be stayed pending the individual insurance producer’s or individual insurance adjuster’s request for a hearing within the time designated in section 8.5 of this rule or pending completion of the hearing if a hearing is timely requested.
8.4.2. The burden of proving successful completion of continuing insurance education courses is at all times upon the individual subject to the continuing insurance education requirements.
8.4.3. Any individual insurance producer who does not satisfy the mandatory continuing education requirements as of the last day of the reporting period following his or her suspension shall have his or her license automatically cancelled pursuant to the provisions of W. Va. Code §33-12-8(j). Any individual insurance adjuster who does not satisfy the mandatory continuing education requirements as of the last day of the reporting period following his or her suspension shall have his or her license automatically cancelled pursuant to the provisions of W. Va. Code §33-12B-13(k).
8.5. Hearings - A hearing may be requested by an individual insurance producer, individual insurance adjuster or a provider in accordance with W. Va. Code §33-2-13, 114CSR13, and the following:
8.5.1. Any individual insurance producer or individual insurance adjuster whose license is being suspended due to his or her failure to successfully complete and submit the required hours of continuing insurance education courses and wants to request a reconsideration hearing as permitted by W. Va. Code §§33-12-8(i) and/or 33-12B-13(j) must submit a request for hearing in writing to the Commissioner’s office address in Charleston, West Virginia, either in person or by certified mail, return receipt requested. Such hearing shall be held within forty-five (45) days of the receipt of request for hearing and notice of the time, place, and matters to be considered at the hearing shall be provided by the Commissioner to all parties directly involved not less than fifteen (15) days prior to the date of hearing. Any request for a reconsideration hearing must be in compliance with W. Va. Code §33-2-13, and must be made within thirty (30) days after the individual insurance producer’s or individual insurance adjuster’s receipt of the order entered by the Commissioner pursuant to section 8.4 of this rule for reconsideration of the matter. The Commissioner shall mail a copy of the order to the individual insurance producer or individual insurance adjuster by certified mail, return receipt requested. In cases where proof of receipt of the order is not received by the Commissioner, service of the order will be presumed complete upon the expiration of four (4) days following deposit by the Commissioner in the United States Mail. If the individual insurance producer or individual insurance adjuster makes a timely request for a hearing, the scope of the hearing will be whether the producer or adjuster has successfully completed and submitted the required hours of continuing insurance education courses. The hearing shall be conducted as provided in W. Va. Code §33-2-13.
8.5.2. Any provider that has received a notice of assessed fee or whose course(s) or program(s) of instruction has been disapproved must submit a request for hearing in the same manner and within the same time as that set forth in subdivision a of this subsection. The Commissioner shall mail a copy of the notice of fee or notification of disapproval of courses or programs to the provider by certified mail, return receipt requested. In cases where proof of receipt of the notice of fee or notification of disapproval is not received by the Commissioner, service will be presumed complete upon the expiration of four (4) days following deposit by the Commissioner in the United States Mail. If the provider makes a timely request for a hearing, the scope of the hearing will be whether the fee was properly assessed, whether the provider has failed to pay the fee or whether the provider has established a pattern or practice of failure to comply with this rule. The hearing shall be conducted as provided in W. Va. Code §33-2-13.
8.5.3. All requests for hearing must identify the order or notification upon which the hearing is requested and must set forth the grounds upon which it is asserted that the order or notification should be vacated or modified.
8.5.4. Untimely hearing requests will not be granted. A request is untimely if it is made by or on behalf of the individual insurance producer or individual insurance adjuster or provider after the time specified in subdivision a of this subsection or prior to the issuance of the order or notification.
8.6. Failure to appear at a hearing requested pursuant to section 8.5 of this rule will result in the following:
8.6.1. If the individual insurance producer or individual insurance adjuster fails to appear either in person or by counsel at the hearing without obtaining a continuance pursuant to 114CSR13, the order suspending his or her license will become final, and the individual insurance producer or individual insurance adjuster shall be assessed the costs set forth in section 8.7 of this rule.
8.6.2. If the provider fails to appear either in person or by counsel at the hearing without obtaining a continuance pursuant to 114CSR13, the provider’s course(s) or program(s) will continue to be disapproved and the provider shall be assessed the costs set forth in section 8.7 of this rule.
8.7. Assessment of Costs.
8.7.1. A docket fee of seventy-five dollars ($75.00) may be assessed against an individual insurance producer, individual insurance adjuster or provider following a hearing if the Commissioner’s prior action is not rescinded pursuant to W. Va. Code §33-2-13.
8.7.2. The Commissioner may assess the costs of the hearing as provided for in W. Va. Code §33-2-13 to any individual insurance producer, individual insurance adjuster or provider who fails to have the Commissioner’s prior action rescinded.
8.7.3. The individual insurance producer or individual insurance adjuster or provider shall pay all applicable assessed fees before the Commissioner may complete reinstatement of the individual insurance producer’s license or individual insurance adjuster’s license or the approval of a provider’s course(s) or program(s) of instruction.
8.7.4. All fees collected under this section shall be deposited, transferred, and paid out in accordance with W. Va. Code §33-3-13.
8.8. Notification of Suspension.
8.8.1. Upon suspension of an individual insurance producer’s license for failure to comply with the mandatory continuing insurance education requirements for the reporting period, the Commissioner shall:
8.8.1.a. Give notice of the suspension to the insurer(s) or employing agent with whom the individual insurance producer has a contractual relationship; and
8.8.1.b. Cancel all appointments of the individual insurance producer subject to disciplinary action.
8.8.2. Upon suspension of an individual insurance adjuster’s license for failure to comply with the mandatory continuing insurance education requirements for the reporting period, the Commissioner shall give notice of the suspension to the insurer, third-party administrator, or employer of the individual insurance adjuster.
8.9. An insurer employing an individual insurance producer shall not renew or issue new appointments subject to continuing insurance education requirements to an individual insurance producer whose license has been suspended for failure to comply with mandatory continuing insurance education requirements until such time as the individual insurance producer’s license has been reinstated and an application and appropriate fee have been submitted to and approved by the Commissioner. Further, an insurer, third-party administrator or independent adjusting company employing an individual insurance adjuster shall not continue to allow an individual insurance adjuster whose license has been suspended for failure to comply with mandatory continuing insurance education requirements to adjust claims for the employer until such time as the individual insurance adjuster’s license has been reinstated and an application and appropriate fee have been submitted to and approved by the Commissioner.
8.10. Neither cancellation of a license nor any disciplinary action levied as a result of non-compliance with continuing insurance education requirements shall prohibit an individual insurance producer from receiving commissions which were vested and earned while that individual insurance producer maintained an approved license nor prohibit an individual insurance adjuster from receiving a salary or other work-related payment which were vested and earned while that individual insurance adjuster maintained an approved license.
114CSR42
114CSR42
Series 43 Health Maintenance Organization
W. Va. Code R. § 114-43-1 General
1.1. Scope. -- This rule applies to all persons or entities which are licensed or which may be required to be licensed pursuant to the provisions of W. Va. Code '33-25A-1 et seq.
1.2. Authority. -- W. Va. Code ''33-25A-3(3) 5, 20.
1.3. Filing Date. -- April 3, 1996.
1.4. Effective Date. -- April 3, 1996.
W. Va. Code R. § 114-43-2 Definitions
2.1. "Administrative health service contract" means an agreement between a certificate of authority holder and a health service intermediary or between health service intermediaries in which:
a. The intermediary accepts payments, including payments on a fixed per capita fixed aggregate sum or percentage of premium basis, from the certificate of authority holder or from another health service intermediary for one or more health care services to be rendered by providers to subscribers, members, policyholders, or certificateholders, as applicable, of a certificate of authority holder, where the intermediary assumes financial risk for payments to providers; and b. The intermediary contracts with providers to render one or more health care services to subscribers, policyholders or certificateholders, as applicable, of a certificate of authority holder.
2.2. "Certificate of authority holder" means an entity which holds a valid certificate of authority from the commissioner to operate a health maintenance organization under W. Va. Code '33-25A-1 et seq.
2.3. "Commissioner" means the Insurance Commissioner of the State of West Virginia.
2.4. AFinancially sound@ or Afiscally and financially sound@ means that according to presently accepted actuarial standards of practice, consistently applied and fairly stated, that the respective considerations to the parties under the contract, including, but not limited to, reserves, the investment earnings on such considerations, the considerations anticipated to be received and retained by the parties under the contract, and related actuarial values, make adequate provision for the anticipated cash flows required by the contractual obligations and related expenses of the parties.
2.5. "Group Practice" means a professional corporation, partnership, association, or other organization composed solely of health professionals licensed to practice medicine or osteopathy and of such other licensed health professionals, including podiatrists, dentists and optometrists, as are necessary for the provision of the health services for which the group is responsible: a. who engage in a single field of medical practice or specialty or who all practice at a single location; b. a majority of the members of which are licensed to practice medicine or osteopathy; c. who as their principal professional activity engage in the coordinated practice of their profession; d. who pool their income for practice as members of the group and distribute it among themselves according to a prearranged salary, drawing account or other plan; and e. who share medical and other records and substantial portions of major equipment and professional, technical and administrative staff.
2.6. "Health care services" or "health services" means services, medical equipment, and supplies furnished by a provider, which may include, but which are not limited to, medical, surgical, or dental care; psychological, optometric, optic, chiropractic, podiatric, nursing, physical therapy, mental health, substance abuse, or pharmaceutical services; health education, preventive medical, rehabilitative, or home health services; inpatient or outpatient hospital services; extended care; nursing home care; convalescent institutional care; technical and professional clinical pathology laboratory services; laboratory and ambulance services; appliances, drugs, medicines, and supplies; or any other care, service, or treatment of disease, or correction of defects for human beings.
2.7. "Health service intermediary" or "intermediary" means a physician, hospital, physician-hospital organization, independent provider organization, independent provider network, or other entity or person that arranges for one or more health care services to be rendered by providers to subscribers, policyholders, or certificateholders, as applicable, of a certificate of authority holder. "Health service intermediary" or "intermediary" does not include:
a. A provider directly contracting with a certificate of authority holder for the provider to render health care services, when that provider renders those services directly and only through its own professional license or licenses or, in the case when the provider is a "group practice" the group practice utilizes only its employees, partners or shareholders and their professional licenses to render those services.
b. A certificate of authority holder.
2.8. "Incurred but not reported health care costs" or "IBNR" means the cost of health care services rendered to subscribers, policyholders or certificateholders, as applicable, of a certificate of authority holder by providers during the reporting period and for which the health service intermediary is financially responsible, but which are not reported to the intermediary until after the reporting period.
2.9. "Independent certified public accountant" means an independent certified public accountant who holds a valid license to practice, issued by the state in which he or she resides or has his or her principal place of business who has experience auditing or performing accounting functions for health maintenance organizations and who does not have a financial or other interest in a given entity which could influence his or her professional judgement.
2.10. "Provider" means a person or other entity which holds a valid license to provide specific health care services in the State of West Virginia.
2.11. "Qualified independent actuary" means an actuary who is a member of the American Academy of Actuaries or the Society of Actuaries and has experience in establishing rates for health maintenance organizations and who has no financial or employment interest in the certificate of authority holder or the health care intermediary.
W. Va. Code R. § 114-43-3 Intermediary Contract Requirements
3.1. A certificate of authority holder may not enter into an administrative health service contract with a health service intermediary unless the contract is in writing, is filed with the commissioner accompanied by an opinion by a qualified independent actuary which states that the entering of the contract by the certificate of authority holder is financially sound, and the contract contains provisions which:
a. Require the health service intermediary to provide the certificate of authority holder with regular written reports prepared on a West Virginia statutory accounting basis, at least quarterly, that state the health service intermediary's current assets and identify in the aggregate all payments made or owed to its providers in sufficient detail for the certificate of authority holder and the Commissioner to determine if the payments are being made in a timely manner and which identify in the aggregate the reasonably estimated incurred but not reported health care costs;
b. Require the certificate of authority holder to monitor the health service intermediary's reports required under paragraph a of this subsection;
c. Permit the certificate of authority holder and the commissioner, both singularly and jointly, upon reasonable prior notice, to audit, inspect and copy the health service intermediary's books, records, and other evidence of its operations which are, in the discretion of the certificate of authority holder or the commissioner, relevant to the intermediary's obligations under the administrative health service contract for the purpose of determining the intermediary's compliance with all requirements legally mandated by statute, rule or the administrative health service contract. Any review is subject to any confidentiality requirements imposed by State or Federal law;
d. Require the health service intermediary to maintain working capital in the form of cash or equivalent liquid assets at least equal to one month=s claims calculated by using the monthly average of actual and estimated claims for the prior six months for all health services provided under the administrative health service contract;
e. Require the intermediary to create a segregated fund, which may be aggregated, equal to the entire monthly IBNR as of the first day of each month as actuarially determined by the certificate of authority holder.
A. The commissioner may upon application of the certificate of authority holder and good cause shown, give prior written approval to alternative financial arrangements between the certificate of authority holder and the intermediary, such as the use of premium withhold funds, either in conjunction with or in lieu of the capital and reserve fund requirements of paragraphs d and e of this section;
f. Require the certificate of authority holder to assume the full financial responsibility as specified in subsection 4.2. of this rule, for any valid claims presented for payment to the health service intermediary by providers for covered health care services rendered to a subscriber, policyholder, enrollee or certificate holder, as applicable, and which are not paid by the health service intermediary as provided by law and by the contract between the intermediary and provider;
g. Require that all enrollee or enrollee group contracts must be directly with the certificate of authority holder and not the intermediary;
h. Require that the intermediary provide services on behalf of the certificate of authority holder only in counties where the certificate of authority holder is authorized by the commissioner to operate;
i. Clearly delineate the responsibilities to be assumed by the intermediary and require that the intermediary adhere to all quality and accessibility standards to which the certificate of authority holder is subject;
j. Require that to the extent the intermediary is permitted to sub-contract the provision of health care services that all sub-contractors must adhere to quality and accessibility standards to which the certificate of authority holder is subject;
k. Require that the certificate of authority holder continuously monitor the intermediaries' compliance with the contract requirements;
l. Specify that the certificate of authority holder is responsible for maintaining appropriate levels of capital, surplus, claims reserves, and other financial criteria as established pursuant to statute or rule;
m. Require the health service intermediary and any entities with which the health service intermediary sub-contracts for the provision of health care services to obtain and provide to the certificate of authority holder no later than the first day of June of each year an annual audited financial report prepared by an independent certified public accountant; and n. If the health service intermediary provides health care services on behalf of more than one entity, specify that the health service intermediary maintain records which are adequate to clearly differentiate the transactions which relate to the provision of health care services on behalf of the certificate of authority holder.
W. Va. Code R. § 114-43-4 HMO Requirements
4.1. Upon entry of a health service intermediary contract, a certificate of authority holder shall immediately file with the commissioner a full executed copy of the contract and all exhibits, attachments, addenda, schedules or other documents relevant to the contract.
a. Upon filing a health service intermediary contract with the commissioner, the certificate of authority holder shall simultaneously file the opinion of a qualified independent actuary which expresses the opinion of the qualified independent actuary that the entry of the contract by the certificate of authority holder:
A. Is a fiscally and financially sound transaction;
B. Does not cause excessive payments to the intermediary;
C. Provides for reasonable incentives to the intermediary for cost control; and D. Does not contribute to the escalation of the cost of providing health care to enrollees.
4.2. A certificate of authority holder is financially responsible for any valid claims for covered health care services, exclusive of unpaid claims of providers who have contracted with the health service intermediary, presented for payment to a health service intermediary and which are not paid by the health service intermediary.
4.3. All affected master group contracts or evidences of coverage must reflect that the certificate of authority holder retains financial responsibility as specified in subsection 4.2. of this rule when health care services are provided through a health care intermediary.
4.4. A certificate of authority holder is responsible for compliance by the health care intermediary with all applicable standards required by W. Va. Code '33-25A-1, et. seq. as to any services performed on behalf of the certificate of authority holder.
4.5. No health care intermediary may contract directly with enrollees or subscribers without first having obtained a certificate of authority to operate a health maintenance organization.
4.6. All financial statements provided by the certificate of authority holder to the commissioner must fully and accurately reflect on a West Virginia statutory accounting basis the costs and liabilities to the certificate of authority holder associated with any health service intermediary contract including those liabilities assumed by the health service intermediary.
4.7. A certificate of authority holder is responsible for taking all reasonable measures to provide the commissioner full access to all books and records of any health service intermediary with which it contracts and to the books and records of any entity with which the intermediary sub-contracts for the provision of health care services, to the same extent the commissioner is given access to the books and records of the certificate of authority holder pursuant to W. Va. Code ''33-25A-17 and 33-2-9. The certificate of authority holder is financially responsible for any costs of examining the books and records of the health service intermediary or sub-contractor consistent with W. Va. Code '33-2-9.
4.8. A certificate of authority holder must within ten days of receipt of the annual audited financial report of a health service intermediary, file a full copy of the report with the commissioner.
4.9. The commissioner may require immediate cancellation or renegotiation of any administrative health service contract when the commissioner determines that the contract does any of the following:
a. Provides for excessive payments;
b. Fails to include reasonable incentives for cost control; or c. Otherwise substantially or unreasonably contributes to the escalation of the cost of providing health care services to enrollees.
W. Va. Code R. § 114-43-5 Guarantees
5.1. A health service intermediary's obligations, pursuant to paragraphs 3.1.d and 3.1.e. may be fulfilled by the unconditional, irrevocable guarantee of a parent, sister or affiliated entity which:
a. Has been in operation for five years or more and has a surplus on a West Virginia statutory accounting basis, not including land, buildings, and equipment, of greater than $2 million. In any determination of the financial condition of the guaranteeing operation, investments in or loans to any organizations guaranteed by the guaranteeing organization shall be excluded from surplus. If the guaranteeing organization is sponsoring more than one organization, the surplus requirement shall be increased by a multiple equal to the number of organizations;
b. Submits a guarantee that is approved by the commissioner in writing as meeting the requirements of this section. The written guarantee must contain a provision which requires that the guarantee be irrevocable unless the guaranteeing organization can demonstrate to the commissioner that the cancellation of the guarantee will not result in the insolvency of the intermediary and the commissioner approves in writing the cancellation of the guarantee;
c. Initially submits its audited financial statements, certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles, covering its two most current annual accounting periods; and d. Submits annually, within three (3) months after the end of its fiscal year, an audited financial statement certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles. The commissioner may, as he or she considers necessary, require quarterly financial statements from the guaranteeing organization.
W. Va. Code R. § 114-43-6 Separability
6.1. If any provision of this rule is held invalid, the remainder of this rule shall not be affected thereby.
114CSR43
Series 44 Minimum Reserve Standards For Individual And Group Health Insurance Contracts
W. Va. Code R. § 114-44-1 General
1.1. Scope. -- This legislative rule establishes minimum reserve standards for all individual and group health [accident and sickness] insurance coverages, except credit insurance.
1.2. Authority. -- W. Va. Code ''33-2-10 and 33-7-9(m).
1.3. Filing Date. -- April 2, 1996.
1.4. Effective Date. -- April 2, 1996.
W. Va. Code R. § 114-44-2 Purpose
2.1. The purpose of this rule is to establish the minimum reserve standards for individual and group health (accident and sickness) insurance coverages.
W. Va. Code R. § 114-44-3 Scope
3.1. When an insurer determines that the adequacy of its health insurance reserves requires reserves in excess of the minimum standards specified in this rule, the increased reserves shall be held and shall be considered the minimum reserves for that insurer.
3.2. With respect to any block of contracts, or with respect to an insurer's health business as a whole, a prospective gross premium valuation is the ultimate test of reserve adequacy as of a given valuation date. The gross premium valuation shall take into account, for contracts in force, in a claims status, or in a continuation of benefits status on the valuation date, the present value as of the valuation date of: all expected benefits unpaid, all expected expenses unpaid, and all unearned or expected premiums, adjusted for future premium increases reasonably expected to be put into effect.
3.3. The insurer is to perform a gross premium valuation whenever a significant doubt exists as to reserve adequacy with respect to any major block of contracts, or with respect to the insurer's health business as a whole. In the event inadequacy is found to exist, immediate loss recognition shall be made and the reserves restored to adequacy. Adequate reserves (inclusive of claim, premium and contract reserves, if any) shall be held with respect to all contracts, regardless of whether contract reserves are required for the contracts under the standards in this rule.
3.4. Whenever minimum reserves, as defined in this rule, exceed reserve requirements as determined by a prospective gross premium valuation, the minimum reserves remain the minimum requirement under this rule.
W. Va. Code R. § 114-44-4 Categories of Reserves
4.1. This rule establishes minimum standards for three categories of health insurance reserves: claims reserves, premium reserves and contract reserves.
4.2. The adequacy of an insurer's health insurance reserves is to be determined on the basis of all three categories combined. However, this rule emphasizes the importance of determining appropriate reserves for each of the three categories separately.
W. Va. Code R. § 114-44-5 Appendices
5.1. This rule contains two appendices which are an integral part of the standards, and one additional "supplementary" appendix which is not part of the standards as such, but is included for explanatory and illustrative purposes only.
a. Appendix A sets forth specific minimum standards with respect to morbidity, mortality and interest, which apply to claim reserves according to year of incurral and to contract reserves according to year of issue.
b. Appendix B sets forth a glossary of technical terms used.
c. Appendix C is a supplementary appendix which establishes standards for reserves taking into consideration waiver of premium.
W. Va. Code R. § 114-44-6 Claim Reserves
6.1. General.
a. Claim reserves are required for all incurred but unpaid claims on all health insurance policies.
b. Appropriate claim expense reserves are required with respect to the estimated expense of settlement of all incurred but unpaid claims.
c. All claim reserves for prior valuation years are to be tested for adequacy and reasonableness along the lines of claim runoff schedules in accordance with the statutory financial statement including consideration of any residual unpaid liability.
6.2. Minimum Standards for Claim Reserves.
a. Disability Income.
A. Interest. The maximum interest rate for claim reserves is specified in Appendix A of this rule.
B. Morbidity. Minimum standards with respect to morbidity are those specified in Appendix A of this rule; except that, at the option of the insurer:
(a). For claims with a duration from date of disablement of less than two years, reserves may be based on the insurer's experience, if the experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities; and (b). For group disability income claims with a duration from date of disablement of more than two (2) years but less than five (5) years, reserves may, with the approval of the commissioner, be based on the insurer's experience for which the insurer maintains underwriting and claim administration control. The request for approval of a plan of modification to the reserve basis must include:
(A). An analysis of the credibility of the experience;
(B). A description of how all of the insurer's experience is proposed to be used in setting reserves;
(C). A description and quantification of the margins to be included;
(D). A summary of the financial impact that the proposed plan of modification would have had on the insurer's last filed annual statement;
(E). A copy of the approval of the proposed plan of modification by the commissioner of the state of domicile; and (F). Any other information considered necessary by the commissioner.
C. Duration of Disablement. For contracts with an elimination period, the duration of disablement should be measured as dating from the time that benefits would have begun to accrue had there been no elimination period.
b. All Other Benefits.
A. Interest. The maximum interest rate for claim reserves is specified in Appendix A of this rule.
B. Morbidity or other Contingency. The reserve should be based on the insurer's experience, if the experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities.
6.3. Claim Reserve Methods Generally.
a. The insurer may use any generally accepted or reasonable actuarial method or combination of methods to estimate all claim liabilities. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. Approximations based on groupings and averages may also be employed. Adequacy of the claim reserves, however, shall be determined in the aggregate.
W. Va. Code R. § 114-44-7 Premium Reserves
7.1. General.
a. Unearned premium reserves are required for all contracts with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation.
b. If premiums due and unpaid are carried as an asset, the premiums must be treated as premiums in force, subject to unearned premium reserve determination. The value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums must be carried as an offsetting liability.
c. The gross premiums paid in advance for a period of coverage commencing after the next premium due date which follows the date of valuation may be appropriately discounted to the evaluation date and shall be held either as a separate liability or as an addition to the unearned premium reserve which would otherwise be required as a minimum.
7.2. Minimum Standards for Unearned Premium Reserves.
a. The minimum unearned premium reserve with respect to any contract is the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with the premium determined on the basis of:
A. The valuation net modal premium on the contract reserve basis applying to the contract; or B. The gross modal premium for the contract if no contract reserve applies.
b. However, in no event may the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements be less than the gross modal unearned premium reserve on all such contracts, as of the date of valuation. The reserve shall never be less than the expected claims for the period beyond the valuation date represented by the unearned premium reserve, to the extent not provided for elsewhere.
7.3. Premium Reserve Methods Generally.
a. The insurer may employ suitable approximations and estimates; including, but not limited to groupings, averages and aggregate estimation; in computing premium reserves. The approximations or estimates should be tested periodically to determine their continuing adequacy and reliability.
W. Va. Code R. § 114-44-8 Contract Reserves
8.1. General.
a. Contract reserves are required, unless otherwise specified in paragraph b of this subsection for:
A. All individual and group contracts with which level premiums are used; or B. All individual and group contracts with respect to which, due to the gross premium pricing structure at issue, the value of the future benefits at any time exceeds the value of any appropriate future valuation net premiums at that time. The values specified in this subparagraph shall be determined on the basis specified in subsection 8.2 of this rule.
b. Contracts not requiring a contract reserve are:
A. Contracts which cannot be continued after one year from issue; or B. Contracts already in force on the effective date of this rule for which no contract reserve was previously required.
c. The contract reserve is in addition to claim reserves and premium reserves.
d. The methods and procedures for contract reserves should be consistent with those for claim reserves for any contract, or else appropriate adjustment must be made when necessary to assure provision for the aggregate liability. The definition of the date of incurral must be the same in both determinations.
8.2. Minimum Standards for Contract Reserves.
a. Basis A. Morbidity or other Contingency. The minimum standards with respect to morbidity are those set forth in Appendix A of this rule. Valuation net premiums used under each contract must have a structure consistent with the gross premium structure at issue of the contract as this relates to advancing age of the insured, contract duration and the period for which gross premiums have been calculated. Contracts for which tabular morbidity standards are not specified in Appendix A of this rule shall be valued using tables established for reserve purposes by a qualified actuary and acceptable to the commissioner.
B. Interest. The maximum interest rate is specified in Appendix A of this rule.
C. Termination Rates. Termination rates used in the computation of reserves shall be on the basis of a mortality table as specified in Appendix A of this rule except as noted in the following part.
(a). Under contracts for which premium rates are not guaranteed, and where the effects of insurer underwriting are specifically used by policy duration in the valuation morbidity standard or for return of premium or other deferred cash benefits, total termination rates may be used at ages and durations where the rates exceed specified mortality table rates, but not in excess of the lesser of:
(A). Eighty percent of the total termination rate used in the calculation of the gross premiums, or (B). Eight percent.
(b). Where a morbidity standard specified in Appendix A of this rule is on an aggregate basis, the morbidity standard may be adjusted to reflect the effect of insurer underwriting by policy duration. The adjustments must be appropriate to the underwriting and be acceptable to the commissioner.
D. Reserve Method.
(a). For insurance except long-term care and return of premium or other deferred cash benefits, the minimum reserve is the reserve calculated on the two-year full preliminary term method; that is, under which the terminal reserve is zero at the first and also the second contract anniversary.
(b). For long-term care insurance, the minimum reserve is the reserve calculated on the one-year full preliminary term method.
(c). For return of premium or other deferred cash benefits, the minimum reserve is the reserve calculated as follows:
(A). On the one year preliminary term method if the benefits are provided at any time before the twentieth anniversary;
(B). On the two year preliminary term method if the benefits are only provided on or after the twentieth anniversary.
(C). The preliminary term method may be applied only in relation to the date of issue of a contract. Reserve adjustments introduced later, as a result of rate increases, revisions in assumptions (e.g., projected inflation rates) or for other reasons, are to be applied immediately as of the effective date of adoption of the adjusted basis.
E. Negative Reserves. Negative reserves on any benefit may be offset against positive reserves for other benefits in the same contract, but the total contract reserve with respect to all benefits combined may not be less than zero.
8.3. Alternative Valuation Methods and Assumptions Generally.
a. Provided the contract reserve on all contracts to which an alternative method or basis is applied is not less in the aggregate than the amount determined according to the applicable standards specified in subsection 8.2 of this rule; an insurer may use any reasonable assumptions as to interest rates, termination and/or mortality rates, and rates of morbidity or other contingency. Also, subject to the preceding condition, the insurer may employ methods other than the methods stated in subsection 8.2 of this rule in determining a sound value of its liabilities under the contracts, including, but not limited to the following: the net level premium method; the one-year full preliminary term method; prospective valuation on the basis of actual gross premiums with reasonable allowance for future expenses; the use of approximations such as those involving age groupings, groupings of several years of issue, average amounts of indemnity, grouping of similar contract forms; the computation of the reserve for one contract benefit as a percentage of, or by other relation to, the aggregate contract reserves exclusive of the benefit or benefits so valued; and the use of a composite annual claim cost for all or any combination of the benefits included in the contracts valued.
8.4. Tests For Adequacy and Reasonableness of Contract Reserves.
a. Annually, the insurer shall make an appropriate review of the insurer's prospective contract liabilities on contracts valued by tabular reserves, to determine the continuing adequacy and reasonableness of the tabular reserves giving consideration to future gross premiums. The insurer shall make appropriate increments to the tabular reserves if the tests indicate that the basis of the reserves is no longer adequate; subject, however, to the minimum standards of subsection 8.2 of this rule.
b. In the event a company has a contract or a group of related similar contracts, for which future gross premiums will be restricted by contract, Insurance Commissioner=s rules, or for other reasons, such that the future gross premiums reduced by expenses for administration, commissions, and taxes will be insufficient to cover future claims, the company shall establish contract reserves for the shortfall in the aggregate.
W. Va. Code R. § 114-44-9 Reinsurance
9.1. Increases to, or credits against reserves carried, arising because of reinsurance assumed or reinsurance ceded, must be determined in a manner consistent with the minimum reserve standards set forth in this rule and with all applicable provisions of the reinsurance contracts which affect the insurer's liabilities.
W. Va. Code R. § 114-44-10 Severability
10.1. If any provision of this rule or the application of this rule to any person or circumstances is for any reason held to be invalid, the remainder of the rule and the application of the provisions to other persons or circumstances shall not be affected by the holding.
APPENDIX A. SPECIFIC STANDARDS FOR MORBIDITY, INTEREST AND MORTALITY
I. MORBIDITY
A. Minimum morbidity standards for valuation of specified individual contract health insurance benefits are as follows:
(1) Disability Income Benefits Due to Accident or Sickness.
(a) Contract Reserves:
Contracts issued on or after January 1, 1965 and prior to January 1, 1986:
The 1964 Commissioners Disability Table (64 CDT).
Contracts issued on or after January 1, 1997:
The 1985 Commissioners Individual Disability Table A (85CIDA); or The 1985 Commissioners Individual Disability Table B (85CIDB).
Contracts issued during 1986 through 1996:
Optional use of either the 1964 Table or the 1985 Tables.
Each insurer shall elect, with respect to all individual contracts issued in any one statement year, whether it will use Table A or Table B as the minimum standard. The insurer may, however, elect to use the other tables with respect to any subsequent statement year.
(b) Claim Reserves:
The minimum morbidity standard in effect for contract reserves on currently issued contracts, as of the date the claim is incurred.
(2) Hospital Benefits, Surgical Benefits and Maternity Benefits (Scheduled benefits or fixed time period benefits only).
(a) Contract Reserves:
Contracts issued on or after January 1, 1955, and before January 1, 1982:
The 1956 Intercompany Hospital-Surgical Tables.
Contracts issued on or after January 1, 1982:
The 1974 Medical Expense Tables, Table A, Transactions of the Society of Actuaries, Volume XXX, pg. 63. Refer to the paper (in the same volume, pg. 9) to which this table is appended, including its discussions, for methods of adjustment for benefits not directly valued in Table A: "Development of the 1974 Medical Expense Benefits," Houghton and Wolf.
(b) Claim Reserves:
No specific standard. See (5).
(3) Cancer Expense Benefits (Scheduled benefits or fixed time period benefits only).
(a) Contract Reserves:
Contracts issued on or after January 1, 1986:
The 1985 NAIC Cancer Claim Cost Tables.
(b) Claim Reserves:
No specific standard. See (5).
(4) Accidental Death Benefits.
(a) Contract Reserves:
Contracts issued on or after January 1, 1965:
The 1959 Accidental Death Benefits Table.
(b) Claim Reserves:
Actual amount incurred.
(5) Other Individual Contract Benefits.
(a) Contract Reserves:
For all other individual contract benefits, morbidity assumptions are to be determined as provided in the reserve standards.
(b) Claim Reserves:
For all benefits other than disability, claim reserves are to be determined as provided in the standards.
B. Minimum morbidity standards for valuation of specified group contract health insurance benefits are as follows:
(1) Disability Income Benefits Due to Accident or Sickness.
(a) Contract Reserves:
Contracts issued prior to January 1, 1997:
The same basis, if any, as that employed by the insurer as of December 31, 1996;
Contracts issued on or after January 1, 1997:
The 1987 Commissioners Group Disability Income Table (87CGDT).
(b) Claim Reserves:
For claims incurred on or after January 1, 1997:
The 1987 Commissioners Group Disability Income Table (87CGDT);
For claims incurred prior to January 1, 1997:
Use of the 87CGDT is optional.
(2) Other Group Contract Benefits.
(a) Contract Reserves:
For all other group contract benefits, morbidity assumptions are to be determined as provided in the reserve standards.
(b) Claim Reserves:
For all benefits other than disability, claim reserves are to be determined as provided in the standards.
II. INTEREST
A. For contract reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the health insurance contract.
B. For claim reserves on policies that require contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the claim incurral date.
C. For claim reserves on policies not requiring contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of single premium immediate annuities issued on the same date as the claim incurral date, reduced by one hundred basis points.
III. MORTALITY
A. Except as provided in paragraph B, the mortality basis used shall be according to a table (but without use of selection factors) permitted by law for the valuation of whole life insurance issued on the same date as the health insurance contract.
B. Other mortality tables adopted by the National Association of Insurance Commissioners and promulgated by the commissioner may be used in the calculation of the minimum reserves if appropriate for the type of benefits and if approved by the commissioner. The request for such approval must include the proposed mortality table and the reason that the standard specified in paragraph A is inappropriate.
APPENDIX B. GLOSSARY OF TECHNICAL TERMS USED.
As used in this rule, the following terms have the following meaning:
ANNUAL-CLAIM COST. The net annual cost per unit of benefit before the addition of expenses, including claim settlement expenses, and a margin for profit or contingencies. For example, the annual claim cost for a $100 monthly disability benefit, for a maximum disability benefit period of one year, with an elimination period of one week, with respect to a male at age 35, in a certain occupation might be $12, while the gross premium for this benefit might be $18. The additional $6 would cover expenses and profit or contingencies;
CLAIMS ACCRUED. That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services which have been rendered on or prior to the valuation date, and for the payment of benefits for days of hospitalization and days of disability which have occurred on or prior to the valuation date, which the insurer has not paid as of the valuation date, but for which it is liable, and will have to pay after the valuation date. This liability is sometimes referred to as a liability for "accrued" benefits. A claim reserve, which represents an estimate of this accrued claim liability, must be established;
CLAIMS REPORTED. When an insurer has been informed that a claim has been incurred, if the date reported is on or prior to the valuation date, the claim is considered as a reported claim for annual statement purposes;
CLAIMS UNACCRUED. That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services expected to be rendered after the valuation date, and for benefits expected to be payable for days of hospitalization and days of disability occurring after the valuation date. This liability is sometimes referred to as a liability for unaccrued benefits. A claim reserve, which represents an estimate of the unaccrued claim payments expected to be made (which may or may not be discounted with interest), must be established;
CLAIMS UNREPORTED. When an insurer has not been informed, on or before the valuation date, concerning a claim that has been incurred on or prior to the valuation date, the claim is considered as an unreported claim for annual statement purposes;
DATE OF DISABLEMENT. The earliest date the insured is considered as being disabled under the definition of disability in the contract, based on a doctor's evaluation or other evidence. Normally this date will coincide with the start of any elimination period;
ELIMINATION PERIOD. A specified number of days, weeks, or months starting at the beginning of each period of loss, during which no benefits are payable;
GROSS PREMIUM. The amount of premium charged by the insurer. It includes the net premium (based on claim-cost) for the risk, together with any loading for expenses, profit or contingencies;
GROUP INSURANCE. The term group insurance includes blanket insurance and franchise insurance and any other forms of group insurance;
LEVEL PREMIUM. A premium calculated to remain unchanged throughout either the lifetime of the policy, or for some shorter projected period of years. The premium need not be guaranteed; in which case, although it is calculated to remain level, it may be changed if any of the assumptions on which it was based are revised at a later time.
Generally, the annual claim costs are expected to increase each year and the insurer, instead of charging premiums that correspondingly increase each year, charges a premium calculated to remain level for a period of years or for the lifetime of the contract. In this case the benefit portion of the premium is more than needed to provide for the cost of benefits during the earlier years of the policy and less than the actual cost in the later years. The building of a prospective contract reserve is a natural result of level premiums;
LONG-TERM CARE INSURANCE. Any insurance policy or rider advertised, marketed, offered or designed to provide coverage for not less than twelve (12) consecutive months for each covered person on an expense incurred, indemnity, prepaid or other basis; for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance or personal care services, provided in a setting other than an acute care unit of a hospital. Such term also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long-term care insurance may be issued by insurers; fraternal benefit societies; nonprofit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long-term care insurance shall not include any insurance policy which is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset-protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage;
MODAL PREMIUM. This refers to the premium paid on a contract based on a premium term which could be annual, semi-annual, quarterly, monthly, or weekly. Thus if the annual premium is $100 and if, instead, monthly premiums of $9 are paid then the modal premium is $9;
NEGATIVE RESERVE. Normally the terminal reserve is a positive value. However, if the values of the benefits are decreasing with advancing age or duration it could be a negative value, called a negative reserve;
PRELIMINARY TERM RESERVE METHOD. Under this method of valuation the valuation net premium for each year falling within the preliminary term period is exactly sufficient to cover the expected incurred claims of that year, so that the terminal reserves will be zero at the end of the year. As of the end of the preliminary term period, a new constant valuation net premium (or stream of changing valuation premiums) becomes applicable such that the present value of all such premiums is equal to the present value of all claims expected to be incurred following the end of the preliminary term period;
PRESENT VALUE OF AMOUNTS NOT YET DUE ON CLAIMS. The reserve for "claims unaccrued" (see definition), which may be discounted at interest;
RESERVE. The term "reserve" is used to include all items of benefit liability, whether in the nature of incurred claim liability or in the nature of contract liability relating to future periods of coverage, and whether the liability is accrued or unaccrued.
An insurer under its contracts promises benefits which result in:
(a)Claims which have been incurred, that is, for which the insurer has become obligated to make payment, on or prior to the valuation date. On these claims, payments expected to be made after the valuation date for accrued and unaccrued benefits are liabilities of the insurer which should be provided for by establishing claim reserves; or (b)Claims which are expected to be incurred after the valuation date. Any present liability of the insurer for these future claims should be provided for by the establishment of contract reserves and unearned premium reserves;
TERMINAL RESERVE. This is the reserve at the end of a contract year, and is defined as the present value of benefits expected to be incurred after that contract year minus the present value of future valuation net premiums;
UNEARNED PREMIUM RESERVE. This reserve values that portion of the premium paid or due to the insurer which is applicable to the period of coverage extending beyond the valuation date. Thus if an annual premium of $120 was paid on November 1, $20 would be earned as of December 31 and the remaining $100 would be unearned. The unearned premium reserve could be on a gross basis as in this example, or on a valuation net premium basis;
VALUATION NET MODAL PREMIUM. This is the modal fraction of the valuation net annual premium that corresponds to the gross modal premium in effect on any contract to which contract reserves apply. Thus if the mode of payment in effect is quarterly, the valuation net modal premium is the quarterly equivalent of the valuation net annual premium.
APPENDIX C. RESERVES FOR WAIVER OF PREMIUM (Supplementary explanatory material)
Waiver of premium reserves involve several special considerations. First, the disability valuation tables promulgated by the NAIC are based on exposures that include contracts on premium waiver as in-force contracts. Hence, contract reserves based on these tables are NOT reserves on "active lives" but rather reserves on contracts "in force." This is true for the 1964 CDT and for both the 1985 CIDA and CIDB tables.
Accordingly, tabular reserves using any of these tables should value reserves on the following basis:
Claim reserves should include reserves for premiums expected to be waived, valuing as a minimum the valuation net premium being waived.
Premium reserves should include contracts on premium waiver as in-force contracts, valuing as a minimum the unearned modal valuation net premium being waived.
Contract reserves should include recognition of the waiver of premium benefit in addition to other contract benefits provided for, valuing as a minimum the valuation net premium to be waived.
If an insurer is, instead, valuing reserves on what is truly an active life table, or if a specific valuation table is not being used but the insurer's gross premiums are calculated on a basis that includes in the projected exposure only those contracts for which premiums are being paid, then it may not be necessary to provide specifically for waiver of premium reserves. Any insurer using such a true "active life" basis should carefully consider, however, whether or not additional liability should be recognized on account of premiums waived during periods of disability or during claim continuation.
114CSR44
Series 45 Recognizing Annuity Mortality Tables for Use in Determining Reserve Liabilities for Annuities
W. Va. Code R. § 114-45-1 General
W. Va. Code R. § 114-45-2 Purpose
W. Va. Code R. § 114-45-3 Definitions
W. Va. Code R. § 114-45-4 Individual Annuity or Pure Endowment Contracts
W. Va. Code R. § 114-45-5 Application of the 2012 IAR Table
W. Va. Code R. § 114-45-6 Group Annuity or Pure Endowment Contracts
W. Va. Code R. § 114-45-7 Application of the 1994 GAR Table
Appendix I. 2012 IAM Period Table; Female, Age Nearest Birthday.
Appendix II. 2012 IAM Period Table; Male, Age Nearest Birthday.
Appendix III. Projection Scale G2; Female, Age Nearest Birthday.
Appendix IV. Projection Scale G2; Male, Age Nearest Birthday.
TITLE 114 LEGISLATIVE RULE INSURANCE COMMISSIONER
SERIES 45 RECOGNIZING ANNUITY MORTALITY TABLES FOR USE IN DETERMINING RESERVE LIABILITIES FOR ANNUITIES ### §114-45-1. General.
1.1. Scope. -- This Legislative rule applies to all life insurance companies and fraternal benefit societies doing business in this State and to all life insurance companies and fraternal benefit societies which are authorized to reinsure life insurance, annuities or accident and health insurance business in this State. This rule is based upon the National Association of Insurance Commissioners'
"Model Rule For Recognizing a New Annuity Mortality Table For Use In Determining Reserve Liabilities For Annuities (Model 821)," as amended in 2012.
1.2. Authority. -- W. Va. Code §§ 33-2-10, 33-7-9a and 33-7-9(e)(2),(3) and (5).
1.3. Filing Date. -- April 24, 2015.
1.4. Effective Date. -- July 23, 2015. ### §114-45-2. Purpose.
The purpose of this rule is to recognize the following mortality tables for use in determining the minimum standard of valuation for annuity and pure endowment contracts: the 1983 table "a"; the 1983 Group Annuity Mortality (1983 GAM) Table; the Annuity 2000 Mortality Table; the 2012 Individual Annuity Reserving (2012 IAR) Table, and the 1994 Group Annuity Reserving (1994 GAR) Table. ### §114-45-3. Definitions.
3.1. As used in this rule, "1983 Table 'a" means that mortality table developed by the Society of Actuaries Committee To Recommend a New Mortality Basis for Individual Annuity Valuation and adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners.
3.2. As used in this rule, "1983 GAM Table" means that mortality table developed by the Society of Actuaries Committee on Annuities and adopted as a recognized mortality table for annuities in December 1983 by the National Association of Insurance Commissioners.
3.3. As used in this rule, "1994 GAR Table" means that mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force and shown on pages 866-867 of Volume XLVII of the Transactions of the Society of Actuaries (1995).
3.4. As used in this rule, "Annuity 2000 Mortality Table" means that morality table developed by the Society of Actuaries Committee on Life Insurance Research and shown on page 240 of Volume XLVII of the Transactions of the Society of Actuaries (1995).
3.5. As used in this rule, "Period table" means a table of mortality rates applicable to a given calendar year (the Period).
3.6. As used in this rule, "Generational mortality table" means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period table and a projection scale containing rates of mortality improvement.
3.7. As used in this rule "2012 IAR Table" means that Generational mortality table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in section 5.
3.8. As used in this rule, "2012 Individual Annuity Mortality Period Life (2012 IAM Period)
Table" means the Period table containing loaded mortality rates for calendar year 2012. This table contains rates, q_2012, developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices I-II.
3.9. As used in this rule, "Projection Scale G2 (Scale G2)" is a table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012.
This table was developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices III-IV. ### §114-45-4. Individual Annuity or Pure Endowment Contracts.
4.1. Except as provided in subsections 4.2 and 4.3 of this section, the 1983 Table "a" is recognized and approved as an individual annuity mortality table for valuation and, at the option of the life insurance company or fraternal benefit society, may be used for purposes of determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after April 6, 1977.
4.2. Except as provided in subsection 4.3 of this section, either the 1983 Table "a" or the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 1997.
4.3. Except as provided in subsection 4.4 of this section, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after April 1, 1999.
4.4. Except as provided in subsection 4.5 of this section, the 2012 IAR Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after August 1, 2015.
4.5. The 1983 Table "a" without projection is to be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after April 1, 1999, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:
4.5.a. Settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions;
4.5.b. Settlements involving similar actions such as worker's compensation claims; or
4.5.c. Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments. ### §114-45-5. Application of the 2012 IAR Mortality Table.
5.1. In using the 2012 IAR Mortality Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows: qx2012+1 = qx2012(1 - G22)"
5.2. The resulting q.2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the formula above, starting at the 2012 period table rate.
5.3. For example, for a male age 30, q_2012 = 0.741. qx2013= 0.741 * (1 - 0.010) 1 = 0.73359, which is rounded to 0.734. qx2014= 0.741 * (1 - 0.010) 2 = 0.7262541, which is rounded to 0.726.
5.4. A method leading to incorrect rounding would be to calculate qx2014 as qx2013 * (1 - 0.010), or 0.734 * 0.99 = 0.727.
5.5. It is incorrect to use the already rounded q_2013 to calculate qx2014. ### §114-45-6. Group Annuity or Pure Endowment Contracts.
6.1. Except as provided in subsections 6.2 and 6.3 of this section, the 1983 GAM Table, the 1983 Table "a," and the 1994 GAR Table are recognized and approved as group annuity mortality tables for valuation and, at the option of the life insurance company or fraternal benefit society, any one of these tables may be used for purposes of valuation for any annuity or pure endowment purchased on or after April 6, 1977 under a group annuity or pure endowment contract.
6.2. Except as provided in subsection 6.3 of this section, either the 1983 GAM Table or the 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after January 1, 1997 under a group annuity or pure endowment contract.
6.3. The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after April 1, 1999 under a group annuity or pure endowment contract. ### §114-45-7. Application of the 1994 GAR Table.
7.1. In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follows: qx 1994+n = qx 1994(1 - AA2)" where the qx 1994 and AA,s are as specified in the 1994 GAR Table. ## APPENDIX I 2012 IAM Period Table Female, Age Nearest Birthday 1000 · qx 2012 1.621 0.300 3.460 88.377 0.405 0.321 3.916 97.491 0.259 0.338 4.409 107.269 0.179 0.351 4.933 118.201 0.137 0.365 5.507 130.969 0.125 0.381 6.146 146.449 0.117 0.402 6.551 163.908 0.110 0.429 7.039 179.695 0.095 0.463 7.628 196.151 0.088 0.504 8.311 213.150 0.085 0.552 9.074 230.722 0.086 0.600 9.910 251.505 0.094 0.650 10.827 273.007 0.108 0.697 11.839 295.086 0.131 0.740 12.974 317.591 0.156 0.780 14.282 340.362 0.179 0.825 15.799 362.371 0.198 0.885 17.550 384.113 0.211 0.964 19.582 0.221 1.051 21.970 0.228 1.308 24.821 0.234 1.308 28.351 0.240 1.460 32.509 0.245 1.613 37.329 0.247 1.774 42.830 0.250 1.950 48.997 0.256 2.154 55.774 0.261 2.399 63.140 0.270 2.700 71.066 0.281 3.054 79.502 1000.000
APPENDIX II 2012 IAM Period Table Male, Age Nearest Birthday 1000 9x 2012 1000 . q 2012 1.605 0.741 5.096 109.993 0.401 0.751 5.614 123.119 0.275 0.754 6.169 137.168 0.229 6.759 152.171 0.174 7.398 168.194 0.168 8.106 185.260 0.165 8.548 197.322 0.159 9.076 214.751 0.143 9.708 232.507 0.129 0.800 10.463 250.397 0.113 0.859 11.357 268.607 0.111 0.926 12.418 290.016 0.132 0.999 13.675 311.849 0.169 1.069 15.150 333.962 0.213 1.142 16.860 356.207 0.254 1.219 18.815 380.000 0.293 1.318 21.031 0.328 1.454 23.540 0.359 1.627 26.375 0.387 1.829 29.572 0.414 2.057 33.234 0.443 2.302 37.533 0.473 2.545 42.261 0.513 2.779 47.441 0.554 3.011 53.233 0.602 3.254 59.855 0.655 3.529 67.514 0.688 3.845 76.340 0.710 4.213 86.388 0.727 4.631 97.634 1000.000
APPENDIX III Projection Scale G2 Female, Age Nearest Birthday 0.006 0.006 0.005 0.005 0.003 0.003 0.001 0.001 107. 0.009 0.008 0.007 0.007
APPENDIX IV Projection Scale G2 Male, Age Nearest Birthday 0.007 0.007 0.006 0.005 0.005 0.003 0.003 0.001 0.001 0.014 0.000. 0.000. 0.014 0.009 0.014 0.009 0.008
Series 46 Filing Procedures For Health Maintenance Organizations
W. Va. Code R. § 114-46-1 General
1.1. Scope. -- This rule applies to all persons or entities which are licensed or which may be required to be licensed pursuant to the provisions of W. Va. Code '33-25A-1 et seq.
1.2. Authority. -- W. Va. Code ''33-25A-3, 12, 15, 20 and 22.
1.3. Filing Date. -- April 2, 1996.
1.4. Effective Date. -- April 2, 1996.
W. Va. Code R. § 114-46-2 Application for Certificate of Authority
2.1. Each application for a certificate of authority submitted by a health maintenance organization shall be in the format described on a form provided by the Insurance Commissioner.
2.2. Each application shall be verified by an officer or authorized representative of the applicant.
2.3. Each application shall set forth or be accompanied by:
a. The applicant=s name; trade name, if any; address and telephone number; name, address and telephone number of attorney or principal filing the application;
b. A copy of the applicant=s basic organizational document, and any amendments, stamped with the date of filing, together with:
A. An original certificate issued by the Secretary of State of the state under whose laws the applicant is organized, certifying that the attached organizational document is a true and correct copy of the original filed in the Secretary of State=s office;
B. A copy of the stock certificate(s) issued by the applicant, together with a listing of capital (par value per share) and surplus (per share contribution in excess of par value); and C. A description of the applicant=s legal history in chronological order, including predecessor corporations or organizations, mergers, reorganizations and changes of ownership, the dates thereof and the parties involved;
c. The applicant=s bylaws, rules, regulations or similar form of document regulating the conduct of the applicant=s affairs;
d. A list of the names, addresses and official positions of all persons responsible for the conduct of the applicant=s affairs, including all officers, members of the applicant=s board of directors or other governing body and persons owning five percent (5%) or more of the applicant. The list shall contain:
A. A full disclosure of any financial interest in the health maintenance organization held by (a). any officer or member of the governing body;
(b). any provider, as defined in W. Va. Code '33-25A-2(18); or (c). any organization or corporation owned or controlled by an officer or member of the governing body or by a provider;
B. A full disclosure, by any person owning five percent (5%) or more of the applicant, of the extent of that person=s ownership interest in all parent organizations, subsidiaries and affiliated organizations of the applicant, together with an organizational chart depicting all levels of ownership of the applicant and its parent organizations, subsidiaries and affiliated organizations;
C. The extent and nature of any contract or financial arrangements between an officer or member of the governing body or a provider and the health maintenance organization;
D. A completed ABiographical Statement and Affidavit@ on a form provided by the Insurance Commissioner, for each officer, director, manager and administrator of the applicant, including, but not limited to, the applicant=s executive director, medical director, finance director and marketing director, and for each person owning five percent (5%) or more of the applicant; and E. An independent investigation report on each individual reported under paragraph D of this subdivision must be submitted by an independent investigator, which has been approved in writing by the Insurance Commissioner, directly to:
Financial Conditions Division West Virginia Insurance Commissioner P.O. Box 50540 Charleston WV 25305-0540;
e. A description of the applicant, including:
A. Whether it is or will be organized for profit or not for profit;
B. Whether it is or will be a Astaff model@, Aindividual practice arrangement model@ or Acombination model@ health maintenance organization;
C. The method of compensation (fee for service, capitated basis, etc.) for providers; and D. A statement describing the service area or areas and the type or types of enrollees to be served by the applicant;
f. A copy of contract forms used by the applicant, including:
A. Each health maintenance contract form, including but not limited to contracts with affiliates, administrative contracts and external service contracts;
B. Each evidence of coverage form;
C. Member handbook(s) to be offered to enrollees, showing benefits to which enrollees will be entitled together with any riders and endorsements;
D. Each type of provider contract, which must hold harmless all enrollees and otherwise comply with W. Va. Code '33-25A-7a;
E. Each enrollee contract form; and F. An alphabetical list of all providers with whom the applicant has contracted for services, sorted by county and by specialty, and corresponding signature page(s) from each executed provider contract, sorted alphabetically, by county and by specialty;
g. A description of the applicant=s enrollee grievance procedure, including all formal and informal steps for resolving grievances;
h. The applicant=s financial statements, including:
A. Assets, liabilities and sources of financial support of the applicant and any corporation or organization owned or controlled by the applicant, evidencing adequate funding to meet continuously the minimum capital and surplus requirements required by W. Va. Code '33-25A-4(2)(c)(ii);
B. Monthly pro forma financial statements including a balance sheet, income statement and cash flow analysis, with annual totals, for the greater of three (3) years or until the applicant is projected to be profitable for twelve (12) consecutive months, on a statutory accounting principal basis with documentation of all assumptions used and income, expense and capital items projected;
C. A proposed initial cash and cash reserves summary, including loan receipts, loan repayments, stock sales, etc., and describing all sources and terms of funding; an independently certified, audited financial statement must be submitted for each guarantor;
D. A declaration that all investments have been valued for asset purposes on a basis currently approved by the National Association of Insurance Commissioners (NAIC), or, if any investments have not been so valued, a description of each investment and its basis of value shown on the AAsset Page@ of the balance sheet;
E. The applicant=s proposed methods for limiting its financial risk, including:
(a). If the applicant has secured reinsurance coverage, an executed copy of each applicable policy, together with each reinsurance agreement and any modification(s); and (b). Any risk sharing with providers or other parties, referencing the applicable sections of any provider contracts that demonstrate risk sharing;
F. A completed AFidelity Bond Worksheet@ on a form provided by the Insurance Commissioner and copy of the applicant=s fidelity bond in the amount prescribed by the worksheet; and G. A description and documentation of the applicant=s arrangements to guarantee the continuation of benefits to enrollees and payments to providers for services rendered either prior to or after insolvency, for the duration of the enrollee=s contract period for which payment has been made or until the discharge of an enrollee from an inpatient facility in which the enrollee is confined on the date of the applicant=s insolvency;
i. The applicant=s proposed marketing plan, including:
A. Marketing strategy for each major enrollment category (group, individual, PEIA, Medicare, Medicaid), including:
(a). Criteria for selection of primary and secondary targets;
(b). Use of underwriting guidelines; and (c). Plans for community education and public relations;
B. Proposed charges for each enrollment category; and C. A detailed marketing budget covering projected income, expenses and other sources of future capital for the greater of three (3) years or until the applicant is projected to be profitable for twelve (12) consecutive months:
(a). The marketing budget shall cover each major category of enrollment identified in the applicant's marketing strategy and shall include, but not be limited to, compensation, local and out-of-town travel, equipment, printing and postage, advertising and public relations, expense accounts and meeting costs and publications, if applicable;
j. If the applicant is not domiciled in West Virginia, a power of attorney duly executed by the applicant, appointing the commissioner and his or her successors in office and duly authorized deputies as the true and lawful attorney of the applicant in and for this State upon whom all lawful process in any legal action or proceeding against the applicant on a cause of action arising in this State may be served;
k. A description of the mechanism by which enrollees will be afforded an opportunity to participate in matters of the applicant=s policies and operation;
l. A comprehensive feasibility study performed by a qualified independent actuary in conjunction with a certified public accountant:
A. The study shall include a certification by the actuary and an opinion by the certified public accountant as to the proposed organization=s feasibility;
B. The study shall be for the greater of three years or until the applicant is projected to be profitable for twelve (12) consecutive months;
C. The study must show that the applicant would not, at the end of any month of the projection period, have less than the minimum capital and surplus required by W. Va. Code '33-25A-4(2)(c)(ii);
D. The actuary shall certify that:
(a). The rates are neither inadequate nor excessive nor unfairly discriminatory;
(b). The rates are appropriate for the classes of risks for which they have been computed;
(c). The rating methodology is appropriate, provided that the certification shall include an adequate description of the rating methodology showing that the methodology follows consistent and equitable actuarial principles;
(d). The applicant is actuarially sound, provided that the certification shall consider the rates, benefits and expenses of, and any other funds available for the payment of obligations of, the applicant;
(e). The rates being charged or to be charged are actuarially adequate to the end of the period for which rates have been guaranteed; and (f). Incurred but not reported claims and claims reported but not fully paid have been adequately provided for;
E. The applicant must send a copy of the study, for information only, to:
Rates and Forms Division West Virginia Insurance Commissioner P.O. Box 50540 Charleston WV 25305-0540 The submission of a copy of the study does not constitute an official filing of the applicant=s rates and forms;
m. A description of assumptions underlying enrollment projections, including:
A. A projection of enrollment for the greater of three (3) years or until the applicant is projected to be profitable for twelve (12) consecutive months, on a statutory accounting principles basis;
B. The number of eligible persons residing within the proposed service area;
C. Contract size assumptions (contract distribution and content);
D. Penetration assumptions and rationale, including initial and re-enrollments;
E. An allowance for involuntary/voluntary disenrollment and group contract additions during each year;
F. Month and year when applicant first reports income equal to all expenses and enrollment on that date; and G. A plan for emergency and out-of-area health care.
n. A description of competition, including:
A. Identification of the applicant=s competitors operating in applicant=s proposed geographic service area; and B. Major differences between the applicant and competitors operating in applicant=s proposed geographic service area; and o. Notarized acknowledgments, which may be submitted on the AAcknowledgment and Waiver of Chief Executive Officer on Behalf of HMO Applicant@ form provided by the Insurance Commissioner:
A. That a delinquency proceeding pursuant to W. Va. Code '33-10-1 et seq., or supervision by the Insurance Commissioner pursuant to W. Va. Code '33-34-1 et seq., constitutes the sole and exclusive method for the liquidation, rehabilitation, reorganization or conservation, respectively, of a health maintenance organization;
B. That the applicant waives any right to file or be subject to, as a debtor, any federal bankruptcy proceeding; and C. That the applicant=s chief executive officer has read and understands his or her obligations under W. Va. Code '33-35-1 et seq., which imposes criminal sanctions for the failure to report to the Insurance Commissioner an impairment of the health maintenance organization;
p. Acknowledgment on a form provided by the Insurance Commissioner that once licensed, the applicant will observe the resident agent=s law of West Virginia, including the countersignature and other requirements of W. Va. Code '33-12-1 et seq.;
q. A description of the applicant=s arrangements for ongoing evaluation of its quality of health care;
r. The applicant=s procedure for development, compilation, evaluation and reporting of statistics relating to the cost of its operations, availability and accessibility of its services, the pattern of utilization of its services and the quality of health care provided; and s. Such other information as the commissioner may request during review of the application.
2.4. The applicant must file an original application and two copies with:
West Virginia Insurance Commissioner P.O. Box 50540 Charleston, WV 25305-0540
2.5. The application must be accompanied by a completed AHealth Maintenance Organization Application for a Certificate of Authority Filing Fee Remittance Form" provided by the Insurance Commissioner and a check in the amount of two hundred dollars ($200.00) payable to the AWest Virginia Insurance Commissioner@.
2.6. The applicant must mail one copy of the application, together with copies of all related correspondence with the West Virginia Insurance Commission, to:
General Counsel Health Care Cost Review Authority 100 Dee Dr., Suite 201 Charleston WV 25311-1692
2.7. Prior to the issuance of a certificate of authority, the Financial Conditions Division will contact the applicant to initiate the depositing of cash or government securities with the state treasurer pursuant to West Virginia Code ' 33-25A-4(2)(h).
2.8. Either before or after receiving a certificate of authority, the applicant must provide amended versions of the documents required by subparagraphs 2.3.d, D and E of this rule to the Insurance Commissioner within thirty (30) days of any change in the individuals referred to in those subsections.
W. Va. Code R. § 114-46-3 Application for Amendment to Certificate of Authority
3.1. Each application for an amendment to a health maintenance organization=s certificate of authority must be accompanied by a completed AApplication for Amendment to Certificate of Authority Filing Fee Remittance Form@ provided by the Insurance Commissioner and a check in the amount of two hundred dollars ($200.00) payable to the AWest Virginia Insurance Commissioner.@
W. Va. Code R. § 114-46-4 Annual Financial Statement
4.1. Each annual financial statement submitted by a health maintenance organization to the commissioner shall include, but not be limited to:
a. A financial statement on a West Virginia statutory accounting basis of the organization, including its balance sheet and receipts and disbursements for the preceding year certified by an independent certified public accountant, reflecting at least (i) all prepayment and other payments received for health care services rendered; (ii) expenditures to all providers, by classes or groups of providers, and insurance companies or nonprofit health service plan corporations engaged to fulfill obligations arising out of the health maintenance contract; and (iii) expenditures for capital improvements, or additions thereto, including, but not limited to, construction, renovation or purchase of facilities and capital equipment;
b. The number of new enrollees enrolled during the year, the number of enrollees as of the end of the year and the number of enrollees terminated during the year, using the AHealth Maintenance Organization County Enrollment Worksheet Form@ provided by the Insurance Commissioner;
c. A summary of information compiled in such form as may be required by the West Virginia department of health and human resources or other accredited entity, relating to the cost of the health maintenance organization=s operations, the pattern of utilization of its services and the quality, availability and accessibility of its services;
d. report of the names and residence addresses of all persons responsible for the conduct of the health maintenance organization=s affairs, including all officers of the health maintenance organization, members of its board of directors or other governing body, providers and persons owning five percent (5%) or more of the health maintenance organization, who were associated with the health maintenance organization during the preceding year, and the amount of wages, expense reimbursements, or other payments to those individuals for services to the health maintenance organization, including a full disclosure of any contract or financial arrangement between that person and the health maintenance organization during the preceding year; and e. uch other information relating to the health maintenance organization as the commissioner may request during review of the financial statement.
W. Va. Code R. § 114-46-5 Grievance Procedure Annual Report
5.1. Each health maintenance organization shall file an annual report on its grievance procedure, using the AHMO Grievance Report for the Year A Form provided by the Insurance Commissioner to describe its grievance procedure and to report actual grievances filed against the health maintenance organization, their disposition and their underlying causes.
W. Va. Code R. § 114-46-6 Regulation of Marketing
6.1. After a subscriber signs an enrollment application and before the health maintenance organization may process the application changing or initiating the subscriber coverage, the health maintenance organization must verify the intent and desire of the individual to join the health maintenance organization.
a. The verification must be in writing and must be conducted by someone outside the health maintenance organization=s marketing department.
b. Each verification, using the Subscriber Verification Form provided by the Insurance Commissioner, shall confirm that:
A. The subscriber intends and desires to join the health maintenance organization;
B. If the subscriber is a Medicare or Medicaid recipient, the subscriber understands that, by joining the health maintenance organization, he or she will be limited to the benefits provided by the health maintenance organization, and Medicare or Medicaid will pay the health maintenance organization for the subscriber coverage;
C. The subscriber understands the applicable restrictions of health maintenance organizations, especially that he or she must use the health maintenance organization providers and secure approval from the health maintenance organization to use health care providers outside the plan; and D. If the subscriber is enrolled as a member of a health maintenance organization, the subscriber understands that he or she is transferring to another health maintenance organization.
6.2. The health maintenance organization shall not pay a commission, fee, money or any other form of scheduled compensation to any health insurance agent until verification from the subscriber of his or her intent and desire to enroll in the health maintenance organization has been secured and the enrollment process has been completed:
a. The health maintenance organization shall verify the subscriber=s intent to enroll by a written notice to the subscriber, using the Subscriber Confirmation Form provided by the Insurance Commissioner:
A. The Subscriber Confirmation Form shall state that the subscriber has transferred from his or her existing coverage to the new health maintenance organization;
B. The Subscriber Confirmation Form shall be accompanied by printed materials explaining the nature of the health maintenance organization and any applicable restrictions and exclusions; and C. The Subscriber Confirmation Form shall state the subscriber=s enrollment date and when benefits will begin; and b. The enrollment process shall be considered complete seven (7) days after the health maintenance organization mails the Subscriber Confirmation Form and all attachments to the subscriber.
114CSR46
Series 48 Life And Health Reinsurance Agreements
W. Va. Code R. § 114-48-1 General
1.1. Scope. -- This rule shall apply to all domestic life and accident and sickness insurers and to all other licensed life and accident and sickness insurers which are not subject to a substantially similar rule in their domiciliary state. This rule shall also similarly apply to licensed property and casualty insurers with respect to their accident and sickness business. This rule shall not apply to assumption reinsurance, yearly renewable term reinsurance or certain nonproportional reinsurance such as stop loss or catastrophe reinsurance.
1.2. Authority. -- This rule is issued under the authority of W. Va. Code ''33-4-15b(h) and 33-2-10.
1.3. Filing Date. -- May 16, 1997.
1.4. Effective Date. -- May 16, 1997.
W. Va. Code R. § 114-48-2 Preamble
2.1. The West Virginia Insurance commissioner recognizes that licensed insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to surplus.
2.2. However, it is improper for a licensed insurer, in the capacity of ceding insurer, to enter into reinsurance agreements for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured. In substance or effect, the expected potential liability to the ceding insurer remains basically unchanged by the reinsurance transaction, notwithstanding certain risk elements in the reinsurance agreement, such as catastrophic mortality or extraordinary survival. The terms of such agreements referred to herein and described in section 3 of this rule violate:
a. W. Va. Code '33-4-14(a), relating to financial statements which do not properly reflect the financial condition of the ceding insurer;
b. W. Va. Code '33-4-15(c), relating to reinsurance reserve credits, thus resulting in a ceding insurer improperly reducing liabilities or establishing assets for reinsurance ceded; and c. W. Va. Code ' 33-10-5(j), relating to creating a situation that may be hazardous to policyholders and the people of this state.
W. Va. Code R. § 114-48-3 Accounting Requirements
3.1. No insurer subject to this rule shall, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the commissioner if, by the terms of the reinsurance agreement, in substance or effect, any of the following conditions exist.
a. Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period, are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion of the business reinsured, unless a liability is established for the present value of the shortfall (using assumptions equal to the applicable statutory reserve basis on the business reinsured). Those expenses include commissions, premium taxes and direct expenses including, but not limited to, billing, valuation, claims and maintenance expected by the company at the time the business is reinsured.
b. The ceding insurer can be deprived of surplus or assets at the reinsurer's option or automatically upon the occurrence of some event, such as the insolvency of the ceding insurer, except that termination of the reinsurance agreement by the reinsurer for nonpayment of reinsurance premiums or other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements, shall not be considered to be such a deprivation of surplus or assets.
c. The ceding insurer is required to reimburse the reinsurer for negative experience under the reinsurance agreement, except that neither offsetting experience refunds against current and prior years' losses under the agreement nor payment by the ceding insurer of an amount equal to the current and prior years' losses under the agreement upon voluntary termination of in force reinsurance by the ceding insurer shall be considered such a reimbursement to the reinsurer for negative experience. Voluntary termination does not include situations where termination occurs because of unreasonable provisions which allow the reinsurer to reduce its risk under the agreement. An example of such a provision is the right of the reinsurer to increase reinsurance premiums or risk and expense charges to excessive levels forcing the ceding company to prematurely terminate the reinsurance treaty.
d. The ceding insurer must, at specific points in time scheduled in the agreement, terminate or automatically recapture all or part of the reinsurance ceded.
e. The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts other than from income realized from the reinsured policies. For example, it is improper for a ceding company to pay reinsurance premiums, or other fees or charges to a reinsurer which are greater than the direct premiums collected by the ceding company.
f. The treaty does not transfer all of the significant risk inherent in the business being reinsured. Table 114-48A identifies, for a representative sampling of products or type of business, the risks which are considered to be significant. For products not specifically included, the risks determined to be significant shall be consistent with this table.
- The risk categories indicated in Table 114-48A are as follows.
A. Morbidity.
B. Mortality.
C. Lapse -- This is the risk that a policy will voluntarily terminate prior to the recoupment of a statutory surplus strain experienced at issue of the policy.
D. Credit Quality (C1) -- This is the risk that invested assets supporting the reinsured business will decrease in value. The main hazards are that assets will default or that there will be a decrease in earning power. It excludes market value declines due to changes in interest rate.
E. Reinvestment (C3) -- This is the risk that interest rates will fall and funds reinvested (coupon payments or monies received upon asset maturity or call) will therefore earn less than expected. If asset durations are less than liability durations, the mismatch will increase.
F. Disintermediation (C3) -- This is the risk that interest rates rise and policy loans and surrenders increase or maturing contracts do not renew at anticipated rates of renewal. If asset durations are greater than the liability durations, the mismatch will increase. Policyholders will move their funds into new products offering higher rates. The company may have to sell assets at a loss to provide for these withdrawals.
g. The credit quality, reinvestment, or disintermediation risk is significant for the business reinsured and the ceding company does not (other than for the classes of business excepted in paragraph 1 of subdivision g of this subsection) either transfer the underlying assets to the reinsurer or legally segregate such assets in a trust or escrow account or otherwise establish a mechanism satisfactory to the commissioner which legally segregates, by contract or contract provision, the underlying assets.
- Notwithstanding the requirements of subdivision g of this subsection, the assets supporting the reserves for the following classes of business and any classes of business which do not have a significant credit quality, reinvestment or disintermediation risk may be held by the ceding company without segregation of such assets:
A. Health insurance - LTC/LTD B. Traditional non-par permanent C. Traditional par permanent D. Adjustable premium permanent E. Indeterminate premium permanent F. Universal life fixed premium (no dump-in premiums allowed)
- The associated formula for determining the reserve interest rate adjustment must use a formula which reflects the ceding company's investment earnings and incorporates all realized and unrealized gains and losses reflected in the statutory statement. The following is an acceptable formula:
Rate = 2 (I + CG)
X + Y - I - CG
Where: I is the net investment income CG is capital gains less capital losses X is the current year cash and invested assets plus investment income due and accrued less borrowed money Y is the same as X but for the prior year h. Settlements are made less frequently than quarterly or payments due from the reinsurer are not made in cash within ninety (90) days of the settlement date.
i. The ceding insurer is required to make representations or warranties not reasonably related to the business being reinsured.
j. The ceding insurer is required to make representations or warranties about future performance of the business being reinsured.
k. The reinsurance agreement is entered into for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business reinsured and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged.
3.2. Notwithstanding subsection 3.1 of this rule, an insurer subject to this rule may, with the prior approval of the commissioner, take such reserve credit or establish such asset as the commissioner may deem consistent with applicable insurance statutes and rules, including actuarial interpretations or standards adopted by the commissioner.
3.3. Agreements entered into after the effective date of this rule which involve the reinsurance of business issued prior to the effective date of the agreements, along with any subsequent amendments thereto, shall be filed by the ceding company with the commissioner within thirty (30) days from its date of execution. Each filing shall include data detailing the financial impact of the transaction. The ceding insurer's actuary who signs the financial statement actuarial opinion with respect to valuation of reserves shall consider this rule and any applicable actuarial standards of practice when determining the proper credit in financial statements filed with the commissioner. The actuary should maintain adequate documentation and be prepared upon request to describe the actuarial work performed for inclusion in the financial statements and to demonstrate that such work conforms to this rule.
3.4. Any increase in surplus net of federal income tax resulting from arrangements described in subsection 3.3 of this rule, shall be identified separately on the insurer's statutory financial statement as a surplus item (aggregate write-ins for gains and losses in surplus in the Capital and Surplus account) and recognition of the surplus increase as income shall be reflected on a net of tax basis in the "Reinsurance ceded" line as earnings emerge from the business reinsured.
a. (Example.) On the last day of calendar year N, company XYZ pays a $20 million initial commission and expense allowance to company ABC for reinsuring an existing block of business. Assuming a 34% tax rate, the net increase in surplus at inception is $13.2 million ($20 million - $6.8 million) which is reported on the "Aggregate write-ins for gains and losses in surplus" line in the Capital and Surplus account. $6.8 million (34% of $20 million) is reported as income on the "Commissions and expense allowances on reinsurance ceded" line of the Summary of Operations. At the end of year N+1 the business has earned $4 million. ABC has paid $.5 million in profit and risk charges in arrears for the year and has received a $1 million experience refund. Company ABC's annual statement would report $1.65 million (66% of ($4 million - $1 million - $.5 million) up to a maximum of $13.2 million) on the "Commissions and expense allowance on reinsurance ceded" line of the Summary of Operations, and -$1.65 million on the "Aggregate write-ins for gains and losses in surplus" line of the Capital and Surplus account. The experience refund would be reported separately as a miscellaneous income item in the Summary of Operations.
W. Va. Code R. § 114-48-4 Written Agreements
4.1. No reinsurance agreement or amendment to any agreement may be used to reduce any liability or to establish any asset in any financial statement filed with the commissioner unless the agreement, amendment or a binding letter of intent has been duly executed by both parties no later than the "as of date" of the financial statement.
4.2. In the case of a letter of intent, a reinsurance agreement or an amendment to a reinsurance agreement must be executed within a reasonable period of time, not exceeding ninety (90) days from the execution date of the letter of intent, in order for credit to be granted for the reinsurance ceded.
4.3. The reinsurance agreement shall contain provisions which provide that:
a. The agreement shall constitute the entire agreement between the parties with respect to the business being reinsured thereunder and that there are no understandings between the parties other than as expressed in the agreement; and b. Any change or modification to the agreement shall be null and void unless made by amendment to the agreement and signed by both parties.
W. Va. Code R. § 114-48-5 Existing Agreements
Insurers subject to this rule shall reduce to zero by December 31, 1998 any reserve credits or assets established with respect to reinsurance agreements entered into prior to the effective date of this rule which, under the provisions of this rule would not be entitled to recognition of the reserve credits or assets; provided, however, that the reinsurance agreements shall have been in compliance with laws or rules in existence immediately preceding the effective date of this rule.
W. Va. Code R. § 114-48-6 Severability
If any provision of this rule, or their application to any person or circumstance, is held invalid, that determination shall not affect other provisions or applications of this rule which can be given effect without the invalid provision or application, and to that end the provisions of this rule are separable.
TABLE 114-48A
Product Risk category A B C D E F Health Insurance - other than LTC/LTD* + 0 + 0 0 0 Health Insurance - LTC/LTD* + 0 + + + 0 Immediate Annuities 0 + 0 + + 0 Single Premium Deferred Annuities 0 0 + + + + Flexible Premium Deferred Annuities 0 0 + + + + Guaranteed Interest Contracts 0 0 0 + + + Other Annuity Deposit Business 0 0 + + + + Single Premium Whole Life 0 + + + + + Traditional Non-Par Permanent 0 + + + + + Traditional Non-Par Term 0 + + 0 0 0 Traditional Par Permanent 0 + + + + + Traditional Par Term 0 + + 0 0 0 Adjustable Premium Permanent 0 + + + + + Indeterminate Premium Permanent 0 + + + + + Universal Life Flexible Premium 0 + + + + + Universal Life Fixed Premium 0 + + + + + Universal Life Fixed Premium 0 + + + + + dump-in premiums allowed *LTC = Long Term Care Insurance; LTD = Long Term Disability Insurance + - Significant 0 - Insignificant 114CSSR48
Series 53 Quality Assurance
W. Va. Code R. § 114-53-1 General
1.1. Scope. -- The purpose of this rule is to set forth standards for quality assurance programs established as a component of a health maintenance organization’s overall structure.
1.2. Authority. -- W. Va. Code §§33-2-10, 33-25A-4(1)(b), and 33-25A-17a.
1.3. Filing Date. -- April 3, 2003.
1.4. Effective Date. -- April 3, 2003.
W. Va. Code R. § 114-53-2 Definitions
2.1. “Accountability” means the responsibility of a department or individual for achieving defined goals.
2.2. “Appropriateness” means the extent to which a particular procedure, treatment, test or service is clearly indicated, not excessive, adequate in quantity and provided in the setting best suited to the patient’s/member’s needs.
2.3. “Commissioner” means the West Virginia Insurance Commissioner.
2.4. “Clinician” means a state-recognized provider including but not limited to physicians, psychologists and psychiatrists who specialize in clinical studies or practice.
2.5. “Credentialing” means the process by which a health maintenance organization authorizes, contracts with or employs clinicians, who are licensed to practice independently, to provide services to its members. 2.6 “DEA” means Drug Enforcement Administration, the Federal agency that issues licenses to prescribe and dispense scheduled drugs.
2.7. “Delegation” or “delegated” means the formal process by which a health maintenance organization gives a contractor the authority to perform certain functions on its behalf, such as credentialing, utilization review and quality assurance. A health maintenance organization can delegate the authority to perform a function but cannot delegate the responsibility for assuring the function is performed properly.
2.8. “Governing body” means an individual, group or agency with the ultimate authority and responsibility for the overall operation of the organization. 2.9 “Health care services” means any services or goods included in the furnishing to any individual of medical, mental or dental care, or hospitalization, osteopathic services, chiropractic services, podiatric services, home health, health education, or rehabilitation, as well as the furnishing to any person of any and all other services or goods for the purpose of preventing, alleviating, curing or healing human illness or injury.
2.10. “Health maintenance organization” or “HMO” means a public or private organization which provides, or otherwise makes available to enrollees, health care services, including at a minimum basic health care services, which:
a. Receives premiums for the provision of basic health care services to enrollees on a prepaid per capita or prepaid aggregate fixed sum basis, excluding copayments;
b. Primarily provides physicians’ services:
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Directly through physicians who are either employees or partners of the organization;
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Through arrangements with individual physicians or one or more groups of physicians organized on a group practice or individual practice arrangement; or 3. Through some combination of paragraphs one and two of this subdivision;
c. Assures the availability, accessibility and quality including appropriate utilization of the health care services that it provides or makes available through clearly identifiable focal points of legal and administrative responsibility; and d. Offers services through an organized delivery system, in which a primary care physician is designated for each subscriber upon enrollment. The primary care physician is responsible for coordinating the health care of the subscriber and is responsible for referring the subscriber to other providers when necessary: Provided, that when dental care is provided by the health maintenance organization the dentist selected by the subscriber from the list provided by the health maintenance organization shall coordinate the covered dental care of the subscriber, as approved by the primary care physician or the health maintenance organization.
2.11. “Medical record” means the record in which clinical information relating to the provision of physical, social and mental health services is recorded and stored.
2.12. “Member,” “subscriber” or “enrollee” means an individual who has been voluntarily enrolled in a health maintenance organization, including individuals on whose behalf a contractual arrangement has been entered into with a health maintenance organization to receive health care services.
2.13. “Oversight” means the monitoring and direction of a set of activities by individuals responsible for the execution of the activities resulting in the achievement of desired outcomes.
2.14. “Practice guidelines” or “protocols” means systematically developed statements to assist patient and practitioner decisions about appropriate health care for specific clinical circumstances. Practice guidelines are usually based on such authoritative sources as clinical literature and expert consensus.
2.15. “Provider” means any physician, hospital, or other person or organization which is licensed or otherwise authorized in this state to furnish health care services.
2.16. “Quality assurance” means an ongoing program designed to objectively and systematically monitor and evaluate the quality and appropriateness of the enrollee’s care, pursue opportunities to improve the enrollee’s care and to resolve identified problems at the prevailing professional standard of care.
2.17. “Quality assurance work plan” means an annual plan that describes with timeliness the specific planned quality assurance activities that will be carried out within the quality assurance program.
2.18. “Quality of care” means the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.
W. Va. Code R. § 114-53-3 Goals of a Quality Assurance Program
3.1. The goals of a health maintenance organization’s quality assurance program shall be to:
a. Assure the provision of appropriate medical services delivered to members, while simultaneously addressing the effectiveness of quality of care;
b. Monitor, evaluate and improve the quality of health care;
c. Provide a systematic process that promotes the delivery of medically appropriate care in a timely, effective and efficient manner, while maintaining the quality of health care;
d. Direct members and providers toward the goal of quality, cost effective health care.
3.2. A health maintenance organization’s quality assurance program shall include a mechanism for identifying potential utilization management issues and linking them to the HMO’s utilization management program.
W. Va. Code R. § 114-53-4 Requirements of a Quality Assurance Program
4.1. A health maintenance organization shall develop a quality assurance program which adheres to all applicable state and federal laws, federal regulations and state rules.
a. A health maintenance organization that has obtained full accreditation or equal status from a nationally recognized accreditation and review organization approved by the commissioner pursuant to W. Va. Code §33-25A-17a is deemed to be in compliance with this rule. If, at any time subsequent to the granting of full accreditation or equal status by a nationally recognized accreditation and review organization, the commissioner determines that the quality assurance program of the health maintenance organization has become deficient in any significant area, the commissioner, in addition to other remedies available, may establish a corrective action plan that the HMO must follow as a condition to the issuance or maintenance of a certificate of authority.
4.2. Each application for a certificate of authority or renewal thereof filed with the commissioner pursuant to the Health Maintenance Organization Act, W. Va. Code §§33-25A-1 et seq., shall be accompanied by a description of a health maintenance organization’s quality assurance program, which shall include, but not be limited to, the requirements of the quality assurance program set forth in this rule. The HMO’s quality assurance program may be inspected by providers, enrollees or their agents at the offices of the commissioner pursuant to the provisions of the West Virginia Freedom of Information Act, W.Va. Code §§29B-1-1 et seq.
a. Pursuant to the requirements of W. Va. Code §33-25A-3, a health maintenance organization shall file notice with the commissioner prior to any modification of the quality assurance program.
4.3. A health maintenance organization shall have a program for quality assurance which clearly defines the structure, design and responsibilities of both delegated and non-delegated activities.
a. The basic components of the quality assurance program shall include:
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Organizational arrangements and responsibilities for quality management and improvement processes;
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A documented utilization review program;
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Written policies and procedures for credentialing and recredentialing physicians and other licensed providers;
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A written policy addressing members’ rights and responsibilities; and 5. The adoption of practice guidelines for the use of preventive health services.
b. Utilization management rules contained in 114 CSR 51 shall be incorporated in and made a part of this rule.
4.4. If a health maintenance organization delegates any quality assurance activity to contractors, there shall be evidence of oversight and auditing of the contracted activity.
a. The HMO shall maintain a written description of the delegated activities, the contractor’s accountability for the activities, the frequency of reporting to the HMO, the process by which the delegation will be evaluated and the remedies available, including revocation of delegation, if the contractor does not fulfill its obligations.
b. The HMO shall maintain evidence of its regular evaluation and approval of the delegated activities by the contractor.
c. The HMO shall be responsible for monitoring the activities of the contractor to which it delegates quality assurance activities and for ensuring that the requirements of this rule are met.
4.5. No health maintenance organization may place restrictions upon any provider or upon any primary care physician which would serve to limit the communication of medical advice or options available to the member, subscriber or enrollee or would act in any way to limit the communication between the provider or physician and his or her patient. An HMO may not prevent any provider from advising an enrollee whether or not a treatment is covered by the plan.
a. No health maintenance organization may provide to any provider or any primary care physician an incentive or disincentive plan that includes specific payment made directly or indirectly, in any form, to the provider or primary care physician as an inducement to deny, release, limit, or delay specific, medically necessary and appropriate services provided with respect to a specific enrollee or groups of enrollees with similar medical conditions.
4.6. Data or information pertaining to the diagnoses, treatment or health of a member obtained from the member or from a provider by a health maintenance organization is confidential and shall not be disclosed to any person except:
a. To the extent that it may be necessary to carry out the purposes of these rules and as allowed by state law;
b. Upon the express consent of the member;
c. Pursuant to statute or court order for the production of evidence or the discovery thereof;
d. In the event of a claim or litigation between the member and the health maintenance organization where the data or information is pertinent, regardless of whether the information is in the form of paper, preserved on microfilm, or stored in computer retrievable form.
4.7. If any data or information pertaining to the diagnosis, treatment or health of any enrollee or applicant is disclosed pursuant to the provisions of subsection 4.6, the health maintenance organization making this required disclosure shall not be liable for the disclosure or any subsequent use or misuse of the data.
W. Va. Code R. § 114-53-5 Quality Management & Improvement
5.1. Organizational arrangements and responsibilities for quality management and improvement processes shall be clearly defined and assigned to appropriate individuals.
a. There shall be a detailed written description of the program which shall be reviewed annually and updated as necessary.
b. A senior executive shall be responsible for program implementation.
c. A medical director shall be employed by the health maintenance organization and have substantial involvement in quality improvement activities.
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Upon application to and approval by the commissioner, a health maintenance organization may employ a medical director on a part-time basis during the first two years of the HMO’s operation.
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All health maintenance organizations are required to employ a full-time medical director no later than the first day of the third year of the HMO’s operation.
d. A committee shall be created to oversee quality improvement and shall include HMO providers as active participants. The committee shall keep contemporaneous written records reflecting all of its actions.
e. The role, structure and function, including frequency of meetings, of the quality improvement committee shall be specified in the program description.
f. Adequate resources including, but not limited to, personnel, analytic capabilities and data resources shall be dedicated to meet program needs.
g. A written quality improvement work plan shall be prepared annually and shall include: the objectives, scope and planned projects or activities for the year; planned monitoring of previously identified issues, including tracking of issues over time; and planned evaluation of the quality improvement program.
5.2. The quality improvement committee shall be accountable to the governing body of a health maintenance organization. The governing body shall consist of the board of directors or a committee of senior management in instances where the board’s participation with quality improvement is indirect. There must be documented evidence of a formally designated structure, accountability at the highest levels of the organization and ongoing and/or continuous oversight of quality assurance.
a. The governing body shall formally designate a subcommittee to provide oversight of quality improvement or formally decide to provide such oversight as a committee of the whole.
b. There must be written documentation that the governing body has reviewed and approved the written overall quality improvement program and the annual quality improvement work plan.
c. The governing body or designated committee shall regularly receive written reports from the quality improvement program delineating actions taken and improvements made.
d. All quality assurance information shall be considered in recredentialing, recontracting and/or annual performance evaluations.
5.3. All findings, conclusions, recommendations, actions taken, and results of actions taken as a result of the quality improvement process shall be documented and reported to the appropriate individuals and committees in the health maintenance organization and through established quality improvement standards.
a. Quality improvement activities shall be coordinated with other performance monitoring activities, including but not limited to utilization management, risk management and resolution, monitoring of member complaints and grievances, assessment of member satisfaction and medical records review.
b. Quality improvement shall be coordinated with other management functions of the health maintenance organization such as network changes, benefits redesign, medical management systems, practice feedback to providers and patient education.
5.4. Requirements to participate in quality improvement activities shall be incorporated into all provider contracts and employment agreements. Contracts shall specify that hospitals and other contractors will allow the health maintenance organization access to members’ medical records. Contracts shall also specify that the health maintenance organization allows open provider-patient communication regarding appropriate treatment alternatives and that it does not penalize the provider for discussing medically necessary or appropriate care for the patient.
5.5. The quality improvement program must be ongoing and designed to objectively and systematically monitor and evaluate the quality and appropriateness of care and service provided members and to pursue opportunities for improvements.
a. The scope of the program shall be comprehensive and shall include quality of clinical care and quality of service.
b. Members shall be afforded opportunities to participate in and offer suggestions on quality improvement.
c. A health maintenance organization shall monitor and evaluate clinical issues in institutional and non-institutional settings, primary care and major specialty services including mental health, high volume high-risk services, preventive care services, and the care of acute and chronic conditions. Such monitoring and evaluation shall reflect the population served in terms of age groups, disease categories and special risk status.
5.6. A health maintenance organization shall adopt and use practice guidelines or explicit criteria that are based on reasonable scientific evidence.
a. The guidelines shall be reviewed and updated as needed.
b. The guidelines and any updates shall be communicated in writing to all providers.
5.7. An HMO shall develop and implement mechanisms for:
a. Assessing plan and provider performance against practice guidelines;
b. Evaluating member continuity and coordination of care;
c. Detecting under- and over-utilization; and d. Assessing patient outcomes.
5.8. A health maintenance organization shall establish standards for the availability of primary care providers and access which shall include but not be limited to routine, urgent and emergency care; identification of members with chronic/high-risk illnesses and the appropriate programmatic responses; telephone appointments, advice and member service lines. The availability and access standards shall conform to the minimum requirements set by the commissioner.
5.9. A health maintenance organization shall develop indicators, a data collection system and data analysis capabilities to track quality improvement.
a. Indicators shall be objective, measurable and based on current knowledge and clinical experience and shall be used to monitor and evaluate all aspects of care and services identified.
b. An HMO shall have performance goals and/or a bench marking process for each indicator.
c. Appropriate methods and frequency of data collection shall be used for each indicator.
d. Appropriate clinicians shall be used to evaluate data on the clinical performance of practitioners.
e. Multidisciplinary teams shall be used, where indicated, to analyze and address systems issues.
5.10. If a health maintenance organization receives ten or more complaints from members or enrollees within a six-month period that relate to the same or similar subject matter, the health maintenance organization shall develop a specific written plan of action as to the resolution of the complaints and file a report with the commissioner on how the complaints were successfully resolved.
W. Va. Code R. § 114-53-6 Credentialing & Recredentialing
6.1. A health maintenance organization shall ensure that its network has sufficient numbers and types of providers. The HMO shall have a written access plan outlining its strategy for maintaining an adequate network and shall implement mechanisms designed to assure the availability of primary care and specialty practitioners.
6.2. A health maintenance organization shall have written policies and procedures for the credentialing of all providers that include the original credentialing, recredentialing, recertification and or reappointment of physicians and other licensed independent practitioners who fall under its scope of authority and action.
a. The governing body, or the group or individual to whom the governing body has formally delegated the credentialing function, shall review and approve credentialing policies and procedures.
b. A credentialing committee or other peer review body shall be established to make recommendations regarding credentialing decisions. The committee shall include providers, including but not limited to physicians, as voting members.
6.3. In terms of initial credentialing, an HMO shall obtain and review verification of the following from primary sources:
a. A current valid license to practice;
b. When applicable, clinical privileges in good standing at the hospital designated by the practitioner as the primary admitting facility;
c. A valid Drug Enforcement Administration (DEA) certificate, as applicable;
d. Graduation from medical school or appropriate graduate school and completion of a residency, specialty training and board certification, as applicable;
e. Complete work history;
f. Current adequate malpractice insurance according to the HMO’s policy;
g. Complete professional liability claims history; and h. Any other information deemed necessary by the HMO in determining whether to contract with a prospective provider.
6.4. A prospective provider shall complete an application for membership which includes a statement by the applicant regarding:
a. Reasons for any inability to perform the essential functions of the position, with or without accommodation;
b. Lack of substance abuse or chemical dependency;
c. History of loss of license and/or felony convictions;
d. History of loss or limitation of privileges or disciplinary activity;
e. Any other information deemed necessary by an HMO in determining whether to contract with a prospective provider; and f. An attestation to the correctness/completeness of the application.
6.5. A health maintenance organization shall request information on the prospective provider from recognized monitoring organizations including: the National Practitioner Data Bank; the appropriate state licensing boards such as the Board of Medicine, Chiropractic Board, Osteopathic Board and/or Dental Board; and any Medicare/Medicaid sanctioning.
6.6. Representatives from the credentialing committee or members of their staff shall make an initial visit to each potential primary care practitioner’s office and to the offices of obstetricians/gynecologists and other high-volume specialists. This process shall include documentation of a structured review of the site and of medical record keeping practices to ensure conformance with the HMO’s standards.
6.7. A health maintenance organization shall have written policies and procedures for the initial and ongoing quality assessment of health delivery organizations with which it intends to contract. The HMO shall confirm that the health delivery organization has been reviewed and approved by a recognized accrediting body and is in good standing with state and federal regulatory bodies. If the health delivery organization has not been approved by a recognized accrediting body, the HMO must develop and implement standards of participation. Health delivery organizations shall include but are not limited to hospitals, home health agencies, behavioral health agencies, nursing homes, skilled nursing facilities and free-standing surgical centers.
a. At least every three years, the health maintenance organization shall confirm that the health delivery organization continues to be in good standing with the state and federal regulatory bodies and, if applicable, is reviewed and approved by an accrediting body.
6.8. In terms of recredentialing, a health maintenance organization shall develop a process for the periodic verification of credentials which shall be implemented at least every three years.
a. At a minimum, recredentialing shall include verification from primary sources of:
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A valid state license to practice;
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Clinical privileges in good standing at the hospital designated by the practitioner as the primary admitting facility;
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A valid Drug Enforcement Administration (DEA) certificate, as applicable;
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Board certification, as applicable;
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Current, adequate malpractice insurance;
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Professional liability claims history; and 7. Any other information deemed necessary by an HMO in determining whether to re-contract with a provider.
b. The recredentialing process shall include a current statement by the applicant regarding reasons for any inability to perform the essential functions of the position, with or without accommodation and lack of present illegal drug use and alcohol abuse.
c. An HMO shall request recredentialing information from the National Practitioner Data Bank; the appropriate state licensing boards such as the Board of Medicine, Chiropractic Board, Osteopathic Board and/or Dental Board; and any Medicare/Medicaid sanctioning.
d. The recredentialing process shall also include a review of data from member complaints and grievances, results of quality reviews, utilization management, member satisfaction surveys, medical record reviews and site visits.
e. The recredentialing process shall include an on-site visit to all primary care providers, obstetricians/ gynecologists and high-volume specialists and shall involve documentation of a structured review of the site and medical record keeping practices to ensure conformance with HMO standards.
f. A health maintenance organization shall have polices and procedures in place for reducing, suspending or terminating practitioner privileges which shall include but is not limited to:
- A mechanism for reporting to the appropriate authorities serious quality deficiencies resulting in suspension or termination; and 2. An appeal process for and notice thereof to the provider.
W. Va. Code R. § 114-53-7 Members’ Rights & Responsibilities
7.1. An HMO shall demonstrate a commitment to treating members with respect by developing written policies giving them the right to:
a. Voice grievances about the HMO or care provided;
b. Have information concerning the HMO, its services, the practitioners providing care and members’ rights and responsibilities;
c. Participate in decision-making regarding health care; and d. Be treated with respect and recognition of their dignity and need for privacy.
7.2. An HMO shall develop a written policy addressing members’ responsibilities for cooperating with those providing health care services by giving needed information to professional staff to ensure appropriate care and by following instructions and guidelines given by those providing health care services.
7.3. All policies on members’ rights and responsibilities shall be provided in writing in clear and concise terms to all members and participating providers and, at a minimum, shall address the following procedures for, policies concerning or information regarding:
a. How to submit claim for covered services;
b. How to obtain primary and specialty care, behavioral health services and hospital services;
c. After-hours and emergency coverage including the HMO’s policy on when to directly access emergency care or use 911 type services;
d. Benefits and services included and excluded from membership;
e. Obtaining out-of-area coverage;
f. Special benefit provisions such, as co-payment, higher deductibles and rejection of claims, that may apply to services outside the system;
g. Member charges;
h. Notification of termination or change in any benefits, services or delivery site/office;
i. Notification of termination of a primary care or specialty provider and the process for selecting a new provider;
j. Appealing decisions adversely affecting a member’s coverage, benefits or relationship to the HMO;
k. Changing practitioners;
l. Disenrollment of nongroup subscribers;
m. Voicing complaints, grievances and appeals;
n. Recommending changes in policies and services;
o. Points of access to primary care, specialty care and hospital services;
p. The process by which a managed care organization determines whether or not to include new and emerging technology or treatment as a covered benefit;
q. Provider names, qualifications and titles;
r. Confidentiality; and s. Member satisfaction surveys that assess patient complaints, requests to change practitioners and/or facilities and disenrollments.
7.4. The health maintenance organization shall make reasonable accommodations for providing to member’s with disabilities the HMO’s policies on members’ rights and responsibilities.
7.5. A health maintenance organization shall have a procedure by which a member, upon diagnosis with a life-threatening, degenerative or disabling condition or disease, either of which requires specialized health care over a prolonged period of time, may receive a standing referral to a specialist with expertise in that condition or disease who will be responsible for and capable of providing and coordinating the member’s specialty care. When a standing referral is made, the HMO shall periodically review the referral for continued necessity.
W. Va. Code R. § 114-53-8 Preventive Health Services
8.1. A health maintenance organization shall adopt guidelines for the use of preventive health services which must be based on reasonable medical evidence and the full service population. The guidelines shall be developed or adopted with the participation of the HMO’s providers and must include a mechanism for periodic updates.
a. The guidelines and all updates shall be provided in writing to all providers and members.
b. The guidelines shall consist of the following categories:
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Prenatal and perinatal care;
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Preventive care for infants up to 24 months;
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Preventive care for children and adolescents aged two through 19 years old;
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Preventive care for adults aged 20 through 64 years old; and 5. Preventive care for those aged 65 and older.
c. Each guideline shall describe the prevention or early detection interventions and the recommended frequency and conditions under which the interventions are required. The health maintenance organization shall document the scientific basis or authority upon which it based the preventive health guidelines.
d. Providers from the health maintenance organization who have appropriate knowledge shall be involved in the adoption of the preventive health guidelines.
e. At least annually, an HMO shall monitor, evaluate and take action upon a minimum of two of the following preventive services and take action to improve the use of preventive services as appropriate:
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Childhood immunizations recognized by the American Academy of Pediatrics or as required by state or federal law;
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Adult immunizations including influenza vaccine, pneumococcal vaccine, Hepatitis B vaccine, diphtheria and tetanus toxoid, rubella screening for women of childbearing age or any other immunization required by state or federal law;
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Coronary artery disease risk factor screening and/or counseling for smoking, cholesterol, exercise and hypertension;
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Breast and cervical cancer screening;
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Counseling for prevention of motor vehicle injury;
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Lead toxicity screening;
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Sexually transmitted disease screening/prevention;
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Prenatal care;
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HIV/Aids counseling, screening and education;
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Prevention of unintended pregnancy;
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Alcohol and drug abuse screening/prevention; and 12. Any other preventive services deemed appropriate by the commissioner and any other state or federal regulatory authorities.
f. Preventive health service studies shall be enrollee population-based, measuring compliance as it relates to the total at-risk population.
W. Va. Code R. § 114-53-9 Medical Records
9.1. A health maintenance organization shall require all of its providers to have an organized medical recordkeeping system. Medical records shall be maintained in a manner that is current, detailed, organized and permits effective patient care and quality review. Records shall also reflect all aspects of patient care including ancillary services.
a. An HMO shall set forth in writing appropriate standards for medical records, the systematic review for conformance and the institution of corrective action when standards are not met. Copies of all standards and goals and any updates shall be provided to all providers.
b. Records shall be available to health care practitioners at each patient visit and to nationally and state recognized reviewing bodies sanctioned by the commissioner.
W. Va. Code R. § 114-53-10 Severability
10.1. This rule is subject to the anti-discrimination provisions of W.Va. Code §33-25A-31.
10.2. If any provision of this rule or the application of this rule to any person or circumstances is for any reason held to be invalid, the remainder of the rule and the application of the provisions to other persons or circumstances shall not be affected by the holding.
114CSR53
114CSR53
Series 54 Group Accident And Sickness Insurance Issuance, Portability And marketing Requirements
W. Va. Code R. § 114-54-1 General
1.1. Scope and applicability. -- This rule applies to health benefit plans issued in connection with a group health plan by insurance companies; fraternal benefit societies; hospital, medical, dental and health service corporations and health care corporations; and health maintenance organizations, and delivered or issued for delivery in this state on and after the effective date hereof for group health plan years beginning after June 30, 1997, or as otherwise provided in this rule. This rule does not apply to:
a. Individual policies or contracts issued pursuant to a conversion privilege under a policy or contract of group insurance;
b. Individual policies or contracts issued to eligible individuals, as defined in W. Va. Code '33-15-2a(e);
c. A health benefit plan for any group health plan year if, on the first day of the group health plan year, the group health plan has fewer than two participants who are current employees;
d. Coverage under the West Virginia Public Employees Insurance Act (W. Va. Code
'5-16-1 et seq.): Provided, That this rule applies to a health benefit plan issued by a health insurer to provide medical care under the West Virginia Public Employees Insurance Act;
e. Coverage under Medicare or Medicaid: Provided, That this rule applies to a health benefit plan issued by a health insurer to provide medical care under Medicare or Medicaid;
f. Coverage that consists solely of excepted benefits;
g. Coverage under health benefit plans issued to or through bona fide associations, if such coverage is not related to a group health plan;
h. Accident and sickness insurance contracts covering members of fraternal benefit societies organized pursuant to West Virginia Code ''33-23-1 et seq., if not issued in connection with a group health plan;
i. Credit accident and sickness insurance subject to WV 114CSR6 "Regulation of Credit Life Insurance and Credit Accident and Sickness Insurance;@ j. Medicare supplement insurance policies subject to WV 114CSR24 "Medicare Supplement Insurance;@ k. Long-term care insurance policies subject to WV 114CSR32 "Long-Term Care Insurance;@ l. Individual limited benefits policies subject to the requirements of W. Va. Code '33-16E-1 et seq.
The requirements contained in this rule are in addition to WV 114CSR39 AGroup Accident and Sickness Insurance Minimum Policy Coverage Standards@ and any other applicable rules previously adopted.
1.2. A health insurer may provide greater rights to policyholders, persons covered under a health benefit plan and their dependents than the minimum standards set forth in this rule.
1.3. Authority. -- W. Va. Code ''33-2-10, 33-16-3(f) and 33-16D-6.
1.4. Filing Date. -- April 30, 1999.
1.5. Effective Date. -- April 30, 1999.
1.6. Purpose. -- The purpose of this legislative rule is to provide for implementation of state standards meeting federal requirements under the Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191) and to facilitate public understanding of these standards.
W. Va. Code R. § 114-54-2 Definitions
As used in this legislative rule:
2.1. AAffiliation period@ means, with respect to a health maintenance organization, a period that begins on an individual=s enrollment date, runs concurrently with any waiting period under the group health plan, expires before coverage is effective and during which the health maintenance organization need not provide medical care and may not charge any premium to the individual.
2.2. ABona fide association@ means an association which:
a. has been organized in good faith for purposes other than that of obtaining or providing insurance;
b. has a minimum of one hundred members;
c. has been actively in existence for at least five years;
d. has a constitution and bylaws providing that:
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the association holds annual meetings to further purposes of its members;
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except in the case of credit unions, the association collects dues or solicits contributions from members; and 3. the members have voting privileges and representation on the governing board and committees that exist under the authority of the association;
e. does not condition membership in the association on any health status-related factor relating to an individual;
f. makes accident and sickness insurance offered through the association available to all members regardless of any health status-related factor relating to members or individuals eligible for coverage through a member;
g. does not make accident and sickness insurance coverage offered through the association available other than in connection with a member of the association; and h. meets any additional requirements as may be set forth in chapter thirty-three of the West Virginia Code or by rule.
2.3. ACommissioner@ means the commissioner of insurance.
2.4. ACreditable coverage@ means, with respect to an individual, coverage of the individual after June 30, 1996, under any of the following, other than coverage consisting solely of excepted benefits:
a. A group health plan;
b. A health benefit plan;
c. Medicare Part A or Part B, 42 U.S.C. '1395 et seq.; Medicaid, 42 U.S.C. '1396a et seq. (other than coverage consisting solely of benefits under section 1928 of the Social Security Act); Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), 10 U.S.C., Chapter 55; and a medical care program of the Indian Health Service or of a tribal organization;
d. A public health plan or a health benefits risk pool sponsored by any state of the United States or by the District of Columbia, as defined in regulations promulgated by the federal Secretary of Health and Human Services; a health plan offered under 5 U.S.C., chapter 89; or a health benefit plan as defined in the Peace Corps Act, 22 U.S.C. '2504(e).
2.5. ADays of creditable coverage@ means the aggregate of the periods of creditable coverage, as defined in section 2701(a)(3) of the Public Health Service Act.
2.6. ADependent@ means an eligible employee's spouse or any unmarried child or stepchild under the age of eighteen or unmarried, dependent child or stepchild under age (23) twenty-three if a full-time student at an accredited school.
2.7. AEligible employee@ means an employee, including an individual who either works or resides in this state, who meets all requirements for enrollment in a health benefit plan.
2.8. AEmployer@ means a large employer or a small employer. In connection with a partnership to which this rule applies, employer includes the partnership in relation to any partner, and in connection with a health benefit plan issued through one or more bona fide associations, Aemployer@ includes a bona fide association acting as policyholder for the employers.
2.9. AEnrollment date@ means an individual=s first day of coverage under a group health plan or, if there is a waiting period, the first day of the waiting period.
2.10. AExcepted benefits@ means:
a. Any policy of liability insurance or contract supplemental thereto; coverage only for accident or disability income insurance or any combination thereof; automobile medical payment insurance; credit-only insurance; coverage for on-site medical clinics; workers' compensation insurance; or other similar insurance under which benefits for medical care are secondary or incidental to other insurance benefits;
b. If offered separately or otherwise not as an integral part of a health benefit plan or the group health plan in connection with which it is issued, a policy providing benefits for long-term care, nursing home care, home health care, community-based care or any combination thereof, dental or vision benefits, or other similar, limited benefits;
c. If offered as independent, noncoordinated benefits under separate policies or certificates, specified disease or illness coverage, hospital indemnity or other fixed indemnity insurance, or coverage, such as Medicare supplement insurance, supplemental to a group health plan; or d. A policy of accident and sickness insurance covering a period of less than one year.
2.11. AGroup health plan@ means an employee welfare benefit plan, including a church plan or a governmental plan, all as defined in section three of the Employee Retirement Income Security Act of 1974, 29 U.S.C. '1002, to the extent that the plan provides medical care. For purposes of this rule, Agroup health plan@ includes any plan, fund or program which would not (but for this subsection) be a group health plan and which is established or maintained by a partnership, to the extent that such plan, fund or program provides medical care to present or former partners or their dependents (as defined under terms of the plan, fund or program).
2.12. AHealth benefit plan@ means benefits consisting of medical care provided directly, through insurance or reimbursement, or indirectly, including items and services paid for as medical care, under any hospital or medical expense incurred policy or certificate; hospital, medical or health service corporation contract; health maintenance organization contract; or plan provided by a multiple-employer trust or a multiple-employer welfare arrangement. AHealth benefit plan@ does not include excepted benefits.
2.13. AHealth insurer@ means an entity licensed by the commissioner to transact accident and sickness insurance in this state and subject to chapter thirty-three of the West Virginia Code. AHealth insurer@ does not include a group health plan.
2.14. AHealth status-related factor@ means an individual=s health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence) or disability.
2.15. ALarge employer@ means any person, firm, corporation, partnership or bona fide association actively engaged in business in the state of West Virginia who employed an average of at least fifty-one (51) eligible employees on business days during the preceding calendar year and employs at least two employees on the first day of its group health plan year.
2.16. ALate enrollee@ means an individual, other than one who enrolls during a special enrollment period, who enrolls under a health benefit plan or a group health plan in connection with which it is issued other than during the first period in which the individual is eligible to enroll under terms of the health benefit plan or group health plan.
2.17. AMedical care@ means amounts paid for, or paid for insurance covering, the diagnosis, cure, mitigation, treatment or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body, including amounts paid for transportation primarily for and essential to such care.
2.18. AMedical care provider@ means an individual licensed or similarly authorized to provide medical care and operating within the scope of services authorized for the individual.
2.19. ANetwork plan@ means a health benefit plan under which the financing and delivery of medical care are provided, in whole or in part, through a defined set of providers under contract with the health insurer. Network plans include, but are not limited to, health maintenance organizations and preferred provider arrangements.
2.20. APolicyholder@ means the group health plan sponsor, as defined in section three of the Employee Retirement Income Security Act of 1974, 29 U.S.C. '1002.
2.21. APreexisting condition exclusion@ means, with respect to a health benefit plan, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the enrollment date for such coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received before the enrollment date.
2.22. ASignificant break in coverage@ means a period of sixty-three consecutive days during all of which an individual does not have any creditable coverage, except that neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage.
2.23. ASmall employer@ means any person, firm, corporation, partnership or bona fide association actively engaged in business in the state of West Virginia who, during the preceding calendar year, employed an average of no more than fifty but not fewer than two eligible employees and employs at least two employees on the first day of its group health plan year. A new employer, not in existence for all of the preceding calendar year, shall be considered a small employer if it is reasonably expected to employ an average of no more than fifty but not fewer than two eligible employees on business days in the current calendar year. Companies which are affiliated companies or which are eligible to file a combined tax return for state tax purposes shall be considered one employer.
2.24. ASpecial enrollment period@ means a period other than the first period in which an eligible employee or a dependent is eligible to enroll under the terms of a health benefit plan or a group health plan in connection with which it is issued, without regard to other enrollment periods defined under the health benefit plan or group health plan.
2.25. AWaiting period@ means, with respect to a group health plan and an eligible employee or a dependent who is potentially eligible for coverage under the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.
W. Va. Code R. § 114-54-3 Limitations on Preexisting Condition Exclusion Period
3.1. Subject to subsection 3.2 of this rule, a health insurer may impose a preexisting condition exclusion with respect to an individual covered under a health benefit plan only if medical advice, diagnosis, care or treatment for the condition was recommended or received within the six-month period which began on the six-month anniversary date preceding the individual=s enrollment date and ends on the enrollment date.
a. Medical advice, diagnosis, care or treatment is taken into account only if it is recommended by, or received from, a medical care provider.
b. Genetic information is not a preexisting condition unless a condition related to the information has been diagnosed.
c. Pregnancy may not be excluded from coverage as a preexisting condition.
3.2. Unless the child has had a significant break in coverage, no preexisting condition exclusion may be imposed with regard to a child who:
a. Is covered under any creditable coverage as of the last day of the thirty-day period beginning with the date of birth; or b. Is adopted or placed for adoption before attaining the age of eighteen years and who, as of the last day of the thirty-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. This subdivision does not apply to coverage before the date of adoption or placement for adoption.
3.3. A preexisting condition exclusion may not extend for more than a twelve-month period (eighteen-month period for a late enrollee) beginning on an individual=s enrollment date.
3.4. Any preexisting condition exclusion otherwise applicable to an individual shall be reduced by the number of days of creditable coverage the individual has as of the enrollment date, as provided in sections four and five of this rule.
3.5. A health maintenance organization that imposes no preexisting condition exclusions under a health benefit plan issued in connection with a particular group health plan may:
a. Impose an affiliation period if the affiliation period is applied uniformly without regard to any health status-related factors and does not exceed two months (three months for a late enrollee); or b. File with the commissioner a proposal for an alternative method to address adverse selection, but no alternative method may be used unless approved by the commissioner.
3.6. With respect to individuals enrolled under a group health plan on the effective date of this rule for the group health plan, a health insurer may not impose a preexisting condition exclusion to the extent that:
a. An individual has met an exclusion period permitted under this section; or b. On the effective date of this rule for the group health plan, an individual uses creditable coverage that the individual had as of his or her enrollment date in the group health plan to reduce an exclusion period permitted under this subsection.
W. Va. Code R. § 114-54-4 Application of Creditable Coverage to Reduce Preexisting Condition Exclusion Period
4.1. For purposes of reducing any preexisting condition exclusion period under terms of a health benefit plan, a health insurer shall take into account all information that it obtains or that is presented on behalf of an individual to determine, based on relevant facts and circumstances, whether an individual has creditable coverage and is entitled to offset all or a portion of any preexisting condition exclusion.
4.2. For purposes of reducing any preexisting condition exclusion period under terms of a health benefit plan, a health insurer may elect to determine an individual=s days of creditable coverage:
a. By the standard method described in subsection 4.3;
b. Subject to other applicable requirements, in any other manner that is at least as favorable to the individual as the standard method described in subsection 4.3; or c. By the alternative method described in subsection 4.4 with respect to any or all categories of benefits described in subsection 4.4.
4.3. A health insurer electing the standard method shall determine the days of creditable coverage by counting all the days the individual has under one or more types of creditable coverage, without regard to specific benefits included in the coverage, but:
a. Any days in a waiting period for coverage are not days of creditable coverage; and b. Days of creditable coverage that occur before a significant break in coverage are not required to be counted.
4.4. A health insurer electing the alternative method:
a. Shall apply the alternative method uniformly to all persons covered under the health benefit plan, but creditable coverage for a category of benefits applies only for purposes of reducing a preexisting condition exclusion;
b. Shall set forth its use of the alternative method in the health benefit plan;
c. For each type of health benefit plan offered, shall state its use of the alternative method prominently in disclosure statements concerning the health benefit plan and to each potential policyholder at the time of offer or sale of the health benefit plan, describing in such statements the effect of using the alternative method;
d. Shall determine the days of creditable coverage based on coverage within any or all of the following categories of benefits and not based on coverage for any other benefits:
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Mental health benefits;
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Substance abuse treatment;
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Prescription drugs;
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Dental care; and 5. Vision care;
e. Shall count creditable coverage if any level of benefits is provided within the category, but coverage under a reimbursement account or arrangement, such as a flexible spending arrangement defined in section 106(c)(2) of the Internal Revenue Code, does not constitute coverage within any category;
f. Shall:
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First determine the amount of the individual=s creditable coverage that may be counted under subsection 4.3, over a period (Adetermination period@) of up to a total of 365 days of the most recent creditable coverage (546 days for a late enrollee);
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Then count, for the category specified under the alternative method, all days of coverage within the category that occurred during the determination period, whether or not a significant break in coverage for that category occurs; and 3. Reduce the individual=s preexisting condition exclusion period for that category by the number of days counted under paragraph 2 of subdivision f of subsection 4.4;
g. Shall use the standard method described in subsection 4.3 to determine days of creditable coverage for benefits not within any category listed in subdivision d of subsection 4.4; and h. May, if the group health plan so chooses, apply a different preexisting condition exclusion period for benefits that are not within any category listed in subdivision d of subsection 4.4 and a different preexisting condition exclusion period with respect to each category.
4.5. An individual may demonstrate creditable coverages and waiting or affiliation periods, for a determination under either the standard or the alternative method, through:
a. Presentation of one or more certificates of creditable coverage issued by a group health plan, health insurer or other entity that previously provided coverage for medical care; or b. Documents or other means if the accuracy of a certificate of creditable coverage is contested or if a certificate is unavailable when needed by an individual, such as when:
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An entity has failed to provide a certificate within the required time period;
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An entity is not required under federal law to provide a certificate;
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The coverage is for a period before July 1, 1996;
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The individual has an urgent medical condition that necessitates a determination before the individual can deliver a certificate of creditable coverage to the group health plan; or 5. The individual lost a certificate of creditable coverage and is unable to obtain another certificate.
4.6. If, in the course of providing evidence (including a certificate) of creditable coverage, an individual must demonstrate dependent status, the health insurer shall treat the individual as having furnished a certificate of creditable coverage if the individual attests to such dependency and the period of such status and cooperates with the health insurer=s efforts to verify the dependent status.
4.7. A health insurer may refuse to credit coverage if the individual fails to cooperate with the health insurer=s efforts to verify coverage but may not consider an individual=s inability to obtain a certificate of creditable coverage to be evidence of the absence of creditable coverage. A health insurer shall treat an individual as having furnished a certificate of creditable coverage if the individual attests to the period of creditable coverage, presents relevant corroborating evidence of some creditable coverage during the period, including periods before July 1, 1996, and cooperates with the health insurer=s efforts to verify the individual=s coverage.
a. For purposes of this subsection, cooperation includes providing, upon the health insurer=s request, written authorization for the health insurer to request a certificate on behalf of the individual and cooperating in efforts to determine the validity of corroborating evidence and the dates of creditable coverage.
b. Documents that may establish creditable coverage and waiting periods or affiliation periods in the absence of a certificate include explanations of benefit claims or correspondence from a group health plan or health insurer indicating coverage, pay stubs showing a payroll deduction for health coverage, a health insurance identification card, a certificate of coverage under a health benefit plan, records from medical care providers indicating health coverage, third party statements verifying periods of coverage and any other relevant documents that evidence periods of health coverage.
c. Creditable coverages and waiting or affiliation periods may be established through means other than documentation.
4.8. A health insurer receiving information with respect to creditable coverage shall, within a reasonable time following receipt of the information:
a. Determine the application of the individual=s creditable coverage to any preexisting condition exclusion period and notify the individual of the determination; and b. For any individual on whom the health insurer seeks to impose a preexisting condition exclusion period, disclose to the individual in writing:
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Any applicable preexisting condition exclusion period;
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The basis for the health insurer=s determination, including the source and substance of any information on which it relied; and 3. Any appeal procedures established by the group health plan or the health insurer, with a reasonable opportunity to submit additional evidence of creditable coverage.
4.9. A health insurer may modify an initial determination of creditable coverage if it determines that the individual did not have the claimed creditable coverage, if it provides a notice of reconsideration to the individual and acts in a manner consistent with the initial determination until the final determination is made.
W. Va. Code R. § 114-54-5 Certification of Creditable Coverage
5.1. A health insurer shall furnish information as provided in this section, without charge, for individuals covered under a health benefit plan (including a health benefit plan issued in connection with an entity or program, other than a group health plan, for which certificates are required, as provided in rules governing the entity or program) except to the extent that:
a. Coverage was provided by another party;
b. Another party agrees to provide information regarding coverage provided by the health insurer and actually provides a certificate of creditable coverage including all information required under subsection 5.4 of this section; or c. Coverage consisted of excepted benefits, but the health insurer may be required to disclose information concerning the benefits to another group health plan or health insurer that uses the alternative method of counting creditable coverage and provides coverage to an individual previously covered by the first health insurer.
5.2. For an individual whose coverage under a health benefit plan issued by the health insurer, but not the individual=s participation in the group health plan, ceases, the health insurer shall provide sufficient information to the group health plan or a party designated by the group health plan to permit the group health plan or designated party to provide a certificate of creditable coverage, reflecting coverage under the health insurer=s health benefit plan, upon termination of the individual=s participation in the group health plan.
5.3. A health insurer shall provide a certificate of creditable coverage for periods after June 30, 1996, for each individual whose coverage under the group health plan and a health benefit plan issued by the health insurer ceases:
a. Without request by or on behalf of the covered individual, showing the last period of continuous coverage ending on the date coverage ceased:
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For a qualified beneficiary (as defined in section 607(3) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. '1167(3); section 2208 of the Public Health Service Act, 42 U.S.C. '300bb-8(3); and section 4980B(g)(1) of the Internal Revenue Code, 26 U.S.C. '4980B(g)(1)) who is entitled to elect coverage under a COBRA continuation provision, as defined in W. Va. Code '33-15-2a(c), no later than the time notice is required to be furnished for a qualifying event under section 606 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. '1166; section 2206 of the Public Health Service Act, 42 U.S.C. '300bb-6; and section 4980B(f)(6) of the Internal Revenue Code, 26 U.S.C. '4980B(f)(6);
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For a qualified beneficiary who has elected coverage under a COBRA continuation provision (or whose coverage has continued under the group health plan after the individual became entitled to COBRA continuation coverage) and whose coverage ceases, within a reasonable time after coverage ceases or the expiration of any grace period for nonpayment of premiums, regardless of whether the individual received a certificate under paragraph 1 of subdivision a of subsection 5.3; or 3. For a covered individual other than a qualified beneficiary entitled to elect COBRA continuation coverage, within a reasonable time after coverage ceases; and b. Upon request by or on behalf of an individual within twenty-four months after the individual=s coverage ceases, showing each period of continuous coverage ending within the twenty-four month period ending (or continuing) on the date of the request, by the earliest date that the health insurer, acting in a reasonable or prompt fashion, can provide it, even if the individual previously received a certificate under subdivision a of subsection 5.3 or this subdivision. The health insurer:
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Shall establish a procedure for individuals to request and receive certificates under this subdivision;
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Shall, if the individual designates another individual or entity to receive the certificate, provide the certificate to the designated party; and 3. May provide a separate certificate for each period of continuous coverage.
5.4. Every certificate of creditable coverage shall contain:
a. The date the certificate is issued;
b. The name of the group health plan under which the health insurer provided the coverage described in the certificate;
c. The name of the individual to whom the certificate applies and any other information necessary for the group health plan or the health insurer to identify the individual;
d. The name, address, telephone number of the health insurer providing the certificate and the telephone number to call for further information, if different from the health insurer=s telephone number;
e. Either:
- A statement that an individual has at least eighteen months (for this purpose, 546 days is deemed to be eighteen months) of creditable coverage, disregarding days of creditable coverage before a significant break in coverage; or 2. The date any waiting period (and affiliation period, if applicable) began and the date creditable coverage began; and f. The date creditable coverage ended, unless the certificate indicates that creditable coverage is continuing as of the date of the certificate.
5.5. Except as otherwise provided in this section, an insurer must provide a certificate of creditable coverage in writing. The requirements of this subsection are satisfied if the insurer provides the required information on a form certificate prescribed by the Commissioner, or in accordance with a model certificate as provided by the Health Care Financing Authority (HCFA), unless:
a. An individual entitled to receive a certificate requests that the certificate be sent to another group health plan or health insurer instead of to the individual;
b. The group health plan or health insurer that would receive the certificate agrees to accept the information contained in the certificate by another means such as by telephone; and c. The receiving group health plan or health insurer receives the information from the sending group health plan or health insurer within the time periods required under subsection 5.3 of this section.
5.6. A certificate of creditable coverage may provide information with respect to both an eligible employee and dependents if the information is identical for each individual, or, if the information is not identical, certificates may be provided on one form if the form provides all the required information for each individual and separately states the information that is not identical.
a. A health insurer shall use reasonable efforts to determine any information needed for a certificate of creditable coverage relating to dependent coverage.
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For a certificate required to be provided for a dependent under subdivision a of subsection 5.3, no individual certificate is required to be provided until the health insurer knows, or making reasonable efforts should know, of the dependent=s cessation of coverage. If a certificate does not contain the name of any dependent of an individual covered by the certificate, the individual may demonstrate dependent status or that a child was enrolled within thirty days of birth, adoption or placement for adoption as provided in section four of this rule.
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With respect to dependent coverage and events occurring through June 30, 1998, a health insurer:
A. May, if it cannot provide the names of dependents or related coverage information, satisfy the requirements of subdivision c, subsection 5.4 of this section, by providing the name of the eligible employee through whom a dependent is covered and specifying that the type of coverage described in the certificate is dependent coverage, such as family coverage or employee-plus-spouse coverage; and B. Shall make reasonable efforts to obtain and provide the names of any dependent covered by the certificate where such information is requested to be provided. If a certificate does not contain the name of any dependent of an individual covered by the certificate, the individual may demonstrate that creditable coverage in the certificate covers a dependent.
5.7. If a health insurer has issued a certificate of creditable coverage for an individual who enrolls in a group health plan or health benefit plan that uses the alternative method of counting creditable coverage, the first health insurer:
a. Shall, upon request from the second group health plan or health insurer, promptly disclose to the requesting entity:
- The categories of benefits with respect to which the requesting entity is using the alternative method of counting creditable coverage; and 2. If requested by the requesting entity, specific information that the requesting entity reasonably needs to determine the individual=s creditable coverage with respect to a category; and b. May charge the requesting entity for the reasonable cost of disclosing the information.
5.8. A health insurer shall be deemed to have satisfied the requirement for delivery of certificates of creditable coverage to individuals described in subsection 5.3 if it provides by first-class mail:
a. One certificate or separate certificates with respect to all covered individuals residing at an eligible employee=s last known address, to the eligible employee and the employee=s spouse at that address; and b. A separate certificate with respect to a dependent whose last known address is different from the eligible employee=s last known address, to the dependent at that individual=s last known address.
5.9. If an individual described in subdivision a of subsection 5.3 designates another individual or entity to receive a certificate with respect to the individual, the health insurer may deliver a certificate to the designated party. If an individual described in subdivision b of subsection 5.3 designates another individual or entity to receive a certificate with respect to the individual, the health insurer shall deliver a certificate to the designated party.
5.10. If the accuracy of a certificate of creditable coverage is contested, or if a certificate is unavailable when needed by an individual, the individual may demonstrate creditable coverages and waiting or affiliation periods as provided in section four of this rule.
W. Va. Code R. § 114-54-6 Renewability and Modification of Coverage
6.1. Except as provided in subsection 6.2, a health insurer shall renew or continue in force a health benefit plan at the policyholder=s option. In the case of a health benefit plan offered only through one or more associations, a reference to Apolicyholder@ is deemed, with respect to coverage provided to an employer member of the association, to include a reference to the employer.
6.2. A health insurer may nonrenew or discontinue a health benefit plan only at the policyholder=s option or for one of the following reasons:
a. The policyholder has failed to pay premiums or contributions in accordance with the terms of the health benefit plan, including any timeliness requirements;
b. The policyholder has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact in connection with the coverage;
c. The policyholder has failed to comply with a material plan provision relating to employer contribution or group participation rules permitted under W. Va. Code chapter thirty-three;
d. The health insurer elects to discontinue offering health benefit plans:
- Of a particular type offered to large employers or to small employers, respectively, if:
A. The health insurer gives written notice to each policyholder of that product and all covered individuals at least ninety days before the date the coverage will be discontinued;
B. On a guaranteed issue basis, the health insurer offers each large employer policyholder the option to purchase any other health benefit plan currently being offered by the health insurer to large employers, or offers each small employer policyholder the option to purchase all other health benefit plans currently being offered by the health insurer to small employers; and C. In electing to discontinue health benefit plans of a particular type and in offering coverage under the subparagraph B of paragraph 1 of subdivision d of subsection 6.2, the health insurer acts uniformly without regard to policyholders= claims experience or any health status-related factor relating to any covered employee, member or dependent or new employees, members or dependents who may become eligible for coverage; or 2. Of all types offered to large employers or to small employers, respectively, if:
A. The health insurer gives written notice to the commissioner and to each policyholder and all covered individuals at least one hundred eighty days before the date plans are discontinued; and B. The health insurer discontinues all, and does not renew any, health benefit plans issued to large employers or to small employers, respectively;
e. For network plans, there is no longer any enrollee under the group health plan who lives, resides or works in the health insurer=s service area, and, in the case of a small employer policyholder, the health insurer applies the same criteria it would apply in denying enrollment in the health benefit plan under section seven of this rule; or f. For a health benefit plan made available to employers only through one or more bona fide associations, the employer=s membership in the association ceases, but only if the coverage is terminated uniformly without regard to any health status-related factor relating to any covered individual.
6.3. A health insurer that elects to discontinue health benefit plans of all types offered to large employers or to small employers, respectively, in this state pursuant to paragraph 2 of subdivision d of subsection 6.2 may not issue any health benefit plan to a large employer or to a small employer, respectively, in this state for a five-year period beginning on the date of discontinuation of the last health benefit plan not renewed.
6.4. A health insurer may modify a health benefit plan=s benefits only at the time of health benefit plan renewal. For health benefit plans available to small employers, other than only through one or more bona fide associations, a modification shall be effective uniformly among group health plans with that product and shall meet all other requirements under W. Va. Code chapter thirty-three.
W. Va. Code R. § 114-54-7 Prohibition Against Discrimination Based on a Health Status-Related Factor
7.1. A health insurer may not establish rules for eligibility, including continued eligibility, of any individual to enroll under the terms of the group health plan based on a health status-related factor in relation to the individual or a dependent of the individual:
a. Rules for eligibility to enroll include rules defining any applicable waiting or affiliation period and rules relating to late and special enrollment; and b. This section does not:
- Require a health insurer to provide particular benefits other than those provided under the terms of the group health plan or health benefit plan; or 2. Prevent a health insurer from establishing limitations or restrictions on the amount, level, extent or nature of the benefits or coverage for similarly situated individuals enrolled in the plan or coverage.
7.2. A health insurer may not require an individual, as a condition of enrollment or continued enrollment, to pay a premium or contribution that is greater than the premium or contribution for a similarly situated individual enrolled in the group health plan based on a health status-related factor in relation to the individual or a dependent of the individual.
a. Subject to the commissioner=s approval pursuant to other provisions of W. Va. Code thirty-three this subsection does not:
- Restrict the amount of premium that may be charged by a health insurer; or 2. Prevent a health insurer from establishing premium discounts or modifying otherwise applicable copayments or deductibles in return for covered individuals= adherence to a bona fide wellness program of health promotion and disease prevention.
W. Va. Code R. § 114-54-8 Special Enrollment Periods
8.1. A health insurer shall permit individuals to enroll for coverage under terms of a health benefit plan, without regard to other enrollment dates permitted under the group health plan, if an eligible employee requests enrollment for himself or herself or, if the group health plan makes coverage available to dependents, on behalf of a dependent who is eligible but not enrolled under the group health plan, during the special enrollment period, which shall be (30) thirty days following an event described in subsections 8.2 or 8.3 with respect to the individual for whom enrollment is requested. A health insurer may impose enrollment requirements that are otherwise applicable under terms of the group health plan to individuals requesting immediate enrollment.
8.2. An individual, who previously had other coverage for medical care and for whom an eligible employee declined coverage under the group health plan, may be enrolled during a special enrollment period if the individual has lost the other coverage for medical care and:
a. If required by the group health plan, the eligible employee stated in writing when declining the coverage, after being given a notice of the requirement for, and the consequences of failure to submit, a written statement, that coverage was declined because the individual had coverage for medical care under another group health plan or otherwise; and b. When enrollment was declined for the individual:
- The individual had coverage under a COBRA continuation provision, as defined in W. Va. Code '33-15-2a(c), and the coverage has been exhausted; or 2. The individual had coverage other than under a COBRA continuation provision and the coverage has been terminated due to loss of eligibility for the coverage, including loss of coverage as a result of legal separation, divorce, death, termination of employment, reduction in the number of hours of employment and any loss of eligibility after a period that is measured by reference to any of the foregoing, or termination of employer contributions towards the other coverage. For purposes of this paragraph:
A. Loss of eligibility for the coverage does not include loss of eligibility due to the eligible employee=s or dependent=s failure to make timely premium payments or termination of coverage for cause such as making a fraudulent claim or intentional misrepresentation of material fact in connection with the group health plan; and B. Employer contributions include contributions by any current or former employer of the individual or another person that was contributing to coverage for the individual.
8.3. If the eligible employee has previously declined enrollment under the group health plan but acquires a dependent through marriage, birth, adoption or placement for adoption, the eligible employee or dependent may be enrolled during the special enrollment period with respect to the individual.
8.4. Enrollment of the eligible employee or dependent is effective not later than the first day of the calendar month beginning after a completed request for enrollment is received or, for a newborn or adopted child, on the date of birth, adoption or placement for adoption.
W. Va. Code R. § 114-54-9 Guaranteed Availability for Small Employers
9.1. Except as provided in subsections 9.2 through 9.5, a health insurer that offers health benefit plans to small employers in this state shall:
a. Offer to any small employer in this state all health benefit plans that are approved for sale to small employers and that the health insurer is actively marketing;
b. Accept any small employer that applies for any health benefit plan approved for sale to small employers and actively marketed by the health insurer; and c. Under a health benefit plan issued to a small employer, accept for enrollment every individual who is eligible:
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To enroll under the health benefit plan in accordance with terms of the group health plan in connection with which the health benefit plan is issued;
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For coverage under rules of the health insurer that are uniformly applicable in this state to small employers to which the health insurer offers health benefit plans; and 3. For coverage in accordance with W. Va. Code chapter thirty-three, and other applicable law;
d. With respect to an individual who meets the requirements of paragraphs 1 through 3 of subdivision c of subsection 9.1, a health insurer:
- Shall accept the individual for enrollment during the period in which he or she first becomes eligible to enroll under terms of the group health plan, or during a special enrollment period; and 2. May not impose any restriction inconsistent with section seven of this rule.
9.2. A health insurer that offers health benefit plans to small employers through a network plan:
a. May limit small employers that apply for the coverage to those with eligible employees (and dependents, if applicable) who live, reside or work in the network plan=s service area; and b. May deny coverage to small employers within the network plan=s service area if the health insurer demonstrates to the commissioner that it:
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Will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to existing group contract holders and enrollees;
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Is applying subdivisions a and b of subsection 9.2 uniformly to all small employers without regard to the claims experience of those small employers, their employees and dependents or any health-status related factor relating to those employees and dependents; and c. May not, if it denies coverage to a small employer in any service area under subdivision b of subsection 9.2, offer coverage to small employers within the service area for a period of one hundred eighty days after coverage is denied, but this subdivision does not limit a health insurer=s ability to renew coverage already in force or relieve the issuer of the responsibility to renew that coverage. Network plans offered within a service area after the one hundred eighty-day period specified in this subdivision are subject to the requirements of this section.
9.3. A health insurer may deny coverage to small employers if the health insurer:
a. Demonstrates to the commissioner that it:
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Does not have the financial reserves necessary to underwrite additional health benefit plans of small employers in this state, or for a network plan whose service areas have been approved by the commissioner, within one or more particular service areas; and 2. Is applying paragraph 1 of subdivision a of subsection 9.3 uniformly to all small employers without regard to the claims experience of those small employers, their employees and dependents or any health-status related factor relating to those employees and dependents; and b. May not, if it denies coverage to any small employer in this state under paragraph 1 of subdivision a of subsection 9.3, offer health benefit plans to small employers in this state for a period of one hundred eighty days after the later of:
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The date coverage is denied; or 2. The health insurer demonstrates to the commissioner that the health insurer has sufficient financial reserves to underwrite additional coverage;
c. This subsection does not limit a health insurer=s ability to renew coverage already in force or relieve the health insurer of the responsibility to renew that coverage; and d. Health benefit plans offered to small employers after the one hundred eighty-day period specified in subdivision b of subsection 9.3 are subject to the requirements of this section.
9.4. A health insurer may establish, and apply to a small employer applying for a health benefit plan, employer contribution rules or group participation rules permitted under W. Va. Code chapter thirty-three. For purposes of this subsection, Aemployer contribution rule@ means a requirement relating to the minimum level or amount of employer contribution toward the premium for enrollment of eligible employees and dependents, and Agroup participation rule@ means a requirement relating to the minimum number of eligible employees or dependents who must be enrolled in relation to a specified percentage or number of eligible individuals or employees of a small employer.
9.5. A health insurer offering a health benefit plan to small employers only through one or more bona fide associations is not required to meet the requirements of subsection 9.1.
W. Va. Code R. § 114-54-10 Severability
If any provision of this legislative rule or the application thereof to any person or circumstance is for any reason held invalid, the remainder of the rule and the application of the provision to other persons or circumstances shall not be affected by the holding.
114CSR54
Series 55 Guaranteed Issue Of Individual Accident And Sickness Insurance
W. Va. Code R. § 114-55-1 General
1.1. Scope. -- The purpose of this rule is to set forth guidelines for insurers required to provide accident and sickness insurance coverage to eligible individuals without the imposition of preexisting conditions exclusions, the election of coverage by insurers, certification and disclosure of coverage, and dependent coverage in accordance with the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) and related federal mandates. The requirements set forth in this rule apply to accident and sickness insurance coverage, other than excepted benefits, offered, sold, issued, renewed or in effect in the individual market after June 30, 1997, regardless of when a period of creditable coverage occurs.
1.2. Authority. -- W. Va. Code '33-2-10.
1.3. Filing Date. -- April 30, 1999.
1.4. Effective Date. -- April 30, 1999.
W. Va. Code R. § 114-55-2 Definitions
2.1. AAffiliation period@ means a period of time that must expire before accident and sickness insurance coverage provided by a health maintenance organization becomes effective, and during which the health maintenance organization is not required to provide benefits.
2.2. ACOBRA continuation provision@ means any of the following:
a. Section 4980B of the Internal Revenue Code of 1986, other than subsection (f)(1) of such section insofar as it relates to pediatric vaccines;
b. Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, other than Section 609 of such act; or c. Title XXII of the Public Health Service Act.
2.3. ACommissioner@ means the West Virginia commissioner of insurance.
2.4. ACreditable coverage@ means, with respect to an individual, coverage of the individual under any of the following:
a. A group health plan;
b. Accident and sickness insurance coverage;
c. Part A or part B of Title XVIII of the Social Security Act;
d. Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928;
e. Chapter 55 of Title 10 of the United States Code;
f. A medical care program of the Indian Health Service or of a tribal organization;
g. A state health benefits risk pool;
h. A health plan offered under Chapter 89 of Title 5 of the United States Code;
i. A public health plan (as defined in federal regulations); or j. A health benefit plan under section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)).
k. The term Acreditable coverage@ does not include excepted benefits.
2.5. AEligible individual@ means an individual:
a. For whom, as of the date on which the individual seeks coverage, the aggregate period of creditable coverage is eighteen months or more and whose most recent prior creditable coverage was under a group health plan, governmental plan (as defined in section 3(32) of the Employee Retirement Income Security Act of 1974), church plan (as defined in section 3(33) of the Employee Retirement Income Security Act of 1974), or accident and sickness insurance coverage offered in connection with any such plan;
b. Who is not eligible for coverage under a group health plan, part A or part B of Title XVIII of the Social Security Act, or state plan under Title XIX of such act (or any successor program), and does not have other accident and sickness insurance coverage;
c. With respect to whom the most recent prior creditable coverage was not terminated as a result of fraud, intentional misrepresentation of material fact under the terms of the coverage, or nonpayment of premium;
d. Who did not turn down an offer of continuation of coverage under a COBRA continuation provision or under a similar state program if it was offered; and e. Who, if the individual elected such continuation coverage, has exhausted that coverage under the COBRA continuation provision or similar state program.
2.6. AExcepted benefits@ means benefits under one or more(or any combination) of the following:
a. Coverage only for accident, or disability income insurance, or any combination thereof;
b. Coverage issued as a supplement to liability insurance;
c. Liability insurance, including general liability insurance and automobile liability insurance;
d. Workers= compensation or similar insurance;
e. Automobile medical payment insurance;
f. Credit-only insurance;
g. Coverage for on-site medical clinics;
h. Other similar insurance coverage under which benefits for medical care are secondary or incidental to other insurance;
i. If provided under a separate policy, certificate or contract of insurance:
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Limited scope dental or vision benefits;
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Benefits for long-term care, nursing home care, home health care, community-based care or any combination thereof;
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Coverage for only a specified disease or illness;
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Hospital indemnity or other fixed indemnity insurance; and 5. Medicare supplement insurance (as defined under 1882 (g)(1) of the Social Security Act [42 U.S.C. '301 et seq.]), coverage supplemental to the coverage provided under chapter 55 [10 U.S.C. '1071 et seq.] of title 10, United States Code and similar supplemental coverage provided under group accident and sickness insurance.
2.7. AIndividual market@ means the market for accident and sickness insurance coverage offered to individuals other than in connection with a group health plan.
2.8. AInsurer@ means any of the following entities that hold a valid certificate of authority from the commissioner: An insurance company authorized to transact accident and sickness insurance; a fraternal benefit society organized pursuant to W.Va. Code '33-23-1 et seq.; a hospital, medical, dental or health service corporation organized pursuant to W. Va. Code '33-24-1 et seq.; a health care corporation organized pursuant to W. Va. Code '33-25-1 et seq.; or a health maintenance organization pursuant to W. Va. Code '33-25A-1 et seq.
2.9. APreexisting condition exclusion@ means a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received before such date.
2.10. ASignificant break in coverage@ means a period of 63 consecutive days during all of which the individual does not have any creditable coverage, except that neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage.
2.11. AWaiting period@ means the period that must pass before an employee or dependent is eligible to enroll under the terms of a group health plan.
2.12. AWeighted average@ means the average actuarial value of benefits provided by all the accident and sickness insurance coverage issued by one of the following:
a. An insurer in the individual market in the State during the previous calendar year, weighted by enrollment for each policy form, but not including coverage issued to eligible individuals; or b. All insurers in the individual market in the State if the data are available for the previous calendar year, weighted by enrollment for each policy form.
W. Va. Code R. § 114-55-3 Election of Coverage
3.1. Except as provided in subsection 3.2, an insurer that provides accident and sickness insurance coverage in the individual market may not decline to offer coverage or deny enrollment under any policy form it actively markets in the individual market to any eligible individual who applies for coverage within sixty-three days after termination of the individual=s prior creditable coverage. An insurer is deemed to meet this requirement if, upon the request of an eligible individual, it promptly:
a. Provides information about all available coverage options;
b. Enrolls the individual in any coverage option the individual selects; and c. Does not impose any preexisting condition exclusion on the individual.
3.2. An insurer may elect to limit the coverage required under subsection 3.1 if it offers eligible individuals at least two policy forms that meet the following requirements:
a. Each policy form must be designed for, made generally available to, and actively marketed to, and enroll both eligible and other individuals; and b. The policy forms must be either the insurer=s two most popular policy forms (as described in paragraph 1 of this subdivision and as set forth in W. Va. Code '33-15-2b) or representative samples of individual accident and sickness insurance (as described in paragraph 2 of this subdivision and as set forth in W. Va. Code '33-15-2b) offered by the insurer in this State.
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The two most popular forms means the policy forms with the largest, and the second largest, premium volume for the last reporting year, for policies offered in the State. Premium volume means earned premiums for the last reporting year. The last reporting year is the period from October 1 through September 30 of the preceding year. Blocks of business closed under applicable State law are not included in calculating premium volume.
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The two representative policy forms must meet the following requirements:
A. Include a lower-level coverage policy form under which the actuarial value of benefits under the coverage is at least 85 percent but not greater than 100 percent of the weighted average; and B. Include a higher level coverage policy form under which the actuarial value of the benefits under the coverage is at least 15 percent greater than the actuarial value of the lower-level coverage policy form offered by an insurer in the State and at least 100 percent, but not greater than 120 percent of the weighted average;
C. Include benefits substantially similar to other individual accident and sickness insurance coverage offered by the insurer in the state;
D. Provide for risk adjustment, risk spreading, or a risk spreading mechanism, or otherwise provide some financial subsidization for eligible individuals; and E. Meet all applicable State requirements.
3.3. All elections by insurers as provided for in subsection 3.2 of this rule must be applied uniformly to all eligible individuals in the State and must be effective for all policies offered during a period of at least two years.
3.4. Insurers making elections must do so on a form prescribed by the Commissioner within the following time frames:
a. For policy forms already being marketed as of July 1, 1997--no later than September 1, 1997.
b. For other policy forms--90 days before the beginning of the calendar year in which the insurer wants to market the policy form.
W. Va. Code R. § 114-55-4 Dependent Coverage
4.1. If an eligible individual elects to enroll in individual accident and sickness insurance coverage that provides coverage for dependents, the insurer may apply a preexisting condition exclusion on any dependent who is not an eligible individual except as otherwise provided by this rule.
4.2. A child is deemed to be an eligible individual if the following conditions are met:
a. The child was covered under any creditable coverage within 30 days of birth, adoption, or placement for adoption; and b. The child has not had a significant break in coverage.
4.3. An insurer in the individual market is not required to offer a family coverage option with any policy form.
W. Va. Code R. § 114-55-5 Certification of Creditable Coverage
5.1. A certificate of creditable coverage must be provided, without charge, for individuals and dependents, who are or were covered under an individual accident and sickness insurance policy as follows:
a. An automatic certificate must be provided within a reasonable time period consistent with State law after the individual ceases to be covered under the policy.
b. A request for a certificate may be made by, or on behalf of, an individual within 24 months after coverage ends. After the request is received, an insurer must provide the certificate promptly. A certificate must be provided even if the individual has previously received an automatic certificate under subdivision a of this subsection.
c. An insurer must establish a procedure for individuals and dependents to request and receive certificates under subdivision b of this subsection.
5.2. Except as otherwise provided in this section, an insurer must provide a certificate of creditable coverage in writing. The requirements of this subsection are satisfied if the insurer provides the required information on a form certificate prescribed by the Commissioner, or in accordance with a model certificate as provided by the Health Care Financing Authority (HCFA).
a. A certificate of creditable coverage must include the following:
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The date the certificate is issued;
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The name of the individual or dependent for whom the certificate applies, and any other information necessary for the insurer providing the coverage specified in the certificate to identify the individual, such as the individual=s identification number under the policy and the name of the policyholder if the certificate is for, or includes, a dependent;
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The name, address, and telephone number of the insurer required to provide the certificate;
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The telephone number to call for further information regarding the certificate (if different from paragraph 3 of this subdivision);
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Either one of the following:
A. A statement that the individual has at least 18 months (for this purpose, 546 days is deemed to be 18 months) of creditable coverage, disregarding days of creditable coverage before a significant break in coverage;
B. Both the date the individual first sought coverage, as evidenced by a substantially complete application, and the date creditable coverage began; and 6. The date creditable coverage ended, unless the certificate indicates that creditable coverage is continuing as of the date of the certificate.
b. No written certificate of creditable coverage must be provided if the following occurs:
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An individual is entitled to receive a certificate;
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The individual requests that the certificate be sent to another plan or insurer instead of to the individual;
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The plan or insurer that would otherwise receive the certificate agrees to accept the required information through means other than a written certificate; and 4. The receiving plan or insurer receives the information from the sending insurer in the prescribed form within the time periods required in subsection 5.1 of this rule.
c. No certificate of creditable coverage is required to be furnished with respect to excepted benefits. If excepted benefits are provided concurrently with other creditable coverage (so that the coverage does not consist solely of excepted benefits), information concerning the benefits may be required to be disclosed under subsection 5.8 of this rule.
5.3. If an automatic certificate is provided under subdivision a of subsection 5.1 of this rule, the period that must be included on the certificate is the last period of continuous coverage ending on the date coverage ceased. If an individual requests a certificate under subdivision b of subsection 5.1 of this rule, a certificate must be provided for each period of continuous coverage ending within the 24-month period ending on the date of the request (or continuing on the date of the request). A separate certificate may be provided for each period of continuous coverage.
5.4. The certificate of creditable coverage is required to be provided, without charge, to each individual described in subsection 5.1 of this rule or an entity requesting the certificate on behalf of the individual. The certificate may be provided by first-class mail.
a. An insurer may provide a single certificate for both an individual and the individual=s dependents if it provides all the required information for each individual and dependent, and separately states the information that is not identical.
b. If the certificate or certificates are provided to the individual and the individual=s spouse at the individual=s last known address, the requirements of this subsection are satisfied with respect to all individuals and dependents residing at that address.
c. If a dependent does not reside at the individual=s last known address, a separate certificate must be provided to the dependent at the dependent=s last known address.
d. If separate certificates are provided by mail to individuals and dependents who reside at the same address, separate mailings of each certificate are not required.
5.5. If an automatic certificate is required to be provided under subdivision a of subsection 5.1 of this rule, and the individual or dependent entitled to receive the certificate designates another individual or entity to receive the certificate, the insurer responsible for providing the certificate may provide the certificate to the designated party. If the certificate must be provided upon request under subdivision b of subsection 5.1, and the individual entitled to receive the certificate designates another individual or entity to receive the certificate, the insurer responsible for providing the certificate must provide the certificate to the designated party.
5.6. An insurer must use reasonable efforts to determine any information needed for a certificate relating to dependent coverage. If an automatic certificate must be furnished with respect to a dependent under subdivision a of subsection 5.1 of this rule, no individual certificate must be furnished until the insurer knows (or making reasonable efforts should know) of the dependent=s cessation of coverage under the policy.
a. If a certificate furnished by an insurer does not provide the name of any dependent of an individual covered by the certificate, the individual may, if necessary, use the procedures described in subdivision c of subsection 5.10 of this rule for demonstrating dependent status. An individual may, if necessary, use these procedures to demonstrate that a child was enrolled within 30 days of birth, adoption, or placement for adoption, in which case the child would not be subject to a preexisting condition exclusion under subsection 4.2 of this rule.
5.7. An insurer that cannot provide the names of dependents, or related coverage information, for purposes of providing a certificate of creditable coverage for a dependent may satisfy the requirements of paragraph 2 of subdivision a of subsection 5.2 of this rule by providing the name of the policyholder and specifying that the type of coverage provided in the certificate is for dependent coverage.
a. For purposes of certificates provided on the request of, or on behalf of, an individual under subdivision b of subsection 5.1 of this rule, an insurer must make reasonable efforts to obtain and provide the names of any dependent covered by the certificate if the information is requested. If an insurer responsible for providing a certificate does not provide the name of any dependent of an individual covered by the certificate, the individual may, if necessary, use the procedures described in subdivision c of subsection 5.10 of this rule for submitting documentation to establish that the creditable coverage in the certificate applies to the dependent.
b. An insurer providing an automatic certificate that does not contain the name of a dependent must furnish a certificate within 21 days after the individual ceases to be covered under the policy.
c. This subsection applies to certifications provided with respect to an event occurring before July 1, 1998.
d. This subsection applies to events described in subdivision a of subsection 5.6 of this rule that occur on or after October 1, 1996 but before June 1, 1997. An insurer offering individual accident and sickness insurance coverage is deemed to satisfy subsections 5.1 and 5.2 of this rule if a notice is provided in accordance with the provisions of this subsection.
5.8. If an individual enrolls in a group health plan and the plan or insurer uses the alternative method of determining creditable coverage described in 114 CSR 54, the individual provides a certificate of creditable coverage under subsection 5.1 or demonstrates creditable coverage subsection 5.9, and the plan or coverage in which the individual enrolls requests from the prior entity, the prior entity must:
a. Promptly identify for the requesting entity the categories of benefits and services used by the individual for which the requesting entity uses the alternative method of crediting coverage, and any specific information that the requesting entity requests to determine the individual=s creditable coverage. The prior entity must promptly disclose to the requesting entity the creditable coverage information.
b. The prior entity furnishing the information under this subsection may charge the requesting entity for the reasonable cost of disclosing the information.
5.9. Individuals may establish creditable coverage (and waiting or affiliation periods) through means other than certificates. If the accuracy of a certificate is contested or a certificate is unavailable when needed by the individual, the individual has the right to demonstrate creditable coverage through the presentation of documents or other means. For example, the individual may make a demonstration if one of the following occurs:
a. An entity has failed to provide a certificate within the required time period;
b. The individual has creditable coverage but an entity may not be required to provide a certificate of the coverage;
c. The coverage is for a period before July 1, 1996;
d. The individual has an urgent medical condition that necessitates a determination before the individual can deliver a certificate to the plan; or e. The individual lost a certificate that the individual had previously received and is unable to obtain another certificate.
5.10. An insurer must take into account all information that it obtains or that is presented on behalf of an individual to make a determination, based on the relevant facts and circumstances, whether or not an individual has 18 months of creditable coverage. An insurer must treat the individual as having furnished a certificate if the individual attests to the period of creditable coverage, the individual presents relevant corroborating evidence of some creditable coverage during the period, and the individual cooperates with the insurer=s efforts to verify the individual=s coverage. For this purpose, cooperation includes providing, upon the insurer=s request, a written authorization for the insurer to request a certificate on behalf of the individual, and cooperating in efforts to determine the validity of the corroborating evidence and dates of coverage. While an insurer may refuse to credit coverage if the individual fails to cooperate with the insurer=s efforts to verify coverage, the insurer may not consider an individual=s inability to obtain a certificate to be evidence of the absence of creditable coverage.
a. Documents that may establish creditable coverage (and waiting or affiliation periods) in the absence of a certificate include explanation of benefit claims or other correspondence from a plan or insurer indicating coverage, pay stubs showing a payroll deduction for health coverage, a health insurance identification card, a certificate of creditable coverage under a group health policy, records from medical care providers indicating health coverage, third party statements verifying periods of coverage, and any other relevant documents that evidence period of health coverage.
b. Creditable coverage (and waiting period and affiliation period information) may be established through means other than documentation, such as by a telephone call from the insurer to a third party verifying creditable coverage.
c. If in the course of providing evidence, including a certificate, of creditable coverage an individual is required to demonstrate dependent status, the insurer must treat the individual as having furnished a certificate showing the dependent status if the individual attests to the dependency and the period of the status and the individual cooperates with the insurer=s efforts to verify the dependent status.
W. Va. Code R. § 114-55-6 Determination of an Eligible Individual
6.1. Each insurer offering accident and sickness insurance coverage in the individual market is responsible for determining whether an applicant for coverage is an eligible individual and must exercise reasonable diligence in making this determination in a timely fashion.
a. If an insurer determines that an individual is an eligible individual, the insurer must promptly issue a policy to that individual.
b. If the information presented in or with an application is substantially insufficient for the insurer to make the determination described in subsection 6.1, the insurer may immediately request additional information from the individual, and must act promptly to make its determination after receipt of the requested information.
c. If an entity fails to provide a certificate of creditable coverage as required by this section, the insurer is subject to the procedures set forth in subsection 5.9 of this rule concerning the individual=s right to demonstrate creditable coverage.
W. Va. Code R. § 114-55-7 Severability
7.1. If any provision of this rule or the application of this rule to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of the provisions to other persons or circumstances shall not be affected by the holding.
114CSR55
Series 56 Quality Assurance Standards For Prepaid Limited Health Service Organizations
W. Va. Code R. § 114-56-1 General
1.1. Scope. -- The purpose of this rule is to set forth standards for quality assurance programs established as a component of a prepaid limited health service organization=s overall structure.
1.2. Authority. -- W. Va. Code '' 33-2-10, 33-25D-7, and 33-25D-22.
1.3. Filing Date. -- April 24, 2000.
1.4. Effective Date. -- April 24, 2000.
W. Va. Code R. § 114-56-2 Definitions
2.1. AAccountability@ means the responsibility of a department or individual for achieving defined goals.
2.2. AAppropriateness@ means the extent to which a particular procedure, treatment, test or service is clearly indicated, not excessive, adequate in quantity and provided in the setting best suited to the patient=s or member=s needs.
2.3. AClinician@ means a state-recognized provider including, but not limited to, physicians, psychologists and psychiatrists who specialize in clinical studies or practice.
2.4. ACommissioner@ means the West Virginia Insurance Commissioner.
2.5. ACoordinating provider@ means the provider of a particular limited health service who is chosen or designated for each subscriber and who will be responsible for coordinating the provision of that particular limited health service to the subscriber, including necessary referrals to other providers of the limited health service: Provided, That if a subscriber is also enrolled in a health maintenance organization, the coordinating provider shall send a written report at least annually to the subscriber=s primary care physician, as defined in article twenty-five-a of this chapter, describing the limited health service provided to the subscriber: Provided, however, That the coordinating provider may disclose data or information only as permitted under W. Va. Code '33-25D-12.
2.6. ACredentialing@ means the process by which a prepaid limited health service organization authorizes, contracts with or employs providers, who are licensed to practice independently, to provide services to its members.
2.7. ADEA@ means Drug Enforcement Administration, the federal agency that issues licenses to prescribe and dispense scheduled drugs.
2.8. ADelegation@ or Adelegated@ means the formal process by which a prepaid limited health service organization gives a contractor the authority to perform certain functions on its behalf, such as credentialing, utilization review and quality assurance. A prepaid limited health service organization can delegate the authority to perform a function but cannot delegate the responsibility for assuring the function is performed properly.
2.9. AGoverning body@ means an individual, group or agency with the ultimate authority and responsibility for the overall operation of the organization.
2.10. ALimited health service@ and Ahealth care service@ means mental or behavioral health services (including mental illness, mental retardation, developmental disabilities, substance abuse, and chemical dependency), together with any services or goods included in the furnishing to any individual of a limited health service. ALimited health services@ does not include inpatient services, hospital surgical services or emergency services except as such services are provided incident to and directly related to a limited health service set forth in this subsection.
2.11. @Member,@ Asubscriber@ or Aenrollee@ means an individual who has been voluntarily enrolled in a prepaid limited health service organization, including individuals on whose behalf a contractual arrangement has been entered into with a prepaid limited health service organization to receive limited health services.
2.12. AOversight@ means the monitoring and direction of a set of activities by individuals responsible for the execution of the activities resulting in the achievement of desired outcomes.
2.13. APractice guidelines@ or Aprotocols@ means systematically developed statements to assist patient and provider decisions about appropriate health care for specific clinical circumstances. Practice guidelines are usually based on such authoritative sources as clinical literature and expert consensus.
2.14. APreauthorization@ means prior assessment that proposed limited health services are covered by the member=s benefit plan and are appropriate for a particular member.
2.15. APrepaid limited health service organization@ means a public or private organization which provides, or otherwise makes available to enrollees, limited health services and which:
a. Receives premiums for the provision of limited health services to enrollees on a prepaid per capita or prepaid aggregate fixed sum basis, excluding copayments;
b. Provides limited health services primarily:
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Directly through an exclusive panel of physicians or other providers who are employees or partners of the organization;
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Through arrangements with individual physicians or other providers or one or more groups of physicians or other providers organized on a group practice or individual practice arrangement; or 3. Some combination of paragraphs 1 and 2 of this subdivision.
2.16. AProvider@ means any physician or other person or organization licensed or otherwise authorized in this state to furnish a health care service.
2.17. AQuality assurance@ means an ongoing program designed to objectively and systematically monitor and evaluate the quality and appropriateness of the enrollee=s care, pursue opportunities to improve the enrollee=s care and to resolve identified problems at the prevailing professional standard of care.
2.18. AQuality improvement work plan@ means an annual plan that describes with timeliness the specific planned quality assurance activities that will be carried out within the quality assurance program.
2.19. AQuality of care@ means the degree to which limited health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.
2.20. ATreatment record@ means the record in which clinical information relating to the provision of physical, social and mental services is recorded and stored either electronically or on paper.
2.21. AUtilization management@ means a system for the evaluation of the necessity, appropriateness, and efficiency of the use of health care services, procedures and facilities.
W. Va. Code R. § 114-56-3 Goals of a Quality Assurance Program
3.1. The goals of a prepaid limited health service organization=s quality assurance program shall be to:
a. Assure the provision of appropriate limited health services delivered to members, while simultaneously addressing the effectiveness of quality of care;
b. Monitor, evaluate and improve the quality of care for limited health services;
c. Provide a systematic process that promotes the delivery of appropriate care in a timely, effective and efficient manner, while maintaining the quality of care for limited health services;
d. Direct members and providers toward the goal of quality and cost effective care for limited health services.
3.2. A prepaid limited health service organization=s quality assurance program shall include a mechanism for identifying potential utilization management issues and linking them to the PLHSO=s utilization management program.
W. Va. Code R. § 114-56-4 Requirements of a Quality Assurance Program
4.1. A prepaid limited health service organization shall develop a quality assurance program which adheres to all applicable state and federal laws, federal regulations and state rules.
a. If, at any time, the commissioner determines that the quality assurance program of the prepaid limited health service organization has become deficient in any significant area, the commissioner, in addition to other remedies available, may establish a corrective action plan that the PLHSO must follow as a condition to the issuance or maintenance of a certificate of authority.
4.2. Each application for a certificate of authority or renewal thereof filed with the commissioner pursuant to the Prepaid Limited Health Service Organization Act, W. Va. Code '' 33-25D-1 et seq., shall be accompanied by a description of a prepaid limited health service organization=s quality assurance program, which shall include, but not be limited to, the requirements of the quality assurance program set forth in this rule. The PLHSO=s quality assurance program may be inspected by providers, enrollees or their agents at the offices of the commissioner pursuant to the provisions of the West Virginia Freedom of Information Act, W.Va. Code '' 29B-1-1 et seq.
a. Pursuant to the requirements of W. Va. Code '33-25D-3, a prepaid limited health service organization shall file notice with the commissioner prior to any modification of the quality assurance program.
4.3. A prepaid limited health service organization shall have a program for quality assurance which clearly defines the structure, design and responsibilities of both delegated and non-delegated activities.
a. The basic components of the quality assurance program shall include:
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Organizational arrangements and responsibilities for quality management and improvement processes;
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A documented utilization management program;
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Written policies and procedures for credentialing and recredentialing physicians and other licensed providers who fall under the scope of the prepaid limited health services organization;
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A written policy addressing enrollees= rights and responsibilities; and 5. The adoption of practice guidelines for the use of preventive health services.
4.4. If a prepaid limited health service organization delegates any quality assurance activity to contractors, there shall be evidence of oversight and auditing of the contracted activity.
a. The PLHSO shall maintain a written description of the delegated activities, the contractor=s accountability for the activities, the frequency of reporting to the PLHSO, the process by which the delegation will be evaluated and the remedies available, including revocation of delegation, if the contractor does not fulfill its obligations.
b. The PLHSO shall maintain evidence of its regular evaluation and approval of the delegated activities by the contractor.
c. The PLHSO shall be responsible for monitoring the activities of the contractor to which it delegates quality assurance activities and for ensuring that the requirements of this rule are met.
4.5. No prepaid limited health service organization may place restrictions upon any provider or coordinating provider which would serve to limit the communication of advice or options regarding treatment available to the member, subscriber or enrollee or would act in any way to limit the communication between the provider and his or her patient. A PLHSO may not prevent any provider from advising an enrollee whether or not a treatment is covered by the plan.
a. No prepaid limited health service organization may provide to any provider or any coordinating provider an incentive or disincentive plan that includes specific payment made directly or indirectly, in any form, to the provider or coordinating provider as an inducement to deny, release, limit, or delay specific, medically necessary and appropriate services provided with respect to a specific enrollee or groups of enrollees with similar conditions.
4.6. Data or information pertaining to the diagnoses, treatment or health of a member obtained from the member or from a provider by a prepaid limited health service organization is confidential and shall not be disclosed to any person except:
a. To the extent that it may be necessary to carry out the purposes of these rules and as allowed by state law;
b. Upon the express consent of the member;
c. Pursuant to statute or court order for the production of evidence or the discovery thereof;
d. In the event of a claim or litigation between the member and the prepaid limited health service organization where the data or information is pertinent, regardless of whether the information is in the form of paper, preserved on microfilm, or stored in computer retrievable form.
4.7. If any data or information pertaining to the diagnosis, treatment or health of any enrollee or applicant is disclosed pursuant to the provisions of subsection 4.6, the prepaid limited health service organization making this required disclosure shall not be liable for the disclosure or any subsequent use or misuse of the data.
W. Va. Code R. § 114-56-5 Quality Management & Improvement
5.1. Organizational arrangements and responsibilities for quality management and improvement processes shall be clearly defined and assigned to appropriate individuals.
a. There shall be a detailed written description of the program which shall be reviewed annually and updated as necessary.
b. A senior executive shall be responsible for program implementation.
c. A medical director shall be employed by the prepaid limited health service organization and have substantial involvement in quality improvement activities.
d. A committee shall be created to oversee quality improvement and shall include PLHSO providers as active participants. The committee shall keep contemporaneous written records reflecting all of its actions.
e. The role, structure and function, including frequency of meetings, of the quality improvement committee shall be specified in the program description.
f. Adequate resources including, but not limited to, personnel, analytic capabilities and data resources shall be dedicated to meet program needs.
g. A written quality improvement work plan shall be prepared annually and shall include: the objectives, scope and planned projects or activities for the year; planned monitoring of previously identified issues, including tracking of issues over time; and planned evaluation of the quality improvement program.
5.2. The quality improvement committee shall be accountable to the governing body of a prepaid limited health service organization. The governing body shall consist of the board of directors or a committee of senior management in instances where the board=s participation with quality improvement is indirect. There must be documented evidence of a formally designated structure, accountability at the highest levels of the organization and ongoing and continuous oversight of quality assurance.
a. The governing body shall formally designate a subcommittee to provide oversight of quality improvement or formally decide to provide such oversight as a committee of the whole.
b. There must be written documentation that the governing body has reviewed and approved the written overall quality improvement program and the annual quality improvement work plan.
c. The governing body or designated committee shall regularly receive written reports from the quality improvement program delineating actions taken and improvements made.
d. All quality assurance information shall be considered in recredentialing, recontracting and annual performance evaluations.
5.3. All findings, conclusions, recommendations, actions taken, and results of actions taken as a result of the quality improvement process shall be documented and reported to the appropriate individuals and committees in the prepaid limited health service organization and through established quality improvement standards.
a. Quality improvement activities shall be coordinated with other performance monitoring activities including, but not limited to, utilization management, risk management and resolution, monitoring of member complaints and grievances, assessment of member satisfaction and review of treatment records.
b. Quality improvement shall be coordinated with other management functions of the prepaid limited health service organization such as network changes, benefits redesign, treatment management systems, practice feedback to providers and patient education.
5.4. Requirements to participate in quality improvement activities shall be incorporated into all provider contracts and employment agreements. Contracts shall specify that hospitals and other contractors will allow the prepaid limited health service organization access to members= treatment records. Contracts shall also specify that the prepaid limited health service organization allows open provider-patient communication regarding appropriate treatment alternatives and that it does not penalize the provider for discussing medically necessary or appropriate care for the patient.
5.5. The quality improvement program must be ongoing and designed to objectively and systematically monitor and evaluate the quality and appropriateness of care and service provided members and to pursue opportunities for improvements.
a. The scope of the program shall be comprehensive and shall include quality of clinical care and quality of service.
b. Members shall be afforded opportunities to participate in and offer suggestions on quality improvement.
c. A prepaid limited health service organization shall monitor and evaluate clinical issues from inpatient facility services, partial facility services, or ambulatory services; high-volume diagnoses or services; and high-risk diagnoses services, or special populations such as child and adolescent mental health, substance abuse, suicidality, persons with serious and persistent mental illness, or persons with dual diagnoses. Such monitoring and evaluation shall reflect members of its covered population.
5.6. A prepaid limited health service organization shall adopt and use practice guidelines or explicit criteria that are based on reasonable scientific evidence.
a. The guidelines shall be reviewed and updated as needed.
b. The guidelines and any updates shall be communicated in writing to all providers.
5.7. A PLHSO shall develop and implement mechanisms for:
a. Assessing performance against practice guidelines;
b. Evaluating member continuity and coordination of care;
c. Detecting under- and over-utilization; and d. Assessing patient outcomes.
5.8. A prepaid limited health service organization shall establish written standards for the availability of coordinating providers. The standards shall be based on the needs of its member population to ensure the availability and accessibility of limited health services, and urgent, emergency and member services. The standards must ensure that the organization=s referral and triage functions are appropriately implemented and monitored.
5.9. A prepaid limited health service organization shall develop indicators, a data collection system and data analysis capabilities to track quality improvement.
a. Indicators shall be objective, measurable and based on current knowledge and clinical experience and shall be used to monitor and evaluate all aspects of care and services identified.
b. A PLHSO shall have performance goals or a bench marking process for each indicator.
c. Appropriate methods and frequency of data collection shall be used for each indicator.
d. Appropriate clinicians shall be used to evaluate data on the clinical performance of providers.
e. Multidisciplinary teams shall be used, where indicated, to analyze and address systems issues.
5.10. If a prepaid limited health service organization receives ten or more complaints from members or enrollees within a six-month period that relate to the same or similar subject matter, the prepaid limited health service organization shall develop a specific written plan of action as to the resolution of the complaints and file a report with the commissioner on how the complaints were successfully resolved.
5.11. A prepaid limited health service organization shall ensure continuity and coordination throughout its continuum of limited health services, and collaborate with relevant health delivery systems and primary care providers to ensure the exchange of patient information in a timely, effective and confidential manner.
W. Va. Code R. § 114-56-6 Utilization Management Program
6.1. A prepaid limited health service organization shall have a documented utilization management program which shall include, at a minimum, performance goals, policies and procedures to evaluate medical necessity, criteria used, information sources, and the process used to review and approve the provision of limited health services.
a. The UM program shall have a mechanism for evaluating and updating the program description on a periodic basis which shall be specified by the prepaid limited health service organization.
6.2. The UM program shall have written utilization review decision protocols based on reasonable medical evidence.
a. A prepaid limited health service organization shall have criteria for appropriateness of a limited health service clearly documented and available, upon request, to participating physicians.
b. A prepaid limited health service organization shall establish a mechanism for checking the consistency of the application of criteria utilized by reviewers.
c. A prepaid limited health service organization shall establish a mechanism for updating review criteria on a periodic basis which shall be specified by the prepaid limited health service organization.
6.3. The UM program shall have professionally accepted, pre-established criteria for the preauthorization of services and for concurrent review of admissions.
a. A prepaid limited health service organization shall, on a timely basis, make efforts to obtain all necessary information, including pertinent clinical information, and consultation with the treating provider, as appropriate.
b. Qualified medical professionals shall review decisions for preauthorization of limited health services and concurrent review of admissions.
c. A duly licensed physician shall conduct a review of medical appropriateness on any denial of limited health services.
d. At any point during the review process a licensed physician consultant specially trained in the area of medicine in question shall be available to provide his or her expert opinion regarding medical appropriateness and necessity of limited health services whenever necessary.
6.4. Decisions regarding provision of limited health services shall be made in a timely manner depending upon the urgency of the situation.
a. The prepaid limited health service organization shall establish medically appropriate time frames for urgent, emergency and planned care cases.
b. In those instances in which a prepaid limited health service organization denies limited health services, a written notice of denial shall be sent immediately to all involved parties, which shall include, but not be limited to, the subscriber, the coordinating provider, and the facility, if appropriate.
- The written notice of denial shall include the reason for denial and an explanation of the appeal process.
6.5. A prepaid limited health service organization may have policies and procedures in place to evaluate the appropriate use of new medical technologies, or new application of established technologies, including medical procedures, drugs, and devices. Any policies and procedures in place regarding new medical technologies shall include standards requiring:
a. Appropriate professionals to participate in the development of technology evaluation criteria:
b. The review of information from appropriate health-related government agencies, government regulatory bodies and published scientific evidence;
c. Assessment of new technologies and new applications of existing technologies; and d. Periodic evaluation and update of policies and procedures as technologies and procedures expand and change.
6.6. A prepaid limited health service organization shall have mechanisms to evaluate the effects of the program using member satisfaction data, provider satisfaction data and other appropriate means.
W. Va. Code R. § 114-56-7 Credentialing & Recredentialing
7.1. A prepaid limited health service organization shall ensure that its network has sufficient numbers and types of providers. The PLHSO shall have a written access plan outlining its strategy for maintaining an adequate network and shall implement mechanisms designed to assure the availability of coordinating providers.
7.2. A prepaid limited health service organization shall have written policies and procedures for the credentialing of all providers that include the original credentialing, recredentialing, recertification and reappointment of providers who fall under its scope of authority and action.
a. The governing body, or the group or individual to whom the governing body has formally delegated the credentialing function, shall review and approve credentialing policies and procedures.
b. A credentialing committee or other peer review body shall be established to make recommendations regarding credentialing decisions. The committee shall include providers including, but not limited to, coordinating providers and physicians, as voting members.
7.3. In terms of initial credentialing, a PLHSO shall obtain and review verification of the following from primary sources:
a. A current valid license to practice;
b. When applicable, clinical privileges in good standing at the institution designated by the provider as the primary admitting facility;
c. A valid Drug Enforcement Administration (DEA) certificate, as applicable;
d. Graduation from medical school or appropriate graduate school and completion of a residency, specialty training and board certification, as applicable;
e. Complete work history;
f. Current adequate malpractice insurance according to the PLHSO=s policy;
g. Complete professional liability claims history; and h. Any other information deemed necessary by the PLHSO in determining whether to contract with a prospective provider.
7.4. A prospective provider shall complete an application for membership which includes a statement by the applicant regarding:
a. Reasons for any inability to perform the essential functions of the position, with or without accommodation;
b. Lack of present illegal drug use and alcohol abuse;
c. History of loss of license or felony convictions;
d. History of loss or limitation of privileges or disciplinary activity;
e. Any other information deemed necessary by a PLHSO in determining whether to contract with a prospective provider; and f. An attestation to the correctness and completeness of the application.
7.5. A prepaid limited health service organization shall request information on the prospective provider from recognized monitoring organizations including: the National Practitioner Data Bank; the appropriate State licensing boards such as the Board of Medicine, the Board of Social Work Examiners, the Board of Examiners of Psychologists, the Board of Examiners in Counseling; and any Medicare/Medicaid sanctioning.
7.6. Representatives from the credentialing committee or members of their staff shall make an initial visit to the office of each coordinating provider. This process shall include documentation of a structured review of the site and of treatment record keeping practices to ensure conformance with the PLHSO=s standards.
7.7. A prepaid limited health service organization shall have written policies and procedures for the initial and ongoing quality assessment of health delivery organizations with which it intends to contract. The PLHSO shall confirm that the health delivery organization has been reviewed and approved by a recognized accrediting body, if appropriate, and is in good standing with state and federal regulatory bodies. If the health delivery organization has not been approved by a recognized accrediting body, the PLHSO must develop and implement standards of participation. Health delivery organizations shall include, but are not limited to, facilities providing mental health or substance abuse services in an inpatient, residential or ambulatory setting.
a. At least every three years, the prepaid limited health service organization shall confirm that the health delivery organization continues to be in good standing with the state and federal regulatory bodies and, if applicable, is reviewed and approved by an accrediting body.
7.8. In terms of recredentialing, a prepaid limited health service organization shall develop a process for the periodic verification of credentials which shall be implemented at least every two years.
a. At a minimum, recredentialing shall include verification from primary sources of:
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A valid state license to practice;
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Clinical privileges in good standing at the institution designated by the provider as the primary admitting facility;
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A valid Drug Enforcement Administration (DEA) certificate, as applicable;
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Board certification, as applicable;
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Current, adequate malpractice insurance;
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Professional liability claims history; and 7. Any other information deemed necessary by a PLHSO in determining whether to re-contract with a provider.
b. The recredentialing process shall include a current statement by the applicant regarding reasons for any inability to perform the essential functions of the position, with or without accommodation and lack of present illegal drug use and alcohol abuse.
c. A PLHSO shall request recredentialing information from the National Practitioner Data Bank; the appropriate State licensing boards such as the Board of Medicine, the Board of Social Work Examiners, the Board of Examiners of Psychologists, the Board of Examiners in Counseling; and any Medicare/Medicaid sanctioning.
d. The recredentialing process shall also include a review of data from member complaints and grievances, results of quality reviews, utilization management, member satisfaction surveys, treatment record reviews and site visits.
e. The recredentialing process shall include an on-site visit to all high-volume coordinating providers and shall involve documentation of a structured review of the site and treatment record keeping practices to ensure conformance with PLHSO standards.
f. A prepaid limited health service organization shall have polices and procedures in place for reducing, suspending or terminating provider privileges which shall include but is not limited to:
- A mechanism for reporting to the appropriate authorities serious quality deficiencies resulting in suspension or termination; and 2. An appeal process for and notice thereof to the provider.
W. Va. Code R. § 114-56-8 Members= Rights & Responsibilities
8.1. A prepaid limited health service organization shall demonstrate a commitment to treating members with respect by developing written policies giving them the right to:
a. Voice grievances about the PLHSO or care provided;
b. Have information concerning the PLHSO, its services, the providers providing care and members= rights and responsibilities;
c. Participate in decision-making regarding limited health services;
d. Be treated with respect and recognition of their dignity and need for privacy; and e. Permit the provider or other person designated by the member or a court of competent jurisdiction to make and enforce all health care decisions which the member could make if he or she had capacity or were competent.
8.2. A PLHSO shall develop a written policy addressing members= responsibilities for cooperating with those providing limited health services by giving needed information to professional staff to ensure appropriate care and by following instructions and guidelines given by those providing limited health services.
8.3. All policies on members= rights and responsibilities shall be provided in writing in clear and concise terms to all members and participating providers and, at a minimum, shall address the following procedures for, policies concerning or information regarding:
a. How to submit a claim for covered services;
b. How to obtain limited health services;
c. After-hours and emergency coverage including the PLHSO=s policy on when to directly access emergency care or use 911-type services;
d. Benefits and services included and excluded from membership;
e. Obtaining out-of-area coverage;
f. Special benefit provisions, such as co-payment, higher deductibles and rejection of claims, that may apply to services outside the system;
g. Member charges;
h. Notification of termination or change in any benefits, services or delivery site/office;
i. Notification of termination of a coordinating provider and the process for selecting a new provider;
j. Appealing decisions adversely affecting a member=s coverage, benefits or relationship to the PLHSO;
k. Changing providers;
l. Disenrollment of nongroup subscribers;
m. Voicing complaints, grievances and appeals;
n. Recommending changes in policies and services;
o. Points of access to limited health services;
p. The process by which a prepaid limited health service organization determines whether or not to include new and emerging technology or treatment as a covered benefit;
q. Provider names, qualifications and titles;
r. Confidentiality;
s. Member satisfaction surveys that assess patient complaints, requests to change providers or facilities and disenrollments; and t. Policies and procedures for the care and treatment of minors as well as adults who are unable to give informed consent.
8.4. The prepaid limited health service organization shall make reasonable accommodations for providing to members with disabilities the PLHSO=s policies on members= rights and responsibilities.
W. Va. Code R. § 114-56-9 Preventive Health Services
9.1. A prepaid limited health service organization shall adopt guidelines for the use of preventive health services which must be based on reasonable medical evidence and the full service population. The guidelines shall be developed or adopted with the participation of the PLHSO=s providers and must include a mechanism for periodic updates.
a. The guidelines and all updates shall be provided in writing to all providers and members.
b. Each guideline shall describe the prevention or early detection interventions and the recommended frequency and conditions under which the interventions are required. The prepaid limited health service organization shall document the scientific basis or authority upon which it based the preventive health guidelines.
c. Providers from the prepaid limited health service organization who have appropriate knowledge shall be involved in the adoption of the preventive health guidelines.
d. At least annually, a PLHSO shall monitor, evaluate and take action upon a minimum of two of the following preventive services as appropriate:
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Infancy, childhood and pre-adolescent screening and educational interventions such as learning and behavioral problems in preschoolers; child abuse and neglect; and impulse disorders;
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Adolescent screening and educational interventions such as depression, acting out, and oppositional disorders; eating disorders; alcohol and drug abuse; suicidal ideation; and high-risk sexual behavior;
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Adult screening and educational interventions such as mood disorders; obsessive compulsive disorders; anxiety disorders; schizophrenia; eating disorders; and alcohol and drug abuse including prescription drug dependence;
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Family and community educational interventions such as healthy lifestyle choices; parent training; stress management; dying, loss and bereavement; domestic violence; and community resources;
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Elderly screening and educational interventions such as mood disorders; organic brain syndrome; complications from chronic illnesses; and substance dependence including prescription drug dependence; and 6. Any other preventive services deemed appropriate by the commissioner and any other state or federal regulatory authorities.
e. Preventive health service studies shall be enrollee population-based, measuring compliance as it relates to the total at-risk population.
W. Va. Code R. § 114-56-10 Treatment records
10.1. A prepaid limited health service organization shall require all of its providers to have an organized treatment record keeping system. Treatment records shall be maintained in a manner that is current, detailed, organized and permits effective patient care and quality review. Records shall also reflect all aspects of patient care including general medical services.
a. A PLHSO shall set forth in writing appropriate standards for treatment records, the systematic review for conformance and the institution of corrective action when standards are not met. Copies of all standards and goals and any updates shall be provided to all providers.
b. Records shall be available to providers at each patient visit and to nationally and state recognized reviewing bodies sanctioned by the commissioner.
W. Va. Code R. § 114-56-11 Severability
11.1. This rule is subject to the anti-discrimination provisions of W.Va. Code ' 33-25A-31.
11.2. If any provision of this rule or the application of this rule to any person or circumstances is for any reason held to be invalid, the remainder of the rule and the application of the provisions to other persons or circumstances shall not be affected by the holding.
114CSR56
Series 57 Privacy Of Consumer Financial And Health Information
W. Va. Code R. § 114-57-1 General
1.1. Scope. -- This rule governs the treatment of nonpublic personal health information and nonpublic personal financial information about individuals by all licensees of the West Virginia Insurance Commission.
1.2. Authority. -- W. Va. Code §§33-2-10, 33-6F-1 and 33-11A-4.
a. This rule:
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Requires a licensee to provide notice to individuals about its privacy policies and practices;
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Describes the conditions under which a licensee may disclose nonpublic personal health information and nonpublic personal financial information about individuals to affiliates and nonaffiliated third parties; and 3. Provides methods for individuals to prevent a licensee from disclosing that information.
b. This rule applies to:
- Nonpublic personal financial information about individuals who obtain or are claimants or beneficiaries of products or services primarily for personal, family or household purposes from licensees. This rule does not apply to information about companies or about individuals who obtain products or services for business, commercial or agricultural purposes; and 2. All nonpublic personal health information.
c. A licensee domiciled in this state that is in compliance with this rule in a state that has not enacted laws or rules or regulations that meet the requirements of Title V of the Gramm-Leach-Bliley Act (PL 102-106) may nonetheless be deemed to be in compliance with Title V of the Gramm-Leach-Bliley Act in the other state.
1.3. Filing Date. -- April 8, 2002.
1.4. Effective Date. -- April 8, 2002.
Until July 1, 2002, a contract that a licensee has entered into with a nonaffiliated third party to perform services for the licensee or functions on the licensee’s behalf satisfies the provisions of subsection 12.1 of this rule, even if the contract does not include a requirement that the third party maintain the confidentiality of nonpublic personal information, as long as the licensee entered into the agreement on or before July 1, 2000.
W. Va. Code R. § 114-57-2 Definitions
2.1. “Affiliate” means a company that controls, is controlled by or is under common control with another company.
2.2. “Clear and conspicuous” means that a notice is reasonably understandable and designed to call attention to the nature and significance of the information in the notice.
a. A licensee makes its notice reasonably understandable if it:
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Presents the information in the notice in clear, concise sentences, paragraphs and sections;
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Uses short explanatory sentences or bullet lists whenever possible;
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Uses definite, concrete, everyday words and active voice whenever possible;
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Avoids multiple negatives;
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Avoids legal and highly technical business terminology whenever possible; and 6. Avoids explanations that are imprecise and readily subject to different interpretations.
b. A licensee designs its notice to call attention to the nature and significance of the information in it if the licensee:
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Uses a plain-language heading to call attention to the notice;
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Uses a typeface and type size that are easy to read;
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Provides wide margins and ample line spacing;
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Uses boldface or italics for key words; and 5. In a form that combines the licensee’s notice with other information, uses distinctive type size, style, and graphic devices, such as shading or sidebars.
c. If a licensee provides a notice on a web page, the licensee designs its notice to call attention to the nature and significance of the information in it if the licensee uses text or visual cues to encourage scrolling down the page, if necessary, to view the entire notice and to ensure that other elements on the web site (such as text, graphics, hyperlinks or sound) do not distract attention from the notice, and the licensee either:
- Places the notice on a screen that consumers frequently access, such as a page on which transactions are conducted; or 2. Places a link on a screen that consumers frequently access, such as a page on which transactions are conducted, that connects directly to the notice and is labeled appropriately to convey the importance, nature and relevance of the notice.
2.3. “Collect” means to obtain information that the licensee organizes or can retrieve by the name of an individual or by identifying number, symbol or other identifying particular assigned to the individual, irrespective of the source of the underlying information.
2.4. “Commissioner” means the Insurance Commissioner of the State of West Virginia.
2.5. “Company” means a corporation, limited liability company, business trust, general or limited partnership, association, sole proprietorship or similar organization.
2.6. “Consumer” means an individual who seeks to obtain, obtains or has obtained an insurance product or service from a licensee that is to be used primarily for personal, family or household purposes, and about whom the licensee has nonpublic personal information, or that individual’s legal representative.
a. An individual who provides nonpublic personal information to a licensee in connection with obtaining or seeking to obtain financial, investment or economic advisory services relating to an insurance product or service is a consumer regardless of whether the licensee establishes an ongoing advisory relationship.
b. An applicant for insurance prior to the inception of insurance coverage is a licensee’s consumer.
c. An individual who is a consumer of another financial institution is not a licensee’s consumer solely because the licensee is acting as agent for, or provides processing or other services to, that financial institution.
d. An individual is a licensee’s consumer if the licensee discloses nonpublic personal financial information about the individual to a nonaffiliated third party other than as permitted under sections 12, 13 and 14 of this rule, and:
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the individual is a beneficiary of a life insurance policy underwritten by the licensee;
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the individual is a claimant under an insurance policy issued by the licensee;
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the individual is an insured or an annuitant under an insurance policy or an annuity, respectively, issued by the licensee; or 4. the individual is a mortgagor of a mortgage covered under a mortgage insurance policy.
e. Provided that the licensee provides the initial, annual and revised notices under sections 3, 4 and 7 of this rule to the plan sponsor, group or blanket insurance policyholder or group annuity contract holder, all of whom are to be treated as customers for purposes of those sections, and further provided that the licensee does not disclose to a nonaffiliated third party nonpublic personal financial information about such an individual other than as permitted under sections 12, 13 and 14 of this rule, an individual is not the consumer of the licensee solely because he or she is:
- A participant or a beneficiary of an employee benefit plan that the licensee administers or sponsors or for which the licensee acts as a trustee, insurer or fiduciary; or 2. Covered under a group or blanket insurance policy or group annuity contract issued by the licensee.
f. The individuals described in paragraphs 1 and 2 of subdivision e of this subsection are consumers of a licensee if the licensee does not meet all the conditions of subdivision e.
g. In no event shall the individuals, solely by virtue of the status described in paragraphs 1 and 2 of subdivision e of this subsection, be deemed to be customers for purposes of this rule.
h. An individual is not a licensee’s consumer solely because he or she is a beneficiary of a trust for which the licensee is a trustee.
i. An individual is not a licensee’s consumer solely because he or she has designated the licensee as trustee for a trust.
2.7. “Consumer reporting agency” has the same meaning as in section 603(f) of the federal Fair Credit Reporting Act (15 U.S.C. 1681a(f)).
2.8. “Control” means:
a. Ownership, control or power to vote twenty-five percent (25%) or more of the outstanding shares of any class of voting security of the company, directly or indirectly, or acting through one or more other persons;
b. Control in any manner over the election of a majority of the directors, trustees or general partners (or individuals exercising similar functions) of the company; or c. The power to exercise, directly or indirectly, a controlling influence over the management or policies of the company, as the commissioner determines.
2.9. “Customer” means a consumer who has a customer relationship with a licensee.
2.10. “Customer relationship” means a continuing relationship between a consumer and a licensee under which the licensee provides one or more insurance products or services to the consumer that are to be used primarily for personal, family or household purposes.
a. A consumer has a continuing relationship with a licensee if:
- The consumer is a current policyholder of an insurance product issued by or through the licensee; or 2. The consumer obtains financial, investment or economic advisory services relating to an insurance product or service from the licensee for a fee.
b. A consumer does not have a continuing relationship with a licensee if:
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The consumer applies for insurance but does not purchase the insurance;
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The licensee sells the consumer travel insurance in an isolated transaction;
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The individual is no longer a current policyholder of an insurance product or no longer obtains insurance services with or through the licensee;
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The consumer is a beneficiary or claimant under a policy and has submitted a claim under a policy choosing a settlement option involving an ongoing relationship with the licensee;
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The consumer is a beneficiary or a claimant under a policy and has submitted a claim under that policy choosing a lump sum settlement option;
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The customer’s policy is lapsed, expired, or otherwise inactive or dormant under the licensee’s business practices, and the licensee has not communicated with the customer about the relationship for a period of twelve (12) consecutive months, other than annual privacy notices, material required by law or regulation, communication at the direction of a state or federal authority, or promotional materials;
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The individual is an insured or an annuitant under an insurance policy or annuity, respectively, but is not the policyholder or owner of the insurance policy or annuity; or 8. The individual’s last known address according to the licensee’s records is deemed invalid. For the purposes of this rule, an address of record is deemed invalid if mail sent to that address by the licensee has been returned by the postal authorities as undeliverable and if subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful.
2.11. “Financial institution” means any institution the business of which is engaging in activities that are financial in nature or incidental to such financial activities as described in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)). Financial institution does not include:
a. Any person or entity with respect to any financial activity that is subject to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.);
b. The Federal Agricultural Mortgage Corporation or any entity charged and operating under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.); or c. Institutions chartered by Congress specifically to engage in securitizations, secondary market sales (including sales of servicing rights) or similar transactions related to a transaction of a consumer, as long as the institutions do not sell or transfer nonpublic personal information to a nonaffiliated third party.
2.12. “Financial product or service” means a product or service that a financial holding company could offer by engaging in an activity that is financial in nature or incidental to such a financial activity under section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)). Financial service includes a financial institution’s evaluation or brokerage of information that the financial institution collects in connection with a request or an application from a consumer for a financial product or service.
2.13. “Health care” means:
a. Preventive, diagnostic, therapeutic, rehabilitative, maintenance or palliative care, services, procedures, tests or counseling that:
- Relates to the physical, mental or behavioral condition of an individual; or 2. Affects the structure or function of the human body or any part of the human body, including the banking of blood, sperm, organs or any other tissue; or b. Prescribing, dispensing or furnishing to an individual drugs or biologicals, or medical devices or health care equipment and supplies.
2.14. “Health care provider” means a physician or other health care practitioner licensed, accredited or certified to perform specified health services consistent with state law, or a health care facility.
2.15. “Health information” means any information or data except age or gender, whether oral or recorded in any form or medium, created by or derived from a health care provider or the consumer that relates to:
a. The past, present or future physical, mental or behavioral health or condition of an individual;
b. The provision of health care to an individual; or c. Payment for the provision of health care to an individual.
2.16. “Insurance product or service” means any product or service that is offered by a licensee pursuant to the insurance laws of this state. Insurance service includes a licensee's evaluation, brokerage or distribution of information that the licensee collects in connection with a request or an application from a consumer for a insurance product or service.
2.17. “Licensee” means all licensed insurers, producers and other persons licensed or required to be licensed, or authorized or required to be authorized, or registered or required to be registered pursuant to chapter 33 of the West Virginia Code.
a. A licensee is not subject to the notice and opt-out requirements for nonpublic personal financial information set forth in sections 1 through 14 of this rule if the licensee is an employee, agent or other representative of another licensee (“the principal”) and:
- The principal otherwise complies with, and provides the notices required by, the provisions of this rule; and 2. The licensee does not disclose any nonpublic personal information to any person other than the principal or its affiliates in a manner permitted by this rule.
b. Subject to paragraph 1 of this subdivision, “licensee” shall also include an unlicensed insurer that accepts business placed through a licensed excess lines broker in this state, but only in regard to the excess lines placements placed pursuant to W. Va. Code §33-12-10. An excess lines broker or excess lines insurer shall be deemed to be in compliance with the notice and opt-out requirements for nonpublic personal financial information set forth in sections 1 through 14 of this rule provided:
- The broker or insurer does not disclose nonpublic personal information of a consumer or a customer to nonaffiliated third parties for any purpose, including joint servicing or marketing under section 12 of this rule, except as permitted by sections 13 or 14 of this rule; and 2. The broker or insurer delivers a notice to the consumer at the time a customer relationship is established on which the following is printed in 16-point type:
PRIVACY NOTICE
“Neither the U.S. brokers that handled this insurance nor the insurers that have underwritten this insurance will disclose nonpublic personal information concerning the buyer to nonaffiliates of the brokers or insurers except as permitted by law.”
2.18. “Nonaffiliated third party” means any person except:
a. A licensee’s affiliate; or b. A person employed jointly by a licensee and any company that is not the licensee’s affiliate (but nonaffiliated third party includes the other company that jointly employs the person).
c. Nonaffiliated third party includes any company that is an affiliate solely by virtue of the direct or indirect ownership or control of the company by the licensee or its affiliate in conducting merchant banking or investment banking activities of the type described in section 4(k)(4)(H) or insurance company investment activities of the type described in section 4(k)(4)(I) of the federal Bank Holding Company Act (12 U.S.C. 1843(k)(4)(H) and (I)).
2.19. “Nonpublic personal information” means nonpublic personal financial information and nonpublic personal health information.
2.20. “Nonpublic personal financial information” means:
a. Personally identifiable financial information; and b. Any list, description or other grouping of consumers (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available.
c. Nonpublic personal financial information does not include:
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Health information;
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Publicly available information, except as included on a list described in subdivision b of this subsection; or 3. Any list, description or other grouping of consumers (and publicly available information pertaining to them) that is derived without using any personally identifiable financial information that is not publicly available.
d. Nonpublic personal financial information includes any list of individuals’ names and street addresses that is derived in whole or in part using personally identifiable financial information that is not publicly available, such as account numbers.
e. Nonpublic personal financial information does not include any list of individuals’ names and addresses that contains only publicly available information, is not derived in whole or in part using personally identifiable financial information that is not publicly available, and is not disclosed in a manner that indicates that any of the individuals on the list is a consumer of a financial institution.
2.21. “Nonpublic personal health information” means health information:
a. That identifies an individual who is the subject of the information; or b. With respect to which there is a reasonable basis to believe that the information could be used to identify an individual.
2.22. “Opt out” means a direction by the consumer that the licensee not disclose nonpublic personal financial information about that consumer to a nonaffiliated third party, other than as permitted by sections 12, 13 and 14 of this rule.
2.23. “Personally identifiable financial information” means any information:
a. A consumer provides to a licensee to obtain an insurance product or service from the licensee;
b. About a consumer resulting from a transaction involving an insurance product or service between a licensee and a consumer; or c. The licensee otherwise obtains about a consumer in connection with providing an insurance product or service to that consumer.
d. Personally identifiable financial information includes, but is not limited to:
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Information a consumer provides to a licensee on an application to obtain an insurance product or service;
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Account balance information and payment history;
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The fact that an individual is or has been one of the licensee’s customers or has obtained an insurance product or service from the licensee;
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Any information about the licensee’s consumer if it is disclosed in a manner that indicates that the individual is or has been the licensee’s consumer;
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Any information that a consumer provides to a licensee or that the licensee or its agent otherwise obtains in connection with collecting on a loan or servicing a loan;
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Any information the licensee collects through an Internet cookie (an information-collecting device from a web server); and 7. Information from a consumer report.
e. Personally identifiable financial information does not include:
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Health information;
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A list of names and addresses of customers of an entity that is not a financial institution; and 3. Information that does not identify a consumer, such as aggregate information or blind data that does not contain personal identifiers such as account numbers, names or addresses.
2.24. “Publicly available information” means any information that a licensee has a reasonable basis to believe is lawfully made available to the general public from:
a. Federal, state or local government records;
b. Widely distributed media; or c. Disclosures to the general public that are required to be made by federal, state or local law.
d. A licensee has a reasonable basis to believe that information is lawfully made available to the general public if the licensee has taken steps to determine:
- That the information is of the type that is available to the general public; and 2. Whether an individual can direct that the information not be made available to the general public and, if so, that the licensee’s consumer has not done so.
e. Publicly available information in government records includes information in government real estate records and security interest filings.
f. Publicly available information from widely distributed media includes information from a telephone book, a television or radio program, a newspaper or a web site that is available to the general public on an unrestricted basis. A web site is not restricted merely because an Internet service provider or a site operator requires a fee or a password, so long as access is available to the general public.
g. A licensee has a reasonable basis to believe that mortgage information is lawfully made available to the general public if the licensee has determined that the information is of the type included on the public record in the jurisdiction where the mortgage would be recorded.
h. A licensee has a reasonable basis to believe that an individual’s telephone number is lawfully made available to the general public if the licensee has located the telephone number in the telephone book or the consumer has informed you that the telephone number is not unlisted.
W. Va. Code R. § 114-57-3 Initial Privacy Notice to Consumers Required
3.1. A licensee shall provide a clear and conspicuous notice that accurately reflects its privacy policies and practices regarding disclosure of nonpublic personal financial information to:
a. An individual who becomes the licensee’s customer, not later than when the licensee establishes a customer relationship, except as provided in subsection 3.5; and b. A consumer, before the licensee discloses any nonpublic personal financial information about the consumer to any nonaffiliated third party, if the licensee makes a disclosure other than as authorized by sections 13 and 14.
3.2. A licensee is not required to provide an initial notice to a consumer under subdivision b of subsection 3.1 if:
a. The licensee does not disclose any nonpublic personal financial information about the consumer to any nonaffiliated third party, other than as authorized by sections 13 and 14, and the licensee does not have a customer relationship with the consumer; or b. A notice has been provided by an affiliated licensee, as long as the notice clearly identifies all licensees to whom the notice applies and is accurate with respect to the licensee and the other institutions.
3.3. A licensee establishes a customer relationship at the time the licensee and the consumer enter into a continuing relationship. A licensee establishes a customer relationship when the consumer:
a. Becomes a policyholder of a licensee that is an insurer when the insurer delivers an insurance policy or contract to the consumer, or in the case of a licensee that is an insurance producer or insurance broker, obtains insurance through that licensee; or b. Agrees to obtain financial, economic or investment advisory services relating to insurance products or services for a fee from the licensee.
3.4. When an existing customer obtains a new insurance product or service from a licensee that is to be used primarily for personal, family or household purposes, the licensee satisfies the initial notice requirements of subsection 3.1 of this section if the licensee provides a revised policy notice, under section 7, that covers the customer’s new insurance product or service. If the initial, revised or annual notice that the licensee most recently provided to that customer was accurate with respect to the new insurance product or service, the licensee does not need to provide a new privacy notice under subsection 3.1. 3.5.
a. A licensee may provide the initial notice required by subdivision a of subsection 3.1 of this section within a reasonable time after the licensee establishes a customer relationship if:
- Establishing the customer relationship is not at the customer’s election; or 2. Providing notice not later than when the licensee establishes a customer relationship would substantially delay the customer’s transaction and the customer agrees to receive the notice at a later time A. when the licensee and the individual agree over the telephone to enter into a customer relationship involving prompt delivery of the insurance product or service; or B. when the relationship is initiated in person at the licensee’s office or through other means by which the customer may view the notice, such as on a web site.
b. Establishing a customer relationship is not at the customer’s election if a licensee acquires or is assigned a customer’s policy from another financial institution or residual market mechanism and the customer does not have a choice about the licensee’s acquisition or assignment.
3.6. When a licensee is required to deliver an initial privacy notice by this section, the licensee shall deliver it according to section 8. If the licensee uses a short-form initial notice for non-customers according to subsection 5.3, the licensee may deliver its privacy notice according to subdivision b of subsection 5.3.
W. Va. Code R. § 114-57-4 Annual Privacy Notice to Customers Required
4.1. A licensee shall provide a clear and conspicuous notice to customers that accurately reflects its privacy policies and practices regarding disclosure of nonpublic personal financial information not less than annually during the continuation of the customer relationship. Annually means at least once in any period of twelve (12) consecutive months during which that relationship exists. A licensee may define the twelve-consecutive-month period, but the licensee shall apply it to the customer on a consistent basis.
a. A licensee provides a notice annually if it defines the twelve-consecutive-month period as a calendar year and provides the annual notice to the customer once in each calendar year following the calendar year in which the licensee provided the initial notice. For example, if a customer opens an account on any day of year one, the licensee shall provide an annual notice to that customer by December 31 of year two.
4.2. A licensee is not required to provide an annual notice to a former customer. A former customer is an individual with whom a licensee no longer has a continuing relationship.
a. A licensee no longer has a continuing relationship with an individual if the individual no longer is a current policyholder of an insurance product or no longer obtains insurance services with or through the licensee.
b. A licensee no longer has a continuing relationship with an individual if the individual’s policy is lapsed, expired or otherwise inactive or dormant under the licensee’s business practices, and the licensee has not communicated with the customer about the relationship for a period of twelve (12) consecutive months, other than to provide annual privacy notices, material required by law or regulation, or promotional materials.
c. For the purposes of this rule, a licensee no longer has a continuing relationship with an individual if the individual’s last known address according to the licensee’s records is deemed invalid. An address of record is deemed invalid if mail sent to that address by the licensee has been returned by the postal authorities as undeliverable and if subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful.
d. A licensee no longer has a continuing relationship with a customer in the case of providing real estate settlement services, at the time the customer completes execution of all documents related to the real estate closing, payment for those services has been received, or the licensee has completed all of its responsibilities with respect to the settlement, including filing documents on the public record, whichever is later.
4.3. When a licensee is required by this section to deliver an annual privacy notice, the licensee shall deliver it according to section 8.
W. Va. Code R. § 114-57-5 Information to be Included in Privacy Notices
5.1. The initial, annual and revised privacy notices that a licensee provides under sections 3, 4 and 7 shall include each of the following items of information, in addition to any other information the licensee wishes to provide, that applies to the licensee and to the consumers to whom the licensee sends its privacy notice:
a. The categories of nonpublic personal financial information that the licensee collects;
b. The categories of nonpublic personal financial information that the licensee discloses;
c. The categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal financial information, other than those parties to whom the licensee discloses information under sections 13 and 14;
d. The categories of nonpublic personal financial information about the licensee’s former customers that the licensee discloses and the categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal financial information about the licensee’s former customers, other than those parties to whom the licensee discloses information under sections 13 and 14;
e. If a licensee discloses nonpublic personal financial information to a nonaffiliated third party under section 12 (and no other exception in sections 13 and 14 applies to that disclosure), a separate description of the categories of information the licensee discloses and the categories of third parties with whom the licensee has contracted;
f. An explanation of the consumer’s right under subsection 9.1 to opt out of the disclosure of nonpublic personal financial information to nonaffiliated third parties, including the methods by which the consumer may exercise that right at that time;
g. Any disclosures that the licensee makes under section 603(d)(2)(A)(iii) of the federal Fair Credit Reporting Act (15 U.S.C. 1681a(d)(2)(A)(iii)) (that is, notices regarding the ability to opt out of disclosures of information among affiliates);
h. The licensee’s policies and practices with respect to protecting the confidentiality and security of nonpublic personal information; and i. Any disclosure that the licensee makes under subsection 5.2 of this section.
5.2. If a licensee discloses nonpublic personal financial information as authorized under sections 13 and 14, the licensee is not required to list those exceptions in the initial or annual privacy notices required by sections 3 and 4. When describing the categories of parties to whom disclosure is made, the licensee is required to state only that it makes disclosures to other affiliated or nonaffiliated third parties, as applicable, as permitted by law.
a. A licensee satisfies the requirement to categorize the nonpublic personal financial information it collects if the licensee categorizes it according to the source of the information, as applicable:
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Information from the consumer;
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Information about the consumer’s transactions with the licensee or its affiliates;
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Information about the consumer’s transactions with nonaffiliated third parties; and 4. Information from a consumer reporting agency.
b. A licensee satisfies the requirement to categorize nonpublic personal financial information it discloses if the licensee categorizes the information according to source, as described in subdivision a of this subsection, as applicable, and provides a few examples to illustrate the types of information in each category. These might include:
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Information from the consumer, including application information, such as assets and income, and identifying information, such as name, address and social security number;
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Transaction information, such as information about balances, payment history and parties to the transaction; and 3. Information from consumer reports, such as a consumer’s creditworthiness and credit history.
c. A licensee does not adequately categorize the information that it discloses if the licensee uses only general terms, such as “transaction information about the consumer.”
d. If a licensee reserves the right to disclose all of the nonpublic personal financial information about consumers that it collects, the licensee may simply state that fact without describing the categories or examples of nonpublic personal information that the licensee discloses.
e. A licensee satisfies the requirement to categorize the affiliates and nonaffiliated third parties to which the licensee discloses nonpublic personal financial information about consumers if the licensee identifies the types of businesses in which they engage.
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Types of businesses may be described by general terms only if the licensee uses a few illustrative examples of significant lines of business. For example, a licensee may use the term “financial products or services” if it includes appropriate examples of significant lines of businesses, such as life insurer, automobile insurer, consumer banking or securities brokerage.
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A licensee also may categorize the affiliates and nonaffiliated third parties to which it discloses nonpublic personal financial information about consumers using more detailed categories.
f. If a licensee discloses nonpublic personal financial information under the exception in section 12 to a nonaffiliated third party to market products or services that it offers alone or jointly with another financial institution, the licensee satisfies the disclosure requirement of subdivision e of subsection 5.1 if it:
- Lists the categories of nonpublic personal financial information it discloses, using the same categories and examples the licensee used to meet the requirements of subdivision b of subsection 5.1, as applicable; and 2. States whether the third party is:
A. A service provider that performs marketing services on the licensee’s behalf or on behalf of the licensee and another financial institution; or B. A financial institution with whom the licensee has a joint marketing agreement.
g. If a licensee does not disclose, and does not wish to reserve the right to disclose, nonpublic personal financial information about customers or former customers to affiliates or nonaffiliated third parties except as authorized under sections 13 and 14, the licensee may simply state that fact, in addition to the information it shall provide under subdivisions a, h, and i of subsection 5.1 and under subsection 5.2.
h. A licensee describes its policies and practices with respect to protecting the confidentiality and security of nonpublic personal financial information if it does both of the following:
- Describes in general terms who is authorized to have access to the information; and 2. States whether the licensee has security practices and procedures in place to ensure the confidentiality of the information in accordance with the licensee’s policy. The licensee is not required to describe technical information about the safeguards it uses.
5.3. A licensee may satisfy the initial notice requirements in subdivision b of subsection 3.1 and in subsection 6.7 for a consumer who is not a customer by providing a short-form initial notice at the same time as the licensee delivers an opt-out notice as required in section 6.
a. A short-form initial notice shall:
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Be clear and conspicuous;
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State that the licensee’s privacy notice is available upon request; and 3. Explain a reasonable means by which the consumer may obtain that notice.
b. The licensee shall deliver its short-form initial notice according to section 8. The licensee is not required to deliver its privacy notice with its short-form initial notice. The licensee instead may simply provide the consumer a reasonable means to obtain its privacy notice. If a consumer who receives the licensee’s short-form notice requests the licensee’s privacy notice, the licensee shall deliver its privacy notice according to section 8.
- Examples of obtaining privacy notice. The licensee provides a reasonable means by which a consumer may obtain a copy of its privacy notice if the licensee:
A. Provides a toll-free telephone number that the consumer may call to request the notice; or B. For a consumer who conducts business in person at the licensee’s office, maintains copies of the notice on hand that the licensee provides to the consumer immediately upon request.
5.4. The licensee’s notice may include:
a. Categories of nonpublic personal financial information that the licensee reserves the right to disclose in the future, but does not currently disclose; and b. Categories of affiliates or nonaffiliated third parties to whom the licensee reserves the right in the future to disclose, but to whom the licensee does not currently disclose, nonpublic personal financial information.
5.5. Sample clauses illustrating some of the notice content required by this section are included in Appendix A of this rule.
W. Va. Code R. § 114-57-6 Form of Opt-Out Notice to Consumers and Opt-Out Methods
6.1. If a licensee is required to provide an opt-out notice under subsection 9.1, it shall provide a clear and conspicuous notice to each of its consumers that accurately explains the right to opt out under that section. The notice shall state:
a. That the licensee discloses or reserves the right to disclose nonpublic personal financial information about its consumer to a nonaffiliated third party;
b. That the consumer has the right to opt out of that disclosure; and c. A reasonable means by which the consumer may exercise the opt-out right.
6.2. A licensee provides adequate notice that the consumer can opt out of the disclosure of nonpublic personal financial information to a nonaffiliated third party if the licensee:
a. Identifies all of the categories of nonpublic personal financial information that it discloses or reserves the right to disclose, and all of the categories of nonaffiliated third parties to which the licensee discloses the information, as described in subdivisions b and c of subsection 5.1, and states that the consumer can opt out of the disclosure of that information; and b. Identifies the insurance products or services that the consumer obtains from the licensee, either singly or jointly, to which the opt-out direction would apply.
6.3. A licensee provides a reasonable means to exercise an opt-out right if it:
a. Designates check-off boxes in a prominent position on the relevant forms with the opt-out notice;
b. Includes a reply form together with the opt-out notice;
c. Provides an electronic means to opt out, such as a form that can be sent via electronic mail or a process at the licensee’s web site, if the consumer agrees to the electronic delivery of information; or d. Provides a toll-free telephone number that consumers may call to opt out.
6.4. A licensee does not provide a reasonable means of opting out if:
a. The only means of opting out is for the consumer to write his or her own letter to exercise that opt-out right; or b. The only means of opting out as described in any notice subsequent to the initial notice is to use a check-off box that the licensee provided with the initial notice but did not include with the subsequent notice.
6.5. A licensee may require each consumer to opt out through a specific means, as long as that means is reasonable for that consumer.
6.6. A licensee may provide the opt-out notice together with or on the same written or electronic form as the initial notice the licensee provides in accordance with section 3.
6.7. If a licensee provides the opt-out notice later than required for the initial notice in accordance with section 3, the licensee shall also include a copy of the initial notice with the opt-out notice in writing or, if the consumer agrees, electronically.
6.8. If two (2) or more consumers jointly obtain an insurance product or service from a licensee, the licensee may provide a single opt-out notice. The licensee’s opt-out notice shall explain how the licensee will treat an opt-out direction by a joint consumer (as explained in subdivision d of this subsection).
a. The licensee may either:
- Treat an opt-out direction by a joint consumer as applying to all of the associated joint consumers; or 2. Permit each joint consumer to opt out separately.
b. If a licensee permits each joint consumer to opt out separately, the licensee shall permit one of the joint consumers to opt out on behalf of all of the joint consumers.
c. A licensee may not require all joint consumers to opt out before it implements any opt-out direction.
d. Example: If John and Mary are both named policyholders on a homeowner’s insurance policy issued by a licensee, and the licensee sends policy statements to John’s address, the licensee may do any of the following, but it shall explain in its opt-out notice which opt-out policy the licensee will follow:
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Send a single opt-out notice to John’s address, but the licensee will accept an opt-out direction from either John or Mary.
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Treat an opt-out direction by either John or Mary as applying to the entire policy. If the licensee does so and John opts out, the licensee may not require Mary to opt out as well before implementing John’s opt-out direction.
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Permit John and Mary to make different opt-out directions. If the licensee does so:
A. It shall permit John and Mary to opt out for each other;
B. If both opt out, the licensee shall permit both of them to notify it in a single response (such as on a form or through a telephone call); and C. If John opts out and Mary does not, the licensee may only disclose nonpublic personal financial information about Mary, but not about John and not about John and Mary jointly.
6.9. A licensee shall comply with a consumer’s opt-out direction as soon as reasonably practicable after the licensee receives it.
6.10. A consumer may exercise the right to opt out at any time.
6.11. A consumer’s direction to opt out under this section is effective until the consumer revokes it in writing or, if the consumer agrees, electronically.
a. When a customer relationship terminates, the customer’s opt-out direction continues to apply to the nonpublic personal financial information that the licensee collected during or related to that relationship. If the individual subsequently establishes a new customer relationship with the licensee, the opt-out direction that applied to the former relationship does not apply to the new relationship.
6.12. When a licensee is required to deliver an opt-out notice under this section, the licensee shall deliver it according to section 8.
W. Va. Code R. § 114-57-7 Revised Privacy Notices
7.1. Except as otherwise authorized in this rule, a licensee shall not, directly or through an affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party other than as described in the initial notice that the licensee provided to that consumer under section 3, unless:
a. The licensee has provided to the consumer a clear and conspicuous revised notice that accurately describes its policies and practices regarding disclosure of nonpublic personal financial information;
b. The licensee has provided to the consumer a new opt-out notice;
c. The licensee has given the consumer a reasonable opportunity, before the licensee discloses the information to the nonaffiliated third party, to opt out of the disclosure; and d. The consumer does not opt out.
7.2. Except as otherwise permitted by sections 12, 13 and 14, a licensee shall provide a revised notice before it:
a. Discloses a new category of nonpublic personal financial information to any nonaffiliated third party;
b. Discloses nonpublic personal financial information to a new category of nonaffiliated third party; or c. Discloses nonpublic personal financial information about a former customer to a nonaffiliated third party, if that former customer has not had the opportunity to exercise an opt-out right regarding that disclosure.
7.3. A revised notice is not required if the licensee discloses nonpublic personal financial information to a new nonaffiliated third party that the licensee adequately described in its prior notice.
7.4. When a licensee is required to deliver a revised privacy notice by this section, the licensee shall deliver it according to section 8.
W. Va. Code R. § 114-57-8 Delivery
8.1. A licensee shall provide any notices that this rule requires so that each consumer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, electronically.
8.2. A licensee may reasonably expect that a consumer will receive actual notice if the licensee:
a. Hand-delivers a printed copy of the notice to the consumer;
b. Mails a printed copy of the notice to the last known address of the consumer separately, or in a policy, billing or other written communication;
c. For a consumer who conducts transactions electronically, posts the notice on the electronic site and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular insurance product or service; or d. For an isolated transaction with a consumer, such as the licensee providing an insurance quote or selling the consumer travel insurance, posts the notice and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining the particular insurance product or service. 8.3 A licensee may not, however, reasonably expect that a consumer will receive actual notice of its privacy policies and practices if it:
a. Only posts a sign in its office or generally publishes advertisements of its privacy policies and practices; or b. Sends the notice via electronic mail to a consumer who has not agreed to receive notices electronically.
8.4. A licensee may reasonably expect that a customer will receive actual notice of the licensee’s annual privacy notice if:
a. The customer agrees to receive notices at the web site and the licensee posts its current privacy notice continuously in a clear and conspicuous manner on the web site; or b. The customer has requested that the licensee refrain from sending any information regarding the customer relationship, and the licensee’s current privacy notice remains available to the customer upon request.
8.5. A licensee may not provide any notice required by this rule solely by orally explaining the notice, either in person or over the telephone.
8.6. For customers only, a licensee shall provide the initial notice required by subdivision a of subsection 3.1, the annual notice required by subsection 4.1, and the revised notice required by section 7 so that the customer can retain them or obtain them later in writing or, if the customer agrees, electronically.
a. A licensee provides a privacy notice to the customer so that the customer can retain it or obtain it later if the licensee:
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Hand-delivers a printed copy of the notice to the customer;
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Mails a printed copy of the notice to the last known address of the customer; or 3. Makes its current privacy notice available on a web site for the customer who agrees to receive the notice at the web site.
8.7. A licensee may provide a joint notice from the licensee and one or more of its affiliates or other financial institutions, as identified in the notice, as long as the notice is accurate with respect to the licensee and the other institutions. A licensee also may provide a notice on behalf of another financial institution.
8.8. If two (2) or more consumers jointly obtain an insurance product or service from a licensee, the licensee may satisfy the initial, annual and revised notice requirements of subsections 3.1, 4.1, and 7.1, respectively, by providing one notice to those consumers jointly.
W. Va. Code R. § 114-57-9 Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties
9.1. Except as otherwise authorized in this rule, a licensee may not, directly or through any affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party unless:
a. The licensee has provided to the consumer an initial notice as required under section 3;
b. The licensee has provided to the consumer an opt-out notice as required in section 6;
c. The licensee has given the consumer a reasonable opportunity, before it discloses the information to the nonaffiliated third party, to opt out of the disclosure; and d. The consumer does not opt out.
e. A licensee provides a consumer with a reasonable opportunity to opt out if:
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The licensee mails the notices required in subdivisions a and b of this subsection to the consumer and allows the consumer to opt out by mailing a form, calling a toll-free telephone number, or any other reasonable means, within thirty (30) days from the date the licensee mailed the notices.
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A customer opens an on-line account with a licensee and agrees to receive the notices required in subdivisions a and b of this subsection electronically, and the licensee allows the customer to opt out by any reasonable means within thirty (30) days after the date that the customer acknowledges receipt of the notices in conjunction with opening the account.
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For an isolated transaction, such as providing the consumer with an insurance quote, the licensee provides the notices required in subdivisions a and b of this subsection at the time of the transaction and requests that the consumer decide, as a necessary part of the transaction, whether to opt out before completing the transaction.
9.2. A licensee shall comply with this section, regardless of whether the licensee and the consumer have established a customer relationship.
9.3. Unless a licensee complies with this section, the licensee may not, directly or through any affiliate, disclose any nonpublic personal financial information about a consumer that the licensee has collected, regardless of whether the licensee collected it before or after receiving the direction to opt out from the consumer.
9.4. A licensee may allow a consumer to select certain nonpublic personal financial information or certain nonaffiliated third parties with respect to which the consumer wishes to opt out.
W. Va. Code R. § 114-57-10 Limits on Redisclosure and Reuse of Nonpublic Personal Financial Information
10.1. If a licensee receives nonpublic personal financial information from a nonaffiliated financial institution under an exception in sections 13 or 14 of this rule, the licensee’s disclosure and use of that information is limited as follows:
a. The licensee may disclose the information to the affiliates of the financial institution from which the licensee received the information;
b. The licensee may disclose the information to its affiliates, but the licensee’s affiliates may, in turn, disclose and use the information only to the extent that the licensee may disclose and use the information; and c. The licensee may disclose and use the information pursuant to an exception in sections 13 or 14 of this rule, in the ordinary course of business to carry out the activity covered by the exception under which the licensee received the information.
10.2. If a licensee receives information from a nonaffiliated financial institution for claims settlement purposes, the licensee may disclose the information for fraud prevention or in response to a properly authorized subpoena. The licensee may not disclose that information to a third party for marketing purposes or use that information for its own marketing purposes.
10.3. If a licensee receives nonpublic personal financial information from a nonaffiliated financial institution other than under an exception in sections 13 or 14 of this rule, the licensee may disclose the information only:
a. To the affiliates of the financial institution from which the licensee received the information;
b. To its affiliates, but its affiliates may, in turn, disclose the information only to the extent that the licensee may disclose the information; and c. To any other person, if the disclosure would be lawful if made directly to that person by the financial institution from which the licensee received the information.
10.4. If a licensee obtains a customer list from a nonaffiliated financial institution outside of the exceptions in sections 13 or 14:
a. The licensee may use that list for its own purposes; and b. The licensee may disclose that list to another nonaffiliated third party only if the financial institution from which the licensee purchased the list could have lawfully disclosed the list to that third party. That is, the licensee may disclose the list in accordance with the privacy policy of the financial institution from which the licensee received the list, as limited by the opt-out direction of each consumer whose nonpublic personal financial information the licensee intends to disclose, and the licensee may disclose the list in accordance with an exception in sections 13 or 14, such as to the licensee’s attorneys or accountants.
10.5. If a licensee discloses nonpublic personal financial information to a nonaffiliated third party under an exception in sections 13 or 14 of this rule, the third party may disclose and use that information only as follows:
a. The third party may disclose the information to the licensee’s affiliates;
b. The third party may disclose the information to its affiliates, but its affiliates may, in turn, disclose and use the information only to the extent that the third party may disclose and use the information; and c. The third party may disclose and use the information pursuant to an exception in sections 13 or 14 in the ordinary course of business to carry out the activity covered by the exception under which it received the information.
10.6. If a licensee discloses nonpublic personal financial information to a nonaffiliated third party other than under an exception in sections 13 or 14 of this rule, the third party may disclose the information only:
a. To the licensee’s affiliates;
b. To the third party's affiliates, but the third party's affiliates, in turn, may disclose the information only to the extent the third party can disclose the information; and c. To any other person, if the disclosure would be lawful if the licensee made it directly to that person.
W. Va. Code R. § 114-57-11 Limits on Sharing Account Number Information for Marketing Purposes
11.1. A licensee shall not, directly or through an affiliate, disclose, other than to a consumer reporting agency, a policy number or similar form of access number or access code for a consumer’s policy or transaction account to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to the consumer.
11.2. Subsection 11.1 does not apply if a licensee discloses a policy number or similar form of access number or access code:
a. To the licensee’s service provider solely in order to perform marketing for the licensee’s own products or services, as long as the service provider is not authorized to directly initiate charges to the account;
b. To a licensee who is a producer solely in order to perform marketing for the licensee’s own products or services; or c. To a participant in an affinity or similar program where the participants in the program are identified to the customer when the customer enters into the program.
11.3. A policy number, or similar form of access number or access code, does not include a number or code in an encrypted form, as long as the licensee does not provide the recipient with a means to decode the number or code.
11.4. For the purposes of this section, a policy or transaction account is an account other than a deposit account or a credit card account. A policy or transaction account does not include an account to which third parties cannot initiate charges.
W. Va. Code R. § 114-57-12 Exception to Opt-Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing
12.1. The opt-out requirements in sections 6 and 9 do not apply when a licensee provides nonpublic personal financial information to a nonaffiliated third party to perform services for the licensee or functions on the licensee’s behalf, if the licensee:
a. Provides the initial notice in accordance with section 3; and b. Enters into a contractual agreement with the third party that prohibits the third party from disclosing or using the information other than to carry out the purposes for which the licensee disclosed the information, including use under an exception in sections 13 or 14 in the ordinary course of business to carry out those purposes.
12.2. If a licensee discloses nonpublic personal financial information under this section to a financial institution with which the licensee performs joint marketing, the licensee’s contractual agreement with that institution meets the requirements of subdivision b of subsection 12.1 if it prohibits the institution from disclosing or using the nonpublic personal financial information except as necessary to carry out the joint marketing or under an exception in sections 13 or 14 in the ordinary course of business to carry out that joint marketing.
12.3. The services a nonaffiliated third party performs for a licensee under subsections 12.1 and 12.2 may include marketing of the licensee’s own products or services or marketing of financial products or services offered pursuant to joint agreements between the licensee and one or more financial institutions.
12.4. For purposes of this section, “joint agreement” means a written contract pursuant to which a licensee and one or more financial institutions jointly offer, endorse or sponsor a financial product or service.
W. Va. Code R. § 114-57-13 Exceptions to Notice and Opt-Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions
13.1. The requirements for initial notice in subdivision b of subsection 3.1, opting out in sections 6 and 9, and service providers and joint marketing in section 12 do not apply if the licensee discloses nonpublic personal financial information as necessary to effect, administer or enforce a transaction that a consumer requests or authorizes, or in connection with:
a. Servicing or processing an insurance product or service that a consumer requests or authorizes;
b. Maintaining or servicing the consumer’s account with a licensee, or with another entity as part of a private label credit card program or other extension of credit on behalf of such entity;
c. A proposed or actual securitization, secondary market sale (including sales of servicing rights) or similar transaction related to a transaction of the consumer; or d. Reinsurance or stop loss or excess loss insurance.
13.2. “Necessary to effect, administer or enforce a transaction” means that the disclosure is:
a. Required, or is one of the lawful or appropriate methods, to enforce the licensee’s rights or the rights of other persons engaged in carrying out the financial transaction or providing the product or service; or b. Required, or is a usual, appropriate or acceptable method:
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To carry out the transaction or the product or service business of which the transaction is a part, and record, service or maintain the consumer’s account in the ordinary course of providing the insurance product or service;
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To administer or service benefits or claims relating to the transaction or the product or service business of which it is a part;
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To provide a confirmation, statement or other record of the transaction, or information on the status or value of the insurance product or service to the consumer or the consumer’s agent or broker;
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To accrue or recognize incentives or bonuses associated with the transaction that are provided by a licensee or any other party;
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To underwrite insurance at the consumer’s request or for any of the following purposes as they relate to a consumer’s insurance: account administration, reporting, investigating or preventing fraud or material misrepresentation, processing premium payments, processing insurance claims, administering insurance benefits (including utilization review activities), participating in research projects or as otherwise required or specifically permitted by federal or state law; or 6. In connection with:
A. The authorization, settlement, billing, processing, clearing, transferring, reconciling or collection of amounts charged, debited or otherwise paid using a debit, credit or other payment card, check or account number, or by other payment means;
B. The transfer of receivables, accounts or interests therein; or C. The audit of debit, credit or other payment information.
W. Va. Code R. § 114-57-14 Other Exceptions to Notice and Opt-Out Requirements for Disclosure of Nonpublic Personal Financial Information
14.1. The requirements for initial notice to consumers in subdivision b of subsection 3.1, opting out in sections 6 and 9, and service providers and joint marketing in section 12 do not apply when a licensee discloses nonpublic personal financial information:
a. With the consent or at the direction of the consumer, provided that the consumer has not revoked the consent or direction;
b. To protect the confidentiality or security of a licensee’s records pertaining to the consumer, service, product or transaction;
c. To protect against or prevent actual or potential fraud or unauthorized transactions;
d. For required institutional risk control or for resolving consumer disputes or inquiries;
e. To persons holding a legal or beneficial interest relating to the consumer; or f. To persons acting in a fiduciary or representative capacity on behalf of the consumer;
g. To provide information to insurance rate advisory organizations, guaranty funds or agencies, agencies that are rating a licensee, persons that are assessing the licensee’s compliance with industry standards, and the licensee’s attorneys, accountants and auditors;
h. To the extent specifically permitted or required under other provisions of law and in accordance with the federal Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.), to law enforcement agencies (including the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration, the Securities and Exchange Commission, the Secretary of the Treasury, with respect to 31 U.S.C. Chapter 53, Subchapter II (Records and Reports on Monetary Instruments and Transactions) and 12 U.S.C. Chapter 21 (Financial Record keeping), a state insurance authority, and the Federal Trade Commission), self-regulatory organizations or for an investigation on a matter related to public safety;
i. To a consumer reporting agency in accordance with the federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq.); or j. From a consumer report reported by a consumer reporting agency;
k. In connection with a proposed or actual sale, merger, transfer or exchange of all or a portion of a business or operating unit if the disclosure of nonpublic personal financial information concerns solely consumers of the business or unit;
l. To comply with federal, state or local laws, rules and other applicable legal requirements;
m. To comply with a properly authorized civil, criminal or regulatory investigation, or subpoena or summons by federal, state or local authorities; or n. To respond to judicial process or government regulatory authorities having jurisdiction over a licensee for examination, compliance or other purposes as authorized by law; or o. For purposes related to the replacement of a group benefit plan, a group health plan or a group welfare plan.
14.2. A consumer may revoke consent by subsequently exercising the right to opt out of future disclosures of nonpublic personal information as permitted under subsection 6.10.
W. Va. Code R. § 114-57-15 When Authorization Required for Disclosure of Nonpublic Personal Health Information
15.1. A licensee shall not disclose nonpublic personal health information about a consumer or customer unless an authorization is obtained from the consumer or customer whose nonpublic personal health information is sought to be disclosed.
15.2. Nothing in this section shall prohibit, restrict or require an authorization for the disclosure of nonpublic personal health information by a licensee for the performance of the following insurance functions by or on behalf of the licensee: claims administration; claims adjustment and management; detection, investigation or reporting of actual or potential fraud, misrepresentation or criminal activity; underwriting; policy placement or issuance; loss control; ratemaking and guaranty fund functions; reinsurance and excess loss insurance; risk management; case management; disease management; quality assurance; quality improvement; performance evaluation; provider credentialing verification; utilization review; peer review activities; actuarial, scientific, medical or public policy research; grievance procedures; internal administration of compliance, managerial, and information systems; policyholder service functions; auditing; reporting; database security; administration of consumer disputes and inquiries; external accreditation standards; the replacement of a group benefit plan; activities in connection with a sale, merger, transfer or exchange of all or part of a business or operating unit; any activity that permits disclosure without authorization pursuant to the federal Health Insurance Portability and Accountability Act privacy rules promulgated by the U.S. Department of Health and Human Services; disclosure that is required, or is one of the lawful or appropriate methods, to enforce the licensee’s rights or the rights of other persons engaged in carrying out a transaction or providing a product or service that a consumer requests or authorizes; and any activity otherwise permitted by law, required pursuant to governmental reporting authority, or to comply with legal process. Additional insurance functions may be added with the approval of the commissioner to the extent they are necessary for appropriate performance of insurance functions and are fair and reasonable to the interest of consumers.
W. Va. Code R. § 114-57-16 Authorizations
16.1. A valid authorization to disclose nonpublic personal health information pursuant to subsection 15.1 shall be in written or electronic form and shall contain all of the following:
a. The identity of the consumer or customer who is the subject of the nonpublic personal health information;
b. A general description of the types of nonpublic personal health information to be disclosed;
c. General descriptions of the parties to whom the licensee discloses nonpublic personal health information, the purpose of the disclosure and how the information will be used;
d. The signature of the consumer or customer who is the subject of the nonpublic personal health information or the individual who is legally empowered to grant authority and the date signed; and e. Notice of the length of time for which the authorization is valid, which in no event shall be for more than twenty-four (24) months, and that the consumer or customer may revoke the authorization at any time and the procedure for making a revocation.
16.2. A consumer or customer who is the subject of nonpublic personal health information may revoke an authorization to disclose nonpublic personal health information at any time, subject to the rights of an individual who acted in reliance on the authorization prior to notice of the revocation.
16.3. A licensee shall retain the authorization or a copy thereof in the record of the individual who is the subject of nonpublic personal health information.
W. Va. Code R. § 114-57-17 Authorization Request Delivery
17.1. A request for authorization and an authorization form may be delivered to a consumer or a customer as part of an opt-out notice pursuant to section 8, provided that the request and the authorization form are clear and conspicuous. An authorization form is not required to be delivered to the consumer or customer or included in any other notices unless the licensee intends to disclose protected health information pursuant to subsection 15.1.
W. Va. Code R. § 114-57-18 Relationship to Federal Rules
18.1. Irrespective of whether a licensee is subject to the federal Health Insurance Portability and Accountability Act privacy rule as promulgated by the U.S. Department of Health and Human Services [65 Fed. Reg. 82461-82829 (Dec. 28, 2000) (to be codified at 45 C.F.R. Parts 160 through 164)] (the “federal rule”), if a licensee complies with all requirements of the federal rule except for its effective date provision, the licensee shall not be subject to the provisions of sections 15, 16, and 17 of this rule.
W. Va. Code R. § 114-57-19 Relationship to State Laws
19.1. Nothing in sections 15, 16, and 17 shall preempt or supercede existing state law related to medical records, health or insurance information privacy.
W. Va. Code R. § 114-57-20 Protection of Fair Credit Reporting Act
20.1. Nothing in this rule shall be construed to modify, limit or supersede the operation of the federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq.), and no inference shall be drawn on the basis of the provisions of this rule regarding whether information is transaction or experience information under section 603 of that Act.
W. Va. Code R. § 114-57-21 Nondiscrimination
21.1. A licensee shall not unfairly discriminate against any consumer or customer because that consumer or customer has opted out from the disclosure of his or her nonpublic personal financial information pursuant to the provisions of this rule.
21.2. A licensee shall not unfairly discriminate against a consumer or customer because that consumer or customer has not granted authorization for the disclosure of his or her nonpublic personal health information pursuant to the provisions of this rule.
W. Va. Code R. § 114-57-22 Construction
22.1. Rule of Construction. -- The examples in this rule and the sample clauses in Appendix A of this rule are not exclusive. Compliance with an example or use of a sample clause, to the extent applicable, constitutes compliance with this rule.
APPENDIX A – SAMPLE CLAUSES
Licensees, including a group of financial holding company affiliates that use a common privacy notice, may use the following sample clauses, if the clause is accurate for each institution that uses the notice. (Note that disclosure of certain information, such as assets, income and information from a consumer reporting agency, may give rise to obligations under the federal Fair Credit Reporting Act, such as a requirement to permit a consumer to opt out of disclosures to affiliates or designation as a consumer reporting agency if disclosures are made to nonaffiliated third parties.)
A-1–Categories of information a licensee collects (all institutions)
A licensee may use this clause, as applicable, to meet the requirement of subdivision a of subsection 5.1 to describe the categories of nonpublic personal information the licensee collects.
Sample Clause A-1:
We collect nonpublic personal information about you from the following sources:
• Information we receive from you on applications or other forms;
• Information about your transactions with us, our affiliates or others; and • Information we receive from a consumer reporting agency.
A-2–Categories of information a licensee discloses (institutions that disclose outside of the exceptions)
A licensee may use one of these clauses, as applicable, to meet the requirement of subdivision b of subsection 5.1 to describe the categories of nonpublic personal information the licensee discloses. The licensee may use these clauses if it discloses nonpublic personal information other than as permitted by the exceptions in sections 12, 13 and 14.
Sample Clause A-2, Alternative 1:
We may disclose the following kinds of nonpublic personal information about you:
• Information we receive from you on applications or other forms, such as [provide illustrative examples, such as “your name, address, social security number, assets, income, and beneficiaries”];
• Information about your transactions with us, our affiliates or others, such as [provide illustrative examples, such as “your policy coverage, premiums, and payment history”]; and • Information we receive from a consumer reporting agency, such as [provide illustrative examples, such as “your creditworthiness and credit history”].
Sample Clause A-2, Alternative 2:
We may disclose all of the information that we collect, as described [describe location in the notice, such as “above” or “below”].
A-3–Categories of information a licensee discloses and parties to whom the licensee discloses (institutions that do not disclose outside of the exceptions)
A licensee may use this clause, as applicable, to meet the requirements of subdivisions b, c, and d of subsection 5.1 to describe the categories of nonpublic personal information about customers and former customers that the licensee discloses and the categories of affiliates and nonaffiliated third parties to whom the licensee discloses. A licensee may use this clause if the licensee does not disclose nonpublic personal information to any party, other than as permitted by the exceptions in sections 13 and 14.
Sample Clause A-3:
We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.
A-4–Categories of parties to whom a licensee discloses (institutions that disclose outside of the exceptions)
A licensee may use this clause, as applicable, to meet the requirement of subdivision c of subsection 5.1 to describe the categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal information. This clause may be used if the licensee discloses nonpublic personal information other than as permitted by the exceptions in sections 12, 13 and 14, as well as when permitted by the exceptions in sections 13 and 14.
Sample Clause A-4:
We may disclose nonpublic personal information about you to the following types of third parties:
• Financial service providers, such as [provide illustrative examples, such as “life insurers, automobile insurers, mortgage bankers, securities broker-dealers, and insurance agents”];
• Non-financial companies, such as [provide illustrative examples, such as “retailers, direct marketers, airlines, and publishers”]; and • Others, such as [provide illustrative examples, such as “non-profit organizations”].
We may also disclose nonpublic personal information about you to nonaffiliated third parties as permitted by law.
A-5–Service provider/joint marketing exception A licensee may use one of these clauses, as applicable, to meet the requirements of subdivision e of subsection 5.1 related to the exception for service providers and joint marketers in section 12. If a licensee discloses nonpublic personal information under this exception, the licensee shall describe the categories of nonpublic personal information the licensee discloses and the categories of third parties with which the licensee has contracted.
Sample Clause A-5, Alternative 1:
We may disclose the following information to companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements:
• Information we receive from you on applications or other forms, such as [provide illustrative examples, such as “your name, address, social security number, assets, income, and beneficiaries”];
• Information about your transactions with us, our affiliates or others, such as [provide illustrative examples, such as “your policy coverage, premium, and payment history”]; and • Information we receive from a consumer reporting agency, such as [provide illustrative examples, such as “your creditworthiness and credit history”].
Sample Clause A-5, Alternative 2:
We may disclose all of the information we collect, as described [describe location in the notice, such as “above” or “below”] to companies that perform marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements.
A-6–Explanation of opt-out right (institutions that disclose outside of the exceptions)
A licensee may use this clause, as applicable, to meet the requirement of subdivision f of subsection 5.1 to provide an explanation of the consumer’s right to opt out of the disclosure of nonpublic personal information to nonaffiliated third parties, including the method(s) by which the consumer may exercise that right. The licensee may use this clause if the licensee discloses nonpublic personal information other than as permitted by the exceptions in sections 12, 13 and 14.
Sample Clause A-6:
If you prefer that we not disclose nonpublic personal information about you to nonaffiliated third parties, you may opt out of those disclosures, that is, you may direct us not to make those disclosures (other than disclosures permitted by law). If you wish to opt out of disclosures to nonaffiliated third parties, you may [describe a reasonable means of opting out, such as “call the following toll-free number: (insert number)].
A-7–Confidentiality and security (all institutions)
A licensee may use this clause, as applicable, to meet the requirement of subdivision h of subsection 5.1 to describe its policies and practices with respect to protecting the confidentiality and security of nonpublic personal information.
Sample Clause A-7:
We restrict access to nonpublic personal information about you to [provide an appropriate description, such as “those employees who need to know that information to provide products or services to you”]. We maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. ________________________________________________
Series 59 Consent To Rate And Guide "a" Rate Agreements
W. Va. Code R. § 114-59-1 General
1.1. Scope. -- Except as otherwise provided, this rule applies to any insurer authorized to transact insurance in West Virginia that writes policies providing medical malpractice insurance coverage for health care providers.
1.2. Authority. -- This rule is promulgated pursuant to the authority granted by W. Va. Code §§33-20B-2 and 33-2-10.
1.3. Filing Date. -- April 3, 2003.
1.4. Effective Date. -- April 3, 2003.
1.5. Purpose. -- The purpose of this rule is to prescribe standards and procedures for reviewing and approving consent to rate agreements or guide “a” rates for medical malpractice insurance policies.
W. Va. Code R. § 114-59-2 Definitions
2.1. “Commissioner” means the commissioner of insurance.
2.2. “Consent to rate” means a written agreement between an insurer and an insured resulting in a rate applied to the risk that exceeds the standard manual rate approved by the commissioner in a rate filing that would otherwise apply to the risk
2.3. “Guide 'a' rate” means a rate that is not backed up by credible loss experience statistics of the carrier writing the risk. These rates are used for unusual risks and are based on the judgment of an underwriter on an individual risk basis.
2.4. “Medical malpractice insurance” means insurance coverage for any claim for damages or loss against a health care provider arising out of the death or injury of any person proximately caused by negligence in the rendering of, or the failure to render, health care services.
2.5. “Non-standard rate” means a rate that is either higher or lower than manual rates set forth in an approved filing that would otherwise apply to a particular risk.
2.6. “Rating manual” means the rates, schedules of rates, classification rules, rating rules, minimum premiums, minimum premium rules, policy fees or rules and any other information which the insurer uses to determine the final dollar charge for medical professional liability insurance coverage.
W. Va. Code R. § 114-59-3 Approval Required for All Non-standard Rates
3.1. Any insurer that wishes to negotiate consent to rate agreements or apply guide “a” rates in connection with the issuance or renewal of any policy providing coverage for medical malpractice liability, shall first file with the commissioner as part of its filing made pursuant to subsection 33-20B-3(a) of the West Virginia Code, or as a supplement to the filing, an appendix which describes the specific risks or reasons for which non-standard rates will be applied to particular risks. The appendix must also set forth the ranges of rates that will be applied to risks that may be the subject of consent to rate agreements: Provided, that the appendix is not required to include rate ranges that will apply to guide “a” rates.
3.2. An insurer shall obtain from the insurance applicant all information necessary to determine the proper application of a non-standard rate before seeking approval from the commissioner of a consent to rate agreement or guide “a” rate. The application for approval of a consent to rate agreement or the use of a guide “a” rate in connection with a specific risk shall be signed by the insured and the insurer, and shall be submitted by the insurer on the West Virginia Medical Malpractice Policy Agreement form, Appendix A to this rule. The original and one copy of the application shall be filed and shall be accompanied by a filing fee of $25.00 and a self-addressed postage prepaid envelope. Resubmission of a disapproved filing will require an additional filing fee. The filing fee shall be paid by the insurer and may not be passed on to the insured.
3.3. An application submitted by an insurer pursuant to subsection 3.2 of this rule shall:
a. In the case of a consent to rate agreement, include the insurer's certification that the risk or reasons for which approval of the consent to rate agreement is requested, and the rate to be applied to the risk, are set forth in the appendix to the rating manual previously approved by the commissioner as provided in subsection 3.1 of this section; or b. In the case of a guide “a” rate, demonstrate that the insurance applicant is a risk for which the insurer has no credible loss experience statistics.
3.4. If the risk or reasons for which approval of a consent to rate agreement are not included in the appendix to the rating manual previously approved by the commissioner as provided in subsection 3.1 of this section, the application for approval of a consent to rate agreement submitted by the insurer shall describe the risk and state with specificity the reasons for the agreement. For the purposes of this subsection, a statement that “coverage is not available at manual rates,” or similar statements will be deemed insufficient.
3.5. An application for approval of a consent to rate agreement or the use of a guide “a” rate in connection with a specific risk shall be approved or denied by the commissioner within fifteen days of receipt of the application by the commissioner as reflected by the “received” stamp placed on the application on the date it is received in the Rates & Forms Division of the West Virginia Insurance Commission. Failure of the commissioner to disapprove the application within this time shall result in its approval.
3.6. In the event a consent to rate agreement or the use of a guide “a” rate in connection with a specific risk is disapproved by the commissioner, the disapproval must specify in what respect(s) the commissioner finds the application to be unacceptable. Notice of the disapproval shall be provided to the agent, the insurer and the insured.
3.7. At any subsequent policy renewal, the requirements of this section must be complied with and a new application for approval must be filed by the insurer.
3.8. The insurer shall retain a copy of each signed consent to rate agreement and a copy of all underwriting and other policy information generated in connection with each consent to rate agreement or guide “a” rate for a period of three years after the date that the policy expires, and shall make this information available to the commissioner upon request.
W. Va. Code R. § 114-59-4 Amendments to West Virginia Medical Malpractice Policy Agreement Form
4.1. The commissioner may as needed amend the West Virginia Medical Malpractice Policy Agreement form, which is Appendix A to this rule, by procedural rule.
W. Va. Code R. § 114-59-5 Violation
5.1. Upon a determination by the commissioner that there is probable cause to believe that any insurer has charged a non-standard rate in violation of §33-20B-2 of the West Virginia Code or this rule, the commissioner shall provide written notice to the insurer of the time and place at which the insurer shall appear to show good cause why a civil penalty, refund to the insured, or transfer from surplus should not be ordered.
5.2. If, after notice and hearing as provided in subsection 5.1 of this section, the commissioner determines that a violation has occurred, the commissioner shall assess a civil penalty and/or order that the insurer issue a refund to the insured or transfer from surplus the difference between the manual rate otherwise applicable to the risk and the rate charged.
APPENDIX A
WEST VIRGINIA MEDICAL PROFESSIONAL LIABILITY
AGREEMENT FORM
TO: Rates and Forms Division WV Insurance Dept. DATE: ____________________ P.O. Box 50540 Charleston, WV 25305 In accordance with Section 33-20B-2(e) of the West Virginia Code and for the reasons provided below, approval is requested of the following proposed rates, which are in excess of or lower than that provided by filings otherwise applicable to the risk.
(1) TYPE OF AGREEMENT ( ) Consent to Rate Agreement ( ) Guide “a” Rate Agreement (2) INSURED NAME _____________________________ (3) INSURED TELEPHONE _________________________________ (4) INSURED ADDRESS _________________________________ (5) TYPE OF RISK (i.e. physicians, nursing homes, hospitals, etc.) __________________________ (6) POLICY TERM _____________________ ___________________ ________________ Inception Expiration Years (7) POLICY NUMBER _______________________________________ (8) INSURER ______________________________________________ (9) INSURER ADDRESS _______________________________________ (10) AGENT’S NAME ___________________________________________ (11) AGENT’S ADDRESS _______________________________________ (12)
Coverage Limits (by coverage)
Manual Premium (inclusive of debits and credits)
Surcharge % or reduction Proposed Premium *Columns are not additive. The Insuring Company certifies that it has explained to the Insured how the proposed premium has been derived.
(13) IN THE CASE OF A CONSENT TO RATE AGREEMENT, THE INSURER MUST CERTIFY THAT THE REASON THIS AGREEMENT IS NECESSARY IS ONE OF THE SPECIFIED REASONS STATED IN THE APPENDIX TO THE RATING MANUAL AS REQUIRED BY §114-59-3.1.
The WV Insurance Commission Filing Number assigned to the aforesaid appendix is: _______________________ IF THE RISK OR REASON(S) THIS AGREEMENT IS NECESSARY IS NOT ONE OF THOSE SPECIFIED IN THE FILING REQUIRED BY §114-59-3.1, THE INSURER MUST DESCRIBE THE RISK AND STATE WITH SPECIFICITY THE REASONS FOR THE AGREEMENT. ______________________________________________________________________________ ______________________________________________________________________________ _____________________________________________________________________________ (14) IN THE CASE OF A GUIDE “A” RATE AGREEMENT, THE INSURER MUST CERTIFY THAT THE REASON(S) THIS AGREEMENT IS NECESSARY IS THAT THIS IS A RISK FOR WHICH THE INSURER HAS NO CREDIBLE LOSS EXPERIENCE STATISTICS.
CERTIFICATION
State of ___________________________ County of ___________________________ To-wit:
I, _____________________________, do swear or affirm that I have carefully examined each of the questions asked in items (12), (13), and (14) in this Agreement and each of the responses thereto and, to the best of my knowledge and ability, all responses, information, exhibits, and documentary evidence submitted in support thereof are true and correct. ______________________________________ (Type or Print Name) ______________________________________ (Title of Insuring Company Official) ______________________________________ (Signature) ______________________________________ (Date)
Sworn to and subscribed before me this _______ day of __________________ 19 ______.
My commission expires: ___________________________________________. _______________________________________ {Notary Seal} Notary Public The above was completed prior to my signing. I note that the rate(s) being charged is:
Choose one option below:
( ) in excess of the rate(s) filed and approved manual rate(s) for this insurer.
( ) below the rate(s) filed and approved manual rate(s) for this insurer.
APPLICANT'S SIGNATURE _____________________________________
EXECUTING THIS FORM DOES NOT OBLIGATE THE SIGNATOR TO PURCHASE COVERAGE FROM THE INSURER REQUESTING UTILIZATION OF THE CONSENT TO RATE OR GUIDE "A" RATE AGREEMENT.
WARNING: THE INSURED SHOULD INVESTIGATE THE POSSIBILITY OF ELIGIBILITY FOR OTHER PLANS THAT MAY BE AVAILABLE TO THE INSURED AT THE TIME OF SIGNING.
NOTICE: An application for approval of a consent to rate agreement or the use of a guide “a” rate or other non-standard rate in connection with a specific risk shall be approved or denied by the Commissioner within 15 days of receipt of the application by the Commissioner as reflected by the “received” stamp placed on the application on the date it is received in the Rates & Forms Division of the West Virginia Insurance Commission. Failure of the Commissioner to disapprove the application within this time shall result in its approval.
114CSR59
114CSR59
WV Insurance Commission Agreement Form 11/2001 WV Insurance Commission Agreement Form 11/2001 WV Insurance Commission Agreement Form 11/2001 WV Insurance Commission Agreement Form 11/2001
Series 60 Affidavits Of Custodian Banks
W. Va. Code R. § 114-60-1 General
1.1. Scope. -- This procedural rule prescribes the form for affidavits of custodian banks for use in the following situations:
a. Where securities entrusted to its care have not been redeposited elsewhere;
b. Where a custodian bank maintains securities on deposit with the depository trust company or like entity; and c. Where ownership of the securities is evidenced by book entry at a federal reserve bank.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-8A-3(b).
1.3. Filing Date. -- July 26, 2002.
1.4. Effective Date. -- August 25, 2002.
W. Va. Code R. § 114-60-2 Definitions
2.1. "Custodian" means a national bank, state bank or trust company that shall at all times during which it acts as a custodian pursuant to this regulation be no less than adequately capitalized as determined by the standards adopted by United States banking regulators and that is regulated by either state banking laws or is a member of the federal reserve system and that is legally qualified to accept custody of securities in accordance with the standards set forth below, except that with respect to securities issued by institutions organized or existing under the laws of a foreign country, or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business therein, "custodian" may include a bank or trust company incorporated or organized under the laws of a country other than the United States that is regulated as such by that country’s government or an agency thereof that shall at all times during which it acts as a custodian pursuant to this regulation be no less than adequately capitalized as determined by the standards adopted by international banking authorities and that is legally qualified to accept custody of securities.
2.2. "Federal reserve book-entry procedure" means the computerized systems sponsored by the United States department of the treasury and certain agencies and instrumentalities of the United States for holding and transferring securities of the United States government and such agencies and instrumentalities, respectively, in federal reserve banks, through banks which are members of the federal reserve system or which otherwise have access to such computerized systems.
2.3. "Securities" means certificated securities as defined in W. Va. Code §46-8-102a(4) and uncertificated securities as defined in subdivision (18) of that subsection.
W. Va. Code R. § 114-60-3 Custodian Affidavit Forms
3.1. The affidavit forms attached to this rule, and made a part hereof as exhibit a, exhibit b and exhibit c, shall be used by a custodian when a written request has been made by an appropriate officer of the insurance company for an affidavit of the custodian in connection with a custody agreement.
APPENDIX A
Clearing Corporation Use [This form affidavit is for use by a custodian bank where securities entrusted to its care have not been redeposited elsewhere.]
STATE OF ____________________________________)
)SS:_____________________
COUNTY OF __________________________________) ______________________________________________, being duly sworn deposes and says that he or she is ________________________________of_______________________________a banking corporation organized under and pursuant to the laws of the _____________________ with the principal place of business at _______________________________________________ ______________________________________________________________________________ _____________________________________________________________________________. (hereinafter called "the bank"):
That his or her duties involve supervision of activities of the bank as custodian and records relating thereto; That the bank is custodian for certain securities of _______________________ ______________, having a place of business at ______________________________________________________________________________ _____________________________________________________________________________, (hereinafter called "the insurance company") pursuant to an agreement between the bank and the insurance company;
That the schedule attached hereto is a true and complete statement of securities (other than those caused to be deposited with The Depository Trust Company or like entity or a Federal Reserve Bank under the Federal Reserve book-entry procedure) which were in the custody of the bank for the account of the insurance company as of the close of business on _______________________; that, unless otherwise indicated on the schedule, the next maturing and all subsequent coupons were then either attached to coupon bonds or in the process of collection; and that, unless otherwise shown on the schedule, all such securities were in bearer form or in registered form in the name of the insurance company or its nominee or of the bank or its nominee, or were in the process of being registered in such form;
That the bank as custodian has the responsibility for the safekeeping of such securities as that responsibility is specifically set forth in the agreement between the bank as custodian and the insurance company; and That, to the best of his or her knowledge and belief, unless otherwise shown on the schedule, the securities were the property of the insurance company and were free of all liens, claims or encumbrances whatsoever.
The foregoing instrument was acknowledged before me this ______ day of ______________, 20, by ____________________________________________________________________ (Name of officer or agent, title of officer or agent) of ________________________________________________________, (Name of corporation acknowledging) a _____________________________ corporation, on behalf of the corporation.
(state or place of incorporation)
Notary:___________________________________ My commission expires_____________________
APPENDIX B
Clearing Corporation Use [This form affidavit is for use in instances where a custodian bank maintains securities on deposit with The Depository Trust Company or like entity.]
STATE OF ____________________________________)
)SS:_____________________
COUNTY OF __________________________________) ______________________________________________, being duly sworn deposes and says that he or she is _of ______________________________, a banking corporation organized under and pursuant to the laws of the _____________________, with the principal place of business at ________________ ______________________________________________________________________________ ______________________________________________________________________________ (hereinafter called "the bank"):
That his or her duties involve supervision of activities of the bank as custodian and records relating thereto;
That the bank is custodian for certain securities of _____________________________________ ______________________________________, having a place of business at _______________ ______________________________________________________________________________ _____________________________________________________________________________, (hereinafter called "the insurance company") pursuant to an agreement between the bank and the insurance company;
That the bank has caused certain of such securities to be deposited with ____________________ ____________________________________________ and that the schedule attached hereto is a true and complete statement of the securities of the insurance company of which the bank was custodian as of the close of business on _____________________________________________, and which were so deposited on such date;
That the bank as custodian has the responsibility for the safekeeping of the securities both in the possession of the bank or deposited with _____________________________________________ as is specifically set forth in the agreement between the bank as custodian and the insurance company; and That, to the best of his or her knowledge and belief, unless otherwise shown on the schedule, the securities were the property of the insurance company and were free of all liens, claims or encumbrances whatsoever.
The foregoing instrument was acknowledged before me this ______ day of , 20, by____________________________________ (Name of officer or agent, title of officer or agent) of ________________________________________________________, (Name of corporation acknowledging) a _____________________________ corporation, on behalf of the corporation.
(state or place of incorporation)
Notary:___________________________________ My commission expires_____________________
APPENDIX C
Clearing Corporation Use [This form affidavit is for use where ownership is evidenced by book entry at a Federal Reserve Bank.]
STATE OF ____________________________________)
)SS:_____________________
COUNTY OF __________________________________) ___________, being duly sworn deposes and says that he or she is__________________________of, a banking corporation organized under and pursuant to the laws of the _____________________, with the principal place of business at _______________________________________________ ______________________________________________________________________________ (hereinafter called "the bank"):
That his or her duties involve supervision of activities of the bank as custodian and records relating thereto;
That the bank is custodian for certain securities of _____________________________________, with a place of business at ________________________________________________________ _____________________________________________________________________________, (hereinafter called "the insurance company") pursuant to an agreement between the bank and the insurance company;
That it has caused certain securities to be credited to its bond entry account with the Federal Reserve Bank of ______________________________________________ under the Federal Reserve book-entry procedure; and that the schedule attached hereto is a true and complete statement of the securities of the insurance company of which the bank was custodian as of the close of business on ________________________________, which were in a "General" book-entry account maintained in the name of the bank on the books and records of the Federal Reserve Bank of _____________________________________________ at such date;
That the bank has the responsibility for the safekeeping of such securities both in the possession of the bank or in said "General" book-entry account as is specifically set forth in the agreement between the bank as custodian and the insurance company; and That, to the best of his or her knowledge and belief, unless otherwise shown on the schedule, said securities were the property of said insurance company and were free of all liens, claims or encumbrances whatsoever.
The foregoing instrument was acknowledged before me this ______ day of ______________, 20, by _________________________________________________ (Name of officer or agent, title of officer or agent) of ________________________________________________________, (Name of corporation acknowledging) a _____________________________ corporation, on behalf of the corporation.
(state or place of incorporation)
Notary:___________________________________ My commission expires_____________________ 114CSR60 114CSR60
Series 61 Credit Personal Property
W. Va. Code R. § 114-61-1 General
1.1. Scope. --
1.1.a. The purposes of this rule are to promote the public welfare by regulating personal property insurance; create a legal framework within which credit personal property insurance may be written in this state; and help maintain the separation between creditors and insurers. It will also minimize the possibilities of unfair competitive practices in the sale of credit personal property insurance, and address problems that could arise from reverse competition in credit insurance markets. This rule is based on the National Association of Insurance Commissioners’ “Credit Personal Property Insurance Model Act” (Model 365), as amended in 2003.
1.1.b. This rule applies to an insurer or producer transacting credit personal property insurance as defined in this rule and all credit personal property insurance written in connection with credit transactions for personal, family or household purposes. This rule does not include the following:
1.1.b.1. Transactions involving extensions of credit primarily for business or commercial purposes;
1.1.b.2. Insurance on motor vehicles designed for highway use and mobile homes;
1.1.b.3. Insurance written in connection with a credit transaction that is secured by a real estate mortgage or deed of trust;
1.1.b.4. Creditor-placed insurance;
1.1.b.5. Title insurance;
1.1.b.6. Non-filing insurance;
1.1.b.7. Insurance purchased by a creditor after repossession or a similar event where the creditor gains possession of the property; and
1.1.b.8. Insurance for which no identifiable charge is made to or collected from the debtor.
1.2. Authority. -- W. Va. Code §§33-2-10 and 46A-3-109(c).
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- July 1, 2011.
W. Va. Code R. § 114-61-2 Definitions
2.1. “Closed-end credit” means a credit transaction that does not meet the definition of open-end credit.
2.2. “Collateral” means personal property in which a purchase money security interest is retained, or that is pledged as security for the satisfaction of a debt.
2.3. “Commissioner” means the West Virginia Insurance Commissioner.
2.4. “Compensation” means commissions, dividends, retrospective rate credits, service fees, expense allowances or reimbursements, gifts, furnishing of equipment, facilities, goods and services or any other form of remuneration that is paid either directly or indirectly as a result of the sale of credit property insurance.
2.5. “Credit agreement” means the written document that sets forth the terms of the credit transaction and includes the security agreement.
2.6. “Credit personal property insurance” means a policy, endorsement, rider, binder, certificate or other instrument or evidence of insurance written in connection with a credit transaction that:
2.6.a. Covers perils to the goods purchased through a credit transaction or used as collateral for a credit transaction and that concerns a creditor’s interest in the purchased goods or pledged collateral either in whole or in part; or
2.6.b. Covers perils to goods purchased in connection with an open-end credit transaction.
2.7. “Credit transaction” means a transaction by which the repayment of money loaned or credit commitment made, or payment of goods, services or properties sold or leased, is to be made at a future date or dates.
2.8. “Creditor” means the lender of money or vendor or lessor of goods, services, property, rights or privileges for which payment is arranged through a credit transaction, or any successor to the right, title or interest of a lender, vendor or lessor and an affiliate, associate or subsidiary of any of them or any director, officer or employee of any of them or any person in any way associated with any of them.
2.9. “Creditor-placed insurance” means insurance that is purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, which provides coverage against loss, expense or damage to the collateralized personal property as a result of fire, theft, collision or other risks of loss that would either impair a creditor’s interest or adversely affect the value of collateral covered by dual interest insurance. It is purchased according to the terms of the credit agreement as a result of the debtor’s failure to provide required insurance, with the cost of the coverage being charged to the debtor. It shall be either single interest insurance or dual interest insurance.
2.10. ”Debtor” means the borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction.
2.11. “Dual interest insurance” means credit personal property insurance covering the seller’s or creditor’s interest and at least partially the borrower’s interest in the goods purchased through the credit transaction or pledged as collateral for the credit transaction.
2.12. “Experience” means earned premiums and incurred losses during the experience period.
2.13. “Experience period” means the most recent period of time for which earned premiums and incurred losses are reported, but not for a period longer than three (3) full years.
2.14. “Finance charge” means any charge payable directly or indirectly as an incident to or as a condition of the extension of credit, including but not limited to interest or time price differentials; amount payable under a discount system of additional charges; service, transaction or carrying charges; loan fees; points or similar charges; appraisal fees; or charges incurred for investigating the credit-worthiness of the consumer. The term shall not include charges as a result of default, taxes, license fees, delinquency charges or filing fees.
2.15. “Gross debt” means the sum of the remaining payments owed to the creditor by the debtor.
2.16. “Incurred losses” means total claims and claim adjustment expenses paid during the experience period plus any change in claim and claim adjustment expense reserves.
2.17. “Identifiable charge” means a charge for credit personal property insurance that is made to debtors having such insurance and not made to debtors not having such insurance. It includes a charge for insurance that is disclosed in the credit or other instrument furnished to the debtor which sets out the financial elements of the credit transaction and any difference in the finance, interest, service or other similar charge made to debtors who are in like circumstances except for the insured or noninsured status of the debtor.
2.18. “Insurance Producer” means a person as defined in W. Va. Code §33-12-2(f), that receives compensation for insurance written or that, on behalf of an insurer or creditor, solicits, negotiates, effects, procures, delivers, renews, continues or binds credit personal property insurance to which this rule applies.
2.19. “Insurer” means insurer as identified in W. Va. Code §33-1-2.
2.20. “Loss ratio” means incurred losses divided by the sum of earned premiums.
2.21. “Mobile home” means “manufactured home” as that term is defined in W. Va. Code §37-15-2(g), “mobile home” as that term is defined in W. Va. Code §37-15-2(h), or “modular home” as that term is defined in W. Va. Code §37-15-2(i).
2.22. “Net debt” means the amount necessary to liquidate the remaining debt in a single lump-sum payment, excluding all unearned interest and other unearned finance charges.
2.23. “Non-filing insurance” means insurance that indemnifies the creditor for loss of its interest in the collateral due to the failure to perfect a security interest.
2.24. “Open-end credit” means credit extended by a creditor under an agreement in which:
2.24.a. The creditor reasonably contemplates repeated transactions;
2.24.b. The creditor imposes a finance charge from time to time on an outstanding unpaid balance; and
2.24.c. The amount of credit that may be extended to the debtor during the term of the agreement, up to any limit set by the creditor, is generally made available to the extent that any outstanding balance is repaid.
2.25. “Reverse competition” means competition among insurers that regularly takes the form of insurers vying with each other for the favor of persons who control, or may control, the placement of the insurance with insurers. Reverse competition tends to increase insurance premiums or prevent the lowering of premiums in order that greater compensation may be paid to persons for such business as a means of obtaining the placement of business. In these situations, the competitive pressure to obtain business by paying higher compensation to these persons overwhelms any downward pressures consumers may exert on the price of insurance, thus causing prices to rise or remain higher than they would otherwise.
2.26. “Single interest insurance” means credit personal property insurance covering only the seller’s or creditor’s interest in the goods purchased through the credit transaction or pledged as collateral in the credit transaction.
2.27. “Title insurance” means insurance as defined in W. Va. Code §33-1-10(f)(4).
W. Va. Code R. § 114-61-3 Amount, Term and Coverage of Credit Personal Property Insurance; Prohibited Practices
3.1. For credit personal property insurance sold in conjunction with a closed-end transaction, an insurer may not issue credit personal property insurance coverage unless the amount financed exceeds five hundred dollars.
3.2. For credit personal property insurance sold in conjunction with a closed-end transaction, an insurer may not issue credit personal property insurance in an amount that exceeds the replacement value of the collateral, up to the amount financed in the underlying credit transaction, or with a term that exceeds in duration the scheduled term of the underlying credit transaction: Provided, That the debtor may obtain from the insurer, at his or her option, greater coverages for longer periods of time if he or she so desires, as authorized by W. Va. Code §46A-3-109(b)(1).
3.3. Credit personal property insurance coverage shall, at a minimum, include the coverages in the standard fire policy with coverage attachment, extended coverage endorsement, and replacement cost provision endorsement.
3.4. Credit personal property insurance shall cover a substantial risk of loss of or damage to the property related to the credit transaction.
3.5. An insurer may not require the bundling of other credit insurance coverages with the purchase of credit personal property insurance coverage. A debtor shall have the choice to purchase credit personal property insurance separate from other credit insurance coverage.
3.6. An insurer shall not use gross debt as an exposure base in determining credit personal property insurance premiums.
W. Va. Code R. § 114-61-4 Disclosure to Debtors; Provisions of Policies; and Certificates of Insurance
4.1. The following shall be disclosed to the debtor in writing, and may be combined with other disclosures required by W. Va. Code §46A-3-109(b)(4), or by federal laws and regulations:
4.1.a. That the purchase of credit personal property insurance through the creditor is optional and not a condition of obtaining credit approval;
4.1.b. If more than one kind of credit insurance is being made available to the debtor, that the debtor can purchase credit personal property insurance separately;
4.1.c. That if the consumer has other insurance that covers the risk, he or she may not want or need credit personal property insurance;
4.1.d. That within the first thirty days after receiving the individual policy or certificate of insurance, the debtor may cancel the coverage and have all premium paid by the debtor refunded or credited. Thereafter, the debtor may cancel the policy at any time during the term of the loan and receive a refund of any unearned premium. However, only in those instances where the creditor requires evidence of insurance for the extension of credit, the debtor may be required to offer evidence of alternative insurance acceptable to the creditor at the time of cancellation;
4.1.e. If not already contained in the certificate or policy received contemporaneously with the credit transaction, a brief description of the coverage, including a description of the major perils and exclusions, any deductible, to whom the benefits would be paid, and the premium or premium rate for the credit personal property coverage; and
4.1.f. If the premium or insurance charge is financed, that it will be subject to finance charges at the rate applicable to the credit transaction.
4.2. The disclosures required in subsection 4.1 of this section shall be provided in the following manner:
4.2.a. In connection with credit personal property insurance offered contemporaneously with the extension of credit or offered through direct mail advertisements, the disclosures shall be made in writing and presented to the consumer in a clear and conspicuous manner; and
4.2.b. When the offer of credit personal property insurance is subsequent to the extension of credit or not offered by direct mail advertisements, the disclosures may be provided in conjunction with the offer either orally or electronically so long as written disclosures are provided to the debtor no later than the earlier of:
4.2.b.1. Ten days after the election to purchase the credit personal property insurance; or
4.2.b.2. The date any other written material is provided to the debtor.
4.3. An offer to extend coverage for an open-end consumer transaction shall include, at the time of the invitation to contract, the written disclosure below in no smaller than twelve-point type. If the solicitation is made by telephone the disclosure may be summarized and given orally, provided that written disclosure is mailed to the debtor within ten days of enrollment.
“This coverage might duplicate existing coverage if you have a residential property insurance policy. It applies to any item of covered property on which you owe a debt. This coverage is primary, so it is the first source to be used in the event of a loss on property it covers. You may cancel this coverage at any time by calling the insurer at the telephone number provided to you, or by writing to the insurer. We are charging you a premium that may be based on things for which a claim cannot be made, such as services, meals or other consumables, entertainment, finance or service fees, loan interest, delivery charges or other insurance premiums.”
4.4. All credit personal property insurance shall be evidenced by an individual policy or a certificate of insurance that shall be delivered to the debtor. The individual policy or certificate of insurance shall, in addition to other requirements of law, set forth the following:
4.4.a. The name and home office address of the insurer;
4.4.b. The name or names of the debtor or debtors, or, in the case of a certificate of insurance, the identity by name or otherwise of the debtor or debtors;
4.4.c. The premium or amount of payment by the debtor, except that for open-end credit, the premium rate and balance to which the rate applies shall be specified;
4.4.d. A full description of the coverage or coverages including the amount and term thereof, and any exceptions, limitations, and exclusions;
4.4.e. A statement that the benefits shall be paid to the creditor to reduce or extinguish the unpaid debt or to repair or replace the property and, whenever the amount of loss payment exceeds the unpaid debt, that any excess payment shall be payable to the debtor;
4.4.f. If the scheduled term of the insurance is less than the scheduled term of the credit transaction, a statement to that effect on the face of the individual policy or certificate of insurance in not less than twelve-point bold face type; and
4.4.g. If the policy is issued to cover open-end consumer transactions, it shall provide that the policyholder or certificate holder will be furnished the following disclosure notice with the account statement at least annually in no smaller than twelve-point type:
“You are paying credit property insurance premium based on the outstanding balance of this account. You may cancel this coverage at any time by calling the insurer at the telephone number the insurer has provided to you, or by writing to the insurer. Your premium may be based on things for which a claim cannot be made, such as services, meals or other consumables, entertainment, finance or service fees, loan interest, delivery charges, or other insurance premiums.”
4.5. Except as provided in subsection 4.6, the individual policy or group certificate shall be delivered to the debtor upon acceptance of the insurance by the insurer.
4.6. An individual policy or group certificate delivered in conjunction with an open-end credit agreement or any credit personal property insurance requested by the debtor after the date the indebtedness is incurred shall be delivered within thirty days of the date the insurance is requested by the debtor.
W. Va. Code R. § 114-61-5 Filing and Approval of Rates and Forms
5.1. All policies, certificates of insurance, group and individual applications for insurance and enrollment forms, endorsements and riders delivered or issued for delivery in this state and the schedules of premium rates pertaining thereto shall be filed with the Commissioner and approved according to the provisions of W. Va. Code §§33-6-8, 33-6-9 and 33-20-1, et seq.
W. Va. Code R. § 114-61-6 Reasonableness of Benefits in Relation to Premium Charge
6.1. An insurer may revise its schedule of premium rates from time to time and shall file the revised schedules with the Commissioner pursuant to the filing requirements in section five of this rule. An insurer shall not issue a credit personal property insurance policy for which the premium rates exceed that determined by the approved schedules of the insurer then on file with the Commissioner.
6.2. Benefits provided by credit personal property insurance policies shall be reasonable in relation to the premium charged. This requirement is satisfied if the premium rate charged develops or may reasonably be expected to develop a loss ratio of not less than sixty percent or such other loss ratio as designated by the Commissioner to afford a reasonable allowance for actual and expected loss experience including a reasonable catastrophe provision, general and administrative expenses, reasonable acquisition expenses, reasonable creditor compensation, investment income, premium taxes, licenses, fees, assessments, and reasonable insurer profit.
6.3. For open-end credit transactions, an insurer’s rating plan shall address, by grouping of like accounts, the expected variance in the mix of goods purchased that are covered under the credit personal property coverage versus items purchased that are not covered under the credit personal property coverage. Accounts shall be separated into groupings that possess or are expected to possess a similar mix of covered goods purchased versus not covered goods purchased.
W. Va. Code R. § 114-61-7 Experience Reports and Triennial Filing Requirements
7.1. An insurer doing insurance business in this state shall annually file with the Commissioner and the National Association of Insurance Commissioners (NAIC) a report of credit personal property insurance written on a calendar year basis. The report shall utilize the Credit Insurance Supplement–Annual Statement Blank approved by the NAIC, and shall contain data separately for each state, rather than an allocation of the company’s countrywide experience. The filing shall be made in accordance with and no later than the due date in the Instructions to the Annual Statement.
7.2. Rates that have been filed and approved pursuant to section 5 of this rule are effective for a period not to exceed three (3) years. An insurer shall file a new rate or support the previously approved rate before the three-year period expires. An insurer may file for a new rate before the end of the three-year period.
W. Va. Code R. § 114-61-8 Cancellation and Refund of Unearned Premium
8.1. Upon cancellation for any reason, the debtor is entitled to a refund of unearned premiums calculated on a daily pro rata basis. No refunds of less than one dollar are required.
W. Va. Code R. § 114-61-9 Claims
9.1. All claims shall be promptly reported by the creditor to the insurer or its designated claim representative, and the insurer shall maintain adequate claim files. All claims shall be settled as soon as possible and in accordance with the terms of the insurance contract.
9.2. All claims shall be paid either by draft drawn upon the insurer, by electronic funds transfer, or by check of the insurer to the order of the claimant to whom payment of the claim is due pursuant to the policy provisions, or upon direction of the claimant to the party specified by the claimant.
9.3. No plan or arrangement may be used whereby any person, firm or corporation other than the insurer or its designated claim representative is authorized to settle or adjust claims. The creditor may not be designated as claim representative for the insurer in adjusting claims: Provided, that once the amount is determined a group policyholder may, by arrangement with the group insurer, draw drafts, checks or electronic transfers in payment of claims due to the group policyholder subject to audit and review by the insurer.
9.4. No claim may be denied because the debtor was ineligible for coverage later than ninety days after the initiation of coverage unless the debtor misrepresented a material fact. If a claim is denied because the debtor was ineligible for coverage within ninety days after initiation of coverage or because the debtor misrepresented a material fact for coverage, the insurer shall refund to the debtor all premium paid and the creditor shall refund any finance charge paid on the premium.
9.5. All claims for credit personal property insurance shall be subject to W. Va. Code §33-11-4(9).
114CSR61
114CSR61
Series 62 Standards For Safeguarding Consumer Information
W. Va. Code R. § 114-62-1 General
1.1. Scope. -- This rule establishes standards for developing and implementing administrative, technical and physical safeguards to protect the security, confidentiality and integrity of customer information, pursuant to sections 501 and 507, and subsection 505(b) of the Gramm-Leach-Bliley Act, codified at 15 U.S.C. 6801, 6807 and 6805(b). Section 507 of the Act provides, among other things, that a state regulation may afford persons greater privacy protections than those provided by subtitle A of Title V of the Gramm-Leach-Bliley Act. The safeguards established pursuant to this rule shall apply to nonpublic personal information, including nonpublic personal financial information and nonpublic personal health information.
1.2. Authority. -- W.Va. Code §§33-6F-1 and 33-2-10.
a. Subsection 501(a) of the Gramm-Leach-Bliley Act, 15 U.S.C. 6801, provides that it is the policy of the Congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’ nonpublic personal information.
b. Subsection 501(b) of the Act requires the state insurance regulatory authorities to establish appropriate standards relating to administrative, technical and physical safeguards:
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To ensure the security and confidentiality of customer records and information;
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To protect against any anticipated threats or hazards to the security or integrity of such records; and 3. To protect against unauthorized access to or use of records or information that could result in substantial harm or inconvenience to a customer.
c. Paragraph 505(b)(2) of the Gramm-Leach-Bliley Act, 15 U.S.C. 6805(b), calls on state insurance regulatory authorities to implement the standards prescribed under subsection 501(b) by regulation with respect to persons engaged in providing insurance.
d. Paragraph 503(a)(3) of the Gramm-Leach-Bliley Act, codified at 15 U.S.C. section 6803(a)(3), requires each financial institution to develop policies for protecting the nonpublic personal information of consumers and to make those policies available in written form.
1.3. Filing Date. -- April 3, 2003.
1.4. Effective Date. -- April 3, 2003.
W. Va. Code R. § 114-62-2 Definitions
2.1. “Customer” means a customer of the licensee as the term is defined in subsection 2.9 of the insurance commissioner's rule on privacy of consumer financial and health information, 114CSR57.
2.2. “Customer information” means any nonpublic personal information as defined in subsection 2.19 of the insurance commissioner's rule on privacy of consumer financial and health information, 114CSR57, about a customer, whether in paper, electronic or other form, that is maintained by or on behalf of the licensee. For purposes of this rule, customer information shall also include information submitted to a licensee by a consumer on an application for an insurance product, regardless of whether the insurance product is ultimately purchased by the consumer.
2.3. “Customer information systems” means the electronic or physical methods used to access, collect, store, use, transmit, protect or dispose of customer information.
2.4. “Licensee” means a licensee as that term is defined in subsection 2.17 of the insurance commissioner's rule on privacy of consumer financial and health information, 114CSR57, except that “licensee” shall not include:
a. A purchasing group; or b. An unauthorized insurer in regard to the excess line business conducted pursuant to article twelve-c, chapter thirty-three of the West Virginia Code.
2.5. “Service provider” means a person that maintains, processes or otherwise is permitted access to customer information through its provision of services directly to the licensee.
W. Va. Code R. § 114-62-3 Information Security Program
3.1. Each licensee shall implement a comprehensive written information security program that includes administrative, technical and physical safeguards for the protection of customer information. The administrative, technical and physical safeguards included in the information security program shall be appropriate to the size and complexity of the licensee and the nature and scope of its activities.
W. Va. Code R. § 114-62-4 Objectives of Information Security Program
4.1. A licensee’s information security program shall be designed to:
a. Ensure the security and confidentiality of customer information;
b. Protect against any anticipated threats or hazards to the security or integrity of the information; and c. Protect against unauthorized access to or use of the information that could result in substantial harm or inconvenience to any customer.
W. Va. Code R. § 114-62-5 Methods of Development and Implementation
5.1. The actions and procedures set forth in this section are nonexclusive examples of methods a licensee may use to implement the requirements of sections three and four of this rule.
5.2. The licensee assesses risk by:
a. Identifying reasonably foreseeable internal or external threats that could result in unauthorized disclosure, misuse, alteration or destruction of customer information or customer information systems;
b. Assessing the likelihood and potential damage of these threats, taking into consideration the sensitivity of customer information; and c. Assessing the sufficiency of policies, procedures, customer information systems and other safeguards in place to control risks.
5.3. The licensee manages and controls risk by:
a. Designing its information security program to control the identified risks, commensurate with the sensitivity of the information and the complexity and scope of the licensee’s activities;
b. Training staff, as appropriate, to implement the licensee’s information security program; and c. Regularly testing or otherwise regularly monitoring the key controls, systems and procedures of the information security program. The frequency and nature of these tests or other monitoring practices shall be determined by the licensee’s risk assessment.
5.4. The licensee oversees service provider arrangements by:
a. Exercising appropriate due diligence in selecting its service providers; and b. Requiring its service providers to implement appropriate measures designed to meet the objectives of this rule, and, where indicated by the licensee’s risk assessment, taking appropriate steps to confirm that its service providers have satisfied these obligations.
5.5. The licensee monitors, evaluates and adjusts, as appropriate, its information security program in light of any relevant changes in technology, the sensitivity of its customer information, internal or external threats to information, and the licensee’s own changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, outsourcing arrangements, and changes to customer information systems.
W. Va. Code R. § 114-62-6 Violation. 6.1 Violations of this rule are subject to the provisions of W. Va. Code §§33-3-11 and 33-12-24
114CSR62
114CSR62
Series 63 Standard Motor Vehicle Policy Provisions
W. Va. Code R. § 114-63-1 General
1.1. Scope. -- This rule establishes the standard motor vehicle insurance policy provisions as required by W. Va. Code §33-6-31(i).
1.2. Authority. -- W. Va. Code §§33-6-31(i) and 33-2-10.
1.3. Filing Date. -- April 3, 2003.
1.4. Effective Date. -- April 3, 2003.
W. Va. Code R. § 114-63-2 Definitions
2.1. “Motor Vehicle” means a car, auto, or other synonym as such word is defined in the policy.
2.2. “Underinsured Motor Vehicle” means a motor vehicle with respect to the ownership, operation or use of which there is liability insurance applicable at the time of the accident but the limits actually available to the injured person in question are less than the total amount of damages sustained by the injured person regardless of the comparison between such liability insurance limits actually available and the underinsured motorist coverage limits.
2.3. “Uninsured Motor Vehicle” means a motor vehicle as to which there is no:
a. Bodily injury liability insurance and property damage liability insurance, or b. There is such insurance, but the insurance company writing the same denies coverage thereunder; and c. There is no certificate of self insurance.
A motor vehicle shall be deemed to be uninsured if the owner or operator thereof be unknown. W. Va. Code §33-6-31(c). A motor vehicle shall also be deemed to be uninsured if there has been a valid bodily injury or property damage liability policy issued upon such vehicle but the policy is uncollectible, in whole or in part, by reason of the insurance company being insolvent or having been placed in receivership. W. Va. Code §33-6-31(j).
W. Va. Code R. § 114-63-3 Liability Insurance Provisions
3.1. All motor vehicle liability policies shall contain a provision insuring the named insured and any other person responsible for the use of or using the motor vehicle with the consent, express or implied, of the named insured or his or her spouse. W. Va. Code §33-6-31(a).
3.2. All motor vehicle liability policies shall contain a provision insuring against liability for death or bodily injury sustained, or loss or damage occasioned, as a result of negligence in the ownership, maintenance or use of the vehicle. W. Va. Code §33-6-31(a).
3.3. All motor vehicle liability policies shall contain a provision providing primary coverage to the named insured and to any other person who normally operates the covered vehicle, if he or she is instead operating a motor vehicle owned by one engaged in the business of selling, repairing, leasing or servicing motor vehicles, without separate consideration, while the insured’s motor vehicle is in the custody of one engaged in said business of selling, repairing, leasing or servicing motor vehicles. W. Va. Code §33-6-29.
3.4. All motor vehicle liability policies shall contain coverage for liability under the family purpose doctrine. W. Va. Code §33-6-31(a).
3.5. Motor vehicle liability policies shall not contain family member exclusions.
3.6. Motor vehicle liability policies shall not contain terms for cancellation or non-renewal less favorable to the insured than those set forth in W. Va. Code §33-6A.
3.7. Motor vehicle liability policies shall not contain any condition, stipulation or agreement requiring the policy to be construed according to the laws of any other state or country, except as necessary to meet the requirements of the motor vehicle financial responsibility laws or compulsory disability benefit laws of such other state or country. W. Va. Code §33-6-14.
3.8. Motor vehicle liability policies shall not contain any condition, stipulation or agreement limiting the time within which a claim may be brought to less than two years from the time the cause of action accrues. W. Va. Code §33-6-14.
3.9. Motor vehicle liability policies may contain a provision excluding coverage for the negligence of a driver operating the motor vehicle without the consent, express or implied, of the named insured (or his or her spouse).
3.10. Motor vehicle liability policies may contain a provision with respect to the negligence of any bailee for hire. W. Va. Code §33-6-31(a).
3.11. Motor vehicle liability policies may contain an exclusion for intentional torts above the minimum financial liability limits under W. Va. Code §17D-4-2.
3.12. Motor vehicle liability policies may contain a restricted named driver exclusion endorsement above the minimum financial liability limit under W. Va. Code §17D-4-2. The restricted named driver exclusion must specifically designate by name the individual or individuals to be excluded.
3.13. Motor vehicle liability policies may contain a provision which precludes stacking.
3.14. Motor vehicle liability policies may contain a “duty to cooperate” clause provided that before an insurance policy will be voided because of the insured’s failure to cooperate, the failure must be substantial and of such nature as to prejudice the insurer’s rights.
3.15. Any coverage issued under a substandard risk motor vehicle insurance policy shall contain the notice set forth in W. Va. Code §33-6-31c.
W. Va. Code R. § 114-63-4 Uninsured Motor Vehicle Insurance Provisions
4.1. All motor vehicle policies shall contain a provision undertaking to pay the insured all sums which he or she shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle up to the limit selected by the named insured on a properly completed form pursuant to W. Va. Code §33-6-31d.
4.2. Uninsured motor vehicle coverage shall not contain family member exclusions.
4.3. Uninsured motor vehicle coverage shall not contain a provision requiring arbitration. W. Va. Code §33-6-31(g).
4.4. Uninsured motor vehicle coverage may contain a provision excluding the first three hundred dollars of property damage but shall not contain any other deductible or setoff up to the limits of the uninsured motorist coverage. W. Va. Code §33-6-31(b).
4.5. Uninsured motor vehicle coverage may contain a provision requiring that the insured use reasonable diligence, upon learning that the tortfeasor is uninsured, to provide notice of any potential uninsured motor vehicle claim within a reasonable period of time.
4.6. Uninsured motor vehicle coverage may contain an “owned but not insured exclusion” precluding benefits above the minimum financial responsibility limits contained in W. Va. Code §17D-4-2.
4.7. Uninsured motor vehicle coverage may contain a provision excluding benefits for injuries which result from a motor vehicle collision which occurs within the course and scope of employment but only with respect to fault of the employer or co-employee and not with regard to the fault of a third party.
4.8. With regard to uninsured motor vehicle coverage in the event of negligence by an unknown tortfeasor, the policy may contain a provision requiring a close and substantial physical nexus between the unidentified hit and run vehicle and the insured vehicle. “Close and Substantial Physical Nexus” means evidence which can be established by independent third-party testimony to the satisfaction of the trial judge and the jury that, but for the immediate evasive action of the insured, direct physical contact would have incurred between the unknown motor vehicle and the victim.
4.9. Uninsured motor vehicle coverage may contain a provision providing for the right of subrogation against the tortfeasor up to the amount paid under the uninsured motor vehicle endorsement, consistent with W. Va. Code §33-6-31(f).
4.10. Uninsured motor vehicle coverage may include an exclusion for punitive damage liability.
W. Va. Code R. § 114-63-5 Underinsured Motor Vehicle Provisions
5.1. If selected by the insured, policies must include a provision agreeing to pay the insured all sums which he or she shall be legally entitled to recover as damages from the owner or operator of an underinsured motor vehicle up to the limits selected by the insured. W. Va. Code §33-6-31(b).
5.2. Underinsured motor vehicle coverage shall not provide for setoff for any payments made by the insured’s policy or any other policy. W. Va. Code §33-6-31(b).
5.3. Underinsured motor vehicle coverage shall not contain a provision requiring arbitration. W. Va. Code §33-6-31(g).
5.4. Underinsured motor vehicle coverage may contain a provision requiring that the insured use reasonable diligence, upon learning that the tortfeasor is underinsured, to provide notice of any potential underinsured motorist claim within a reasonable period of time.
5.5. Underinsured motor vehicle coverage may contain a provision requiring notice of any settlement with the liability carrier consistent with W. Va. Code §33-6-31e.
5.6. Underinsured motor vehicle coverage may contain a provision excluding benefits for injuries which result from a motor vehicle collision which occurs within the course and scope of employment but only with respect to the fault of the employer or co-employee and not with regard to the fault of a third party.
5.7. With regard to underinsured motor vehicle coverage in the event of negligence by an unknown tortfeasor, the policy may contain a provision requiring a close and substantial physical nexus between the unidentified hit and run vehicle and the insured vehicle. “Close and Substantial Physical Nexus” means evidence which can be established by independent third party testimony to the satisfaction of the trial judge and the jury that, but for the immediate evasive action of the insured, direct physical contact would have incurred between the unknown vehicle and the victim.
5.8. Underinsured motor vehicle coverage may contain a provision providing for the right of subrogation against the tortfeasor, up to the amount paid under the underinsured motor vehicle endorsement, consistent with W. Va. Code §33-6-31(f).
5.9. Underinsured motor vehicle coverage may contain family member or similar exclusion precluding a guest passenger from collecting such benefits with respect to the negligence of the driver of the motor vehicle in which he or she is riding but such guest passenger may not be precluded from recovery of underinsured benefits with respect to the negligence of a third party.
5.10. Underinsured motor vehicle coverage may contain a provision precluding intra-policy stacking and inter-policy stacking.
5.11. Underinsured motor vehicle coverage may contain a family use exclusion to be applied when a passenger family member receives payment under the liability provisions with respect to the negligence of his or her driver thereby preventing the underinsured coverage from being converted into additional liability coverage.
5.12. Underinsured motor vehicle coverage may include a provision precluding recovery of underinsured benefits if the liability coverage of the tortfeasor with respect to whose negligence benefits are sought has not been exhausted.
5.13. Underinsured motor vehicle coverage may include a provision precluding benefits if the claimant is in an owned but not insured motor vehicle.
5.14. Underinsured motor vehicle coverage may include an exclusion for punitive damage liability.
W. Va. Code R. § 114-63-6 Replacement of Earlier Provisions and Future Compliance
6.1. This rule shall completely replace Informational Letters two, revised, and two-a, and all contrary policy provisions approved by the Insurance Commission before the effective date of this rule. Thereafter all policy provisions must be in compliance with this rule.
114CSR63
114CSR63
114CSR63
Series 64 Mental Health Parity
W. Va. Code R. § 114-64-1 General
W. Va. Code R. § 114-64-2 Definitions
W. Va. Code R. § 114-64-3 Mental Health Parity and Required Coverage
W. Va. Code R. § 114-64-4 Financial Requirements and Quantitative Treatment Limitations
W. Va. Code R. § 114-64-5 Non-Quantitative Treatment Limitations
W. Va. Code R. § 114-64-6 Concurrent Review and Denial of Benefits
W. Va. Code R. § 114-64-7 Annual Reporting to the Commissioner
W. Va. Code R. § 114-64-8 Comparative Analysis Reporting for Non-Quantitative Treatment Limitations
W. Va. Code R. § 114-64-9 Confidentiality
W. Va. Code R. § 114-64-10 Enforcement
TITLE 114
LEGISLATIVE RULE
INSURANCE COMMISSIONER
SERIES 64
MENTAL HEALTH PARITY
W. Va. Code R. § 114-64-1 General
1.1. Scope. – The purpose of this rule is to establish the requirements, process, and forms to be utilized by insurers and carriers to ensure the parity of benefits for behavioral health, mental health and substance use disorders with medical/surgical benefits and to ensure carrier compliance with W.Va. Code §§33-15-4u, 33-16-3ff, 33-24-7u, 33-25-8r, and 33-25A-8u. This rule applies to all health insurance policies, contracts, plans or agreements subject to Articles 15, 16, 24, 25, or 25A of Chapter 33 of the West Virginia Code that are delivered, executed, issued amended, adjusted, or renewed in this state on or after January 1, 2021.
1.2. Authority. – W. Va. Code §§33-2-10, 33-15-4u, 33-16-3ff, 33-24-7u, 33-25-8r, and 33-25A-8u.
1.3. Filing Date. – April 8, 2026.
1.4. Effective Date. – April 8, 2026.
1.5. Sunset Date. – This rule shall terminate and have no further force or effect upon August 1, 2036.
1.6. This legislative rule repeals and replaces 114CSR64 “Mental Health Parity” filed on April 14, 2010 and effective April 14, 2010.
W. Va. Code R. § 114-64-2 Definitions
2.1. “Aggregate lifetime dollar limit” means, for the purposes of this rule, a dollar limitation on the total amount of specified benefits that may be paid under a health benefit plan, or health insurance coverage offered in connection with such a plan, for any coverage unit. Coverage unit refers to the way in which a plan, or health insurance coverage, groups individuals for purposes of determining benefits or premiums contributions, including family plans, employee with spouse plans, or individual plans.
2.2. “Annual dollar limit” means, for the purposes of this rule, a dollar limitation on the total amount of specified benefits that may be paid in a 12-month period under a health benefit plan.
2.3. “Autism spectrum disorder” shall have the same meaning as defined at W.Va. Code §§33-16-3v, 33-24-7k, and 33-25A-8j, and includes any pervasive developmental disorder, including autistic disorder, Asperger’s Syndrome, Rett syndrome, childhood disintegrative disorder, or Pervasive Development Disorder as defined in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders of the American Psychiatric Association.
2.4. “Behavioral, mental health, and substance use disorder” shall have the same meaning as defined at W.Va. Code §§33-15-4u, 33-16-3ff, 33-24-7u, 33-25-8r, and 33-25A-8u, and shall mean a condition or disorder, regardless of etiology, that may be the result of a combination of genetic and environmental factors and that falls under any of the diagnostic categories listed in the mental disorders section of the most recent version of the International Statistical Classification of Diseases and Related Health Problems, the Diagnostic and Statistical Manual of Mental Disorders, or the Diagnostic Classification of Mental Health and Development Disorders of Infancy and Early Childhood; and includes Autism Spectrum Disorder.
2.5. “Behavioral, mental health, and substance use disorder benefits” means, for the purposes of this rule, the benefits supplied for items or services for behavioral, mental health or substance use disorder conditions.
2.6. “Carrier” shall mean any insurer offering an accident and sickness insurance policy, contract, plan or agreement subject to Articles 15, 16, 24, 25, or 25A of Chapter 33 of the West Virginia Code.
2.7. “Commissioner” means the West Virginia Insurance Commissioner.
2.8. “Concurrent review” means inpatient care is reviewed as it is provided.
2.9. “Financial requirements” means, for the purposes of this rule, the deductibles, copayments, coinsurance, or out-of-pocket maximums imposed under a health benefit plan. Financial requirements do not include aggregate lifetime or annual dollar limits.
2.10. “Health benefit plan” or “plan,” as defined in W.Va. Code §33-16-1a(h), means benefits consisting of medical care provided directly, through insurance or reimbursement, or indirectly, including items and services paid for as medical care, under any hospital or medical expense incurred policy or certificate, hospital, medical or health service corporation contract, health maintenance organization contract, or plan provided by a multiple-employer trust or multiple-employer welfare arrangement. “Health benefit plan” does not include excepted benefits as defined by W. Va. Code §33-16-1a (f).
2.11. “Insurer” or “health insurer” means an insurer licensed to transact accident and sickness insurance in this state, and a health maintenance organization to whom a certificate of authority has been issued by the Commissioner and is subject to the provisions of Articles 15, 16, 24, 25, or 25A of Chapter 33 of the West Virginia Code, and is subject to the provisions of W.Va. Code §§33-15-4u, 33-16-3ff, 33-24-7u, 33-25-8r or 33-25A-8u.
2.12. “Medical/surgical benefits” means, for the purposes of this rule, the benefits supplied for items or services for medical conditions or surgical procedures, as defined under the terms of the plan or health insurance coverage and in accordance with applicable federal and state law, but does not include behavioral, mental health, and substance use disorder benefits.
2.13. “Prior authorization” means obtaining advance approval from a carrier or insurer about the coverage of a benefit, service or medication.
2.14. “Substance use disorder” means the same as that term is defined by the American Psychiatric Association in the Diagnostic and Statistical Manual of Mental Disorders and shall include substance use withdrawal.
2.15. “Substance use disorder benefits” means, for the purposes of this rule, the benefits supplied for items or services used to treat substance use disorders, including substance use withdrawal.
2.16. “Treatment limitations” means, for the purposes of this rule, the limits applied based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically, and non-quantitative treatment limitations, which otherwise limit the scope or duration of benefits for treatment under a plan or coverage. This term does not include any permanent exclusion of all benefits for a particular condition or disorder.
W. Va. Code R. § 114-64-3 Mental Health Parity and Required Coverage
3.1. An insurer or carrier is required to provide coverage for the prevention of, screening for, and treatment of behavioral health, mental health, and substance use disorders that is no less extensive that the medical/surgical benefits or coverage provided for any physical illness and that complies with the requirements of this rule and with W.Va. Code §§33-15-4u, 33-16-3ff, 33-24-7u, 33-25-8r, or 33-25A-8u, whichever is applicable.
3.2. Screening for behavioral health, mental health, and substance use disorders shall include, but are not limited to, unhealthy alcohol use for adults, substance use for adults and adolescents, and depression screening for adults and adolescents.
3.3. An insurer or carrier that provides coverage for an annual physical examination shall include coverage for behavioral health screenings using a validated screening tool for behavioral health, which coverage and reimbursement is no less extensive than the coverage and reimbursement for the annual physical examination.
3.4. An insurer or carrier is required to establish procedures to authorize treatment with a non-participating provider if a covered service is not available within established time and distance standards as set forth in 114CSR100 and within a reasonable period after service is requested, and with the same coinsurance, deductible, or copayment requirements as would apply if the service were provided at a participating provider, and at no greater cost to the covered person than if the services were obtained at, or from a participating provider.
3.5. If a covered person obtains a covered service from a nonparticipating provider because the covered service is not available within the established time and distance standards as set forth in 114CSR100, an insurer or carrier is required to reimburse treatment or services for behavioral health, mental health, or substance use disorders that are provided by a non-participating provider using the same methodology that the insurer or carrier uses to reimburse covered medical/surgical services provided by non-participating providers and, upon request, provide evidence of the methodology to the person or provider.
3.6. An insurer or carrier offering a plan that does not cover services provided by an out-of-network provider may provide that the benefits required herein are covered benefits if the services are rendered by a provider who is designated by or affiliated with the insurer’s or carrier’s plan only if the same requirement applies for medical/surgical benefits or services. A carrier is not required to cover out-of-network care at one hundred percent (100%) or without any cost share to the covered person.
3.7. Subject to the limitation set forth in 3.8, nothing herein prohibits an insurer or carrier from using appropriate disease management or utilization review protocols for behavioral health, mental health, and substance use disorders, as long as the protocols are no more stringent or restrictive than medical/surgical disease management or utilization review protocols.
3.8. An insurer or carrier shall not impose any prior authorization or prospective utilization management requirements on any prescription medication on the insurer’s or carrier’s formulary that is used to treat substance use disorder when the medication is determined to be medically necessary by the covered person’s provider.
3.9. If a health benefit plan, or health insurance coverage offered in connection with a plan, applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with requirements for non-quantitative treatment limitations, and without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to behavioral, mental health, or substance use disorder benefits, the plan or carrier satisfies the parity requirements with respect to prescription drug benefits. Reasonable factors may include, but are not limited to, cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up.
W. Va. Code R. § 114-64-4 Financial Requirements and Quantitative Treatment Limitations
4.1. An insurer or carrier shall comply with financial requirements and quantitative treatment limitations specified in 45 CFR §146.136(c)(2) and (c)(3), or any successor federal regulation as adopted by the Legislature through subsequent amendment to this rule.
4.2. An insurer or carrier shall not impose any financial requirement or quantitative treatment limitation on behavioral, mental health, or substance use disorder benefits that it does not impose on medical/surgical benefits.
4.3. An insurer or carrier shall not impose annual maximums on the number of visits or dollar amounts for behavioral, mental health, or substance use disorder benefits.
4.4. An insurer or carrier shall not impose any financial requirement or quantitative treatment limitation on behavioral, mental health, or substance use disorder benefits, unless the financial requirement or quantitative treatment limitation applies to substantially all of the medical/surgical benefits in a permitted benefit classification.
4.4.1. Benefit classifications may include:
4.4.1.a. Inpatient in-network;
4.4.1.b. Inpatient out-of-network;
4.4.1.c. Outpatient in-network, except that insurers or carriers may use the following sub-classifications;
4.4.1.c.1. Office visits, such as physician visits; and
4.4.1.c.2. All other outpatient services, such as outpatient surgery, day treatment centers, laboratory charges, or other medical items;
4.4.1.d. Outpatient out-of-network, except that insurers or carriers may use the following sub-classifications;
4.4.1.d.1. Office visits, such as physician visits; and
4.4.1.d.2. All other outpatient services, such as outpatient surgery, day treatment centers, laboratory charges, or other medical items;
4.4.1.e. Emergency; and
4.4.1.f. Pharmacy.
4.4.2. If an insurer or carrier provides benefits through multiple tiers of in-network providers, such as an in-network tier of preferred providers with more generous cost-sharing to members than a separate in-network tier of participating providers, the insurer or carrier may divide its benefits furnished on an in-network basis into sub-classifications that reflect network tiers, if the tiering is based on reasonable factors determined in accordance with the requirements in Section 5 of this rule and without regard to whether a provider provides services with respect to medical/surgical benefits or behavioral, mental health, and substance use disorder benefits.
4.4.3. After sub-classifications are established, the insurer or carrier shall not impose any financial requirement or treatment limitation on behavioral, mental health, and substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology as required by sections 4.9 and 4.10 of this rule.
4.4.4. An insurer or carrier shall not use any other type of sub-classification, including but not limited to intermediate services, intensive care or any other sub-classification.
4.4.5. An insurer or carrier shall not sub-classify between primary care providers and specialists in the outpatient classifications.
4.5. An insurer or carrier shall not impose any financial requirement or quantitative treatment limitation on behavioral, mental health, or substance use disorder benefits that it does not impose on medical/surgical benefits.
4.6. An insurer or carrier shall not impose any financial requirement or quantitative treatment limitation on behavioral, mental health, or substance use disorder benefits, unless the financial requirement or quantitative treatment limitation applies to substantially all of the medical/surgical benefits in a permitted benefit classification, as shown in section 4.4 of this rule.
4.7. An insurer or carrier shall not impose a level of financial requirement or quantitative treatment limitation on behavioral, mental health, or substance use disorder benefits, unless the level of financial requirement or treatment limitation predominantly applies to medical/surgical benefits, as shown in Sections 4.9 and 4.10 of this rule.
4.8. Calculation of Substantially All and Predominant Level Tests
4.8.1. An insurer or carrier shall use a reasonable and verifiable method to determine the claims costs associated with the medical/surgical benefits that are subject to a financial requirement or quantitative treatment limitation. The method utilized by the carrier shall conform with Actuarial Standards of Practice.
4.8.2. An insurer or carrier shall not consider claims costs associated with behavioral, mental health, or substance use disorder benefits in the calculation.
4.8.3. An insurer or carrier shall consider all claims applying to the deductible and out-of-pocket maximum when calculating the deductible and out-of-pocket applicability in determining if the deductible and out-of-pocket apply to substantially all of the claims.
4.9. An insurer or carrier shall not use any financial requirement unless the insurer or carrier can provide verification that the following conditions have been met:
4.9.1. An insurer or carrier shall not apply any type of financial requirement or quantitative treatment limitation to behavioral, mental health, or substance use disorder benefits unless the financial requirement applies to “substantially all” medical/surgical benefits in a permitted classification, which consists of no less than two-thirds (2/3) of the expected medical/surgical claims for any given classification of benefits.
4.9.2. Once an insurer or carrier has determined that the financial requirement or quantitative treatment limitation applies to at least two-thirds (2/3) of the benefits, it shall not apply any specific level of financial requirement or quantitative treatment limitation to any behavioral, mental health, or substance use disorder benefit unless the financial requirement applies to more than one-half (1/2) of the expected claims for any given classification of benefits.
4.10. If, with respect to a financial requirement or quantitative treatment limitation that applies to at least two-thirds (2/3) of all medical/surgical benefits in a classification, an insurer or carrier determines that no one specific level of financial requirement or quantitative treatment level applies to more than one-half (1/2) of the expected claims for the classification, the carrier may combine levels until the combination of levels applies to more than one-half (1/2) of the medical/surgical benefits subject to the financial requirement or quantitative treatment limitation in the classification. The carrier must use the least restrictive (lowest) amount that makes up one-half (1/2) of the expected claims.
4.11. An insurer or carrier shall use a combined deductible for behavioral, mental health, and substance use disorder and medical/surgical benefits.
4.12. An insurer or carrier shall use a combined out-of-pocket maximum for behavioral, mental health, and substance use disorder and medical/surgical benefits.
4.13. Nothing herein shall prohibit an insurer or carrier from providing some benefits that are subject to the deductible and other benefits that are not subject to the deductible within the same classification or from applying, separately, a deductible or out-of-pocket maximum that differs between the in-network and out-of-network benefit levels, as long as the same deductible or out-of-pocket applies to behavioral, mental health, or substance use disorder benefits that applies to medical/surgical benefits.
W. Va. Code R. § 114-64-5 Non-Quantitative Treatment Limitations
5.1. An insurer or carrier shall comply with the non-quantitative treatment limitation requirements specified in 45 CFR §146.136(c)(4), or any successor regulation as adopted by the Legislature through subsequent amendment to this rule, regarding any limitations that are not expressed numerically but otherwise limit the scope or duration of benefits for treatment, which in addition to the limitations and examples listed in 45 CFR §146.136(c)(4)(ii) and (c)(4)(iii), or any successor regulation, as adopted by the Legislature through subsequent amendment to this rule, and 78 FR 68246, include the methods by which the carrier establishes and maintains its provider network and responds to deficiencies in the ability of its networks to provide timely access to care.
5.2. An insurer or carrier shall not apply any non-quantitative treatment limitation to benefits for behavioral health, mental health, and substance use disorders that are not applied to medical/surgical benefits within the same classifications of benefits. Specifically, an insurer or carrier shall not impose a non-quantitative treatment limitation with respect to behavioral, mental health, and substance use disorder services in any classification unless, under the terms of the coverage as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the non-quantitative treatment limitation to behavioral, mental health, or substance use disorder services are comparable to, and are applied no more stringently than, the processes strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical/surgical benefits in the classification.
5.3. Non-quantitative treatment limitations include, but are not limited to:
5.3.1. Medical management standards limiting or excluding benefits based on:
5.3.1.a. Medical necessity or medical appropriateness; or
5.3.1.b. Whether the treatment is experimental or investigational.
5.3.2. Step therapy or fail-first protocols;
5.3.3. Exclusions based on failure to complete a course of treatment;
5.3.4. Restrictions based on:
5.3.4.a. Geographic location;
5.3.4.b. Facility type;
5.3.4.c. Provider specialty; and
5.3.4.d. Other criteria that limit the scope or duration of benefits.
5.3.5. Formulary design for prescription drugs;
5.3.6. Network tier design (when the plan has multiple network tiers); and
5.3.7. Standards for provider admission to a network, including reimbursement rates.
5.4. Allowable Non-Quantitative Treatment Limitations
5.4.1. An insurer or carrier may utilize the following non-exhaustive standards when applying non-quantitative treatment limitations:
5.4.1.a. Medical management standards may be used, as long as the criteria are comparable, and applied no more stringently than for behavioral, mental health, and substance use disorder benefits than for medical/surgical benefits;
5.4.1.b. Formulary design or formulary management standards may be used, as long as the criteria used for behavioral, mental health, and substance use disorder benefits are comparable, and applied no more stringently than for medical/surgical benefits; and
5.4.1.c. Network design or network management standards to add or remove providers from the network may be used, as long as the criteria used for behavioral, mental health, and substance use disorder benefits are comparable, and applied no more stringently than for medical/surgical benefits that comply with state network adequacy requirements.
5.5. Non-Quantitative Treatment Limitation Prohibitions
5.5.1. Insurers or carriers shall not use the following medical management standards when applying limitations to behavioral, mental health, and substance use disorder benefits:
5.5.1.a. The insurer or carrier routinely approves a certain number of days without a treatment plan for medical/surgical inpatient services, but approves, on a routine basis, a lesser number of days without a treatment plan for inpatient behavioral, mental health, and substance use disorders.
5.5.1.b. The insurer or carrier applies concurrent review to inpatient stays with various lengths of stay due to the medical condition, but reviews all behavioral, mental health, and substance use disorder inpatient stays using a more restrictive review criteria, reviewing the stay more frequently in all cases than commonly used for medical/surgical benefits.
5.5.1.c. Location of Services
5.5.1.c.1. The insurer or carrier allows for out-of-state treatment of medical/surgical services, but does not permit out-of-state treatment for behavioral, mental health, and substance use disorder services; or
5.5.1.c.2. Permits access to a non-network hospital for medical/surgical services, but does not permit access to a non-network hospital for behavioral, mental health, and substance use disorders, when the plan covers non-network services.
5.5.1.d. The insurer or carrier does not apply a payment reduction penalty to outpatient medical/surgical services that do not have prior authorization, but applies a penalty to all outpatient behavioral, mental health, and substance use disorder benefits when no prior authorization has been obtained.
5.5.1.e. Employee Assistance Programs (Group Plans Only)
5.5.1.e.1. The insurer or carrier requires that the member utilize an Employee Assistance Program prior to utilizing behavioral, mental health, and substance use disorder benefits under a group plan, but does not require the member to utilize an Employee Assistance Program for any medical/surgical benefits prior to utilizing the group plan.
5.6. Insurers and carriers shall not use the following pharmacy benefit network designs when applying limitations to behavioral, mental health, and substance use disorder benefits:
5.6.1. Insurer or carrier formulary design for coverage of prescription drugs for medical/surgical conditions is based on FDA approval, clinical studies, peer-reviewed medical literature, recommendations of experts with necessary training and experience and other medical decision criteria which are routinely provided, whereas the exclusion of behavioral, mental health, and substance use disorder prescription drugs is only based on the side effects reported as a part of clinical studies.
5.6.2. An insurer or carrier regularly provides coverage for medical/surgical prescription drugs on all four (4) tiers of a four (4) tier formulary design, but places all prescription drugs for the treatment of behavioral, mental health, and substance use disorders on the two (2) highest tiers, without regard to it being generic, preferred brand name or non-preferred brand name.
5.7. Insurers or carriers shall not use the following network designs when applying limitations to behavioral, mental health, and substance use disorder benefits:
5.7.1. The insurer or carrier regularly allows licensed, non-M.D. providers into the network for medical/surgical benefits while not regularly allowing licensed, non-M.D. providers into the network who primarily treat behavioral, mental health, or substance use disorders.
5.7.2. The insurer or carrier regularly negotiates with medical/surgical providers based on the rates for behavioral, mental health, and substance use disorder providers.
W. Va. Code R. § 114-64-6 Concurrent Review and Denial of Benefits
6.1. In the event of a concurrent review for a claim for coverage of services for the prevention of, screening for, and treatment of behavioral health, mental health, and substance use disorders, the insurer or carrier must continue to cover the service until the insurer or carrier notifies the covered person of the determination of the claim.
6.2. An insurer or carrier shall provide the covered person with written notice of a denial when denying benefits for the treatment of behavioral health, mental health, and/or substance use disorders that explicitly provides the reason for the denial.
6.3. Unless denied for nonpayment of premium, a denial of reimbursement for services for the prevention of, screening for, or treatment of behavioral health, mental health, and/or substance use disorders by the insurer or carrier must include the following language:
6.3.1. A statement explaining that covered persons are protected under state and federal law, which provides that limitations placed on the access to behavioral health, mental health, and/or substance use disorder benefits may be no greater than any limitations placed on access to medical/surgical benefits for physical illness or injury;
6.3.2. A statement providing that the covered person may contact the Consumer Services Division of the West Virginia Offices of the Insurance Commissioner if the covered person believes his or her rights under state or federal law have been violated. The statement should provide up-to-date contact information for the Consumer Services Division, including the current mailing address, toll-free telephone number, email address and website; and
6.3.3. A statement specifying that the covered person is entitled, upon request to the insurer or carrier, to a copy of the medical necessity criteria for any behavioral health, mental health, and substance use disorder benefit.
W. Va. Code R. § 114-64-7 Annual Reporting to the Commissioner
7.1. As part of their annual health benefit plan filings, insurers or carriers shall provide an attestation to the commissioner that:
7.1.1. The plan applies the same deductible for medical/surgical and behavioral, mental health, and substance use disorders and does not otherwise apply any cumulative financial requirement for behavioral health, mental health, and substance use disorders in a classification that accumulates separately from any established for medical/surgical benefits in the same classification;
7.1.2. The plan applies the same out-of-pocket for medical/surgical and behavioral, mental health, and substance use disorders and does not otherwise apply any cumulative financial requirement for behavioral health, mental health, and substance use disorders in a classification that accumulates separately from any established for medical/surgical benefits in the same classification;
7.1.3. The plan uses the same benefits for emergency room benefits, including all ancillary services provided as part of the emergency room benefits, for medical/surgical and behavioral, mental health, and substance use disorders;
7.1.4. The plan utilizes the same copayment, coinsurance or deductible structure for prescription drug benefits for medical/surgical and behavioral, mental health, and substance use disorders;
7.1.5. The carrier utilizes the same penalties for failure to obtain prior authorization for behavioral, mental health, and substance use disorders as it does for medical/surgical procedures within the same classification of benefits.
7.2. The attestation shall be signed by responsible representative of the insurer or carrier, including but not limited to the president, vice president, assistant vice president, chief executive officer, chief financial officer, chief operating officer, general counsel or other person that has been appointed by the board of directors. The commissioner may develop an attestation form that the health carrier is required to use if he or she determines the attestation provided by the carrier is deficient or otherwise incomplete.
7.3. Data Reporting
7.3.1. Beginning on or after July 1, 2021, the commissioner shall issue annually a mandatory data call to all insurers or carriers subject to this rule to collect the following information for the commissioner’s annual report on mental health parity to the Joint Committee on Government and Finance as required by the provisions of W.Va. Code §§33-15-4u, 33-16-3ff, 33-24-7u, 33-25-8r or 33-25A-8u.
7.3.2. The commissioner will develop a mechanism to accept the data from carriers electronically and securely. The insurers or carriers shall provide data for the twelve (12) month period immediately preceding the data call and shall only provide data regarding fully adjudicated claims, including any denied claims or adverse determinations.
7.3.3. The data call will, at a minimum, require the insurers or carriers to provide the following information and/or analysis to the commissioner.
7.3.3.a. Information regarding financial requirements and non-quantitative treatment limitations including data regarding:
7.3.3.a.1. Medical Management Evaluation;
7.3.3.a.2. Non-Quantitative Treatment Limitations;
7.3.3.a.3. Quantitative Treatment Limitation Classifications; and
7.3.3.a.4. Parity Compliance for Adverse Determinations, including the total number of adverse determinations of such claims.
7.3.3.b. Information regarding other non-quantitative treatment limitations including data regarding:
7.3.3.b.1. Inpatient In-Network;
7.3.3.b.2. Inpatient Out-of-Network;
7.3.3.b.3. Outpatient In-Network;
7.3.3.b.4. Outpatient Out-of-Network;
7.3.3.b.5. Emergency Room Services; and/or
7.3.3.b.6. Pharmacy Services.
7.4. Insurers or carriers may also be asked to provide specific information regarding processes for the development of medical necessity criteria or standards, eligibility criteria, concurrent review standards, non-quantitative treatment limitations or restrictions imposed upon obtaining covered services or benefits, processes, strategies and evidentiary standards, penalties that may be imposed for failure to obtain prior authorization for medical/surgical benefits compared to behavioral, mental health, and substance use disorder benefits.
7.5. The commissioner may ask that a qualified actuary certify that the calculations of the insurer or carrier are accurate and true to the best of the actuary’s knowledge and have been appropriately calculated in accordance with Actuarial Standards of Practice.
W. Va. Code R. § 114-64-8 Comparative Analysis Reporting for Non-Quantitative Treatment Limitations
8.1. An insurer or carrier shall provide annually to the Commissioner a comparative analysis demonstrating that, for any non-quantitative treatment limitation, including medical necessity criteria, as written and in operation, the processes, strategies, evidentiary standards, or other factors used in applying the medical necessity criteria and each non-quantitative treatment limitation to benefits for behavioral, mental health, and substance use disorders within each classification of benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the medical necessity criteria and each non-quantitative treatment limitation to medical and surgical benefits within the corresponding classification of benefits.
8.2. An insurer or carrier shall provide these comparative analyses results to the Commissioner, showing the following, at a minimum:
8.2.1. Identification of any factors used to determine whether a non-quantitative treatment limitation will apply to a benefit, including any factors considered but rejected;
8.2.2. Identify and define the specific evidentiary standards used to define the factors and any other evidence relied on in designing each non-quantitative treatment limitation;
8.2.3. Provide the comparative analyses, including any results of the analyses, performed to determine that the processes and strategies used to design each non-quantitative treatment limitation, as written, and the written processes and strategies used to apply to each nonquantitative treatment limitation for benefits for behavioral, mental health, and substance use disorders are comparable to, and are applied no more stringently than, the processes and strategies used to design and apply to each non-quantitative treatment limitation, as written, and the written processes and strategies used to apply to each non-quantitative treatment limitation for medical and surgical benefits;
8.2.4. Provide the comparative analyses, including the results of the analyses, performed to determine that the processes and strategies used to apply to each non-quantitative treatment limitation, in operation, for benefits for behavioral, mental health, and substance use disorders are comparable to, and are applied no more stringently than, the processes and strategies used to apply to each non-quantitative treatment limitation, in operation, for medical and surgical benefits; and
8.2.5. Disclose the specific findings and conclusions reached by the insurer or carrier that the results of the analyses indicate that each health benefit plan offered by the insurer or carrier complies with W.Va. Code §§33-15-4u, 33-16-3ff, 33-24-7u, 33-25-8r or 33-25A-8u, whichever is applicable, and this rule.
8.3. The insurer or carrier shall provide the commissioner with its comparative analysis annually at the same time, and in conjunction with, the insurer’s or carrier’s response to the annual mental health parity data call refereed to in section 7 of this rule.
W. Va. Code R. § 114-64-9 Confidentiality
9.1. The information and data obtained by the commissioner from an insurer or carrier under this rule shall be considered proprietary and confidential by law and privileged, exempt from disclosure pursuant to Chapter 29B of the West Virginia Code, confidential pursuant to W.Va. Code §§33-2-9 and 33-2-19, and is not open to public inspection, subject to subpoena, subject to discovery or admissible in evidence in any criminal, private civil or administrative action and is not subject to production pursuant to court order. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any investigation, regulatory action or legal action brought as part of the commissioner’s official duties and to share information with other state or federal regulatory authorities as set forth in W.Va. Code §33-2-19.
W. Va. Code R. § 114-64-10 Enforcement
10.1. Noncompliance with this rule may result, after proper notice and hearing, in the imposition of any of the sanctions made available to the Commissioner, including but not limited to, the imposition of monetary penalties, issuance of cease and desist orders, and/or suspensions or revocations of licenses or certificates of authority. Among others, the penalties provided for in W.Va. Code §§33-2-11 and 33-3-11 may be applied.
114CSR64
114CSR64
114CSR64
Series 65 Self-Insurance Pools For Political Subdivisions
W. Va. Code R. § 114-65-1 General
W. Va. Code R. § 114-65-2 Definitions
W. Va. Code R. § 114-65-3 Establishment of Pools Authorized
W. Va. Code R. § 114-65-4 Criteria for Establishing and Maintaining Self-Insurance Pools
W. Va. Code R. § 114-65-5 Authorization of Pools
W. Va. Code R. § 114-65-6 Investments
W. Va. Code R. § 114-65-7 Responsibilities of Board of Directors
W. Va. Code R. § 114-65-8 Additional Requirements for Workers' Compensation Pools
W. Va. Code R. § 114-65-9 Filing of Reports; Examination by Commissioner. 114-65-10 Reserves
W. Va. Code R. § 114-65-11 Additional Contribution Requirements for Workers' Compensation Pools
W. Va. Code R. § 114-65-12 Distribution of Surplus Funds
FILEL
TITLE 114 LEGISLATIVE RULE INSURANCE COMMISSIONER
2011 APR 19 AM 10: 56
SERIES 65 SELF-INSURANCE POOLS FOR POLITICAL SUBDIVISIONS'
OFFICIELTVAGINA
SECRETARY OF STATE ### §114-65-1. General.
1.1. Scope. -- This rule sets forth the procedural requirements for the creation and regulatory oversight of self-insurance pools created to insure workers' compensation and civil liability risks of political subdivisions.
1.2. Authority. -- This rule is promulgated pursuant to the authority granted by W. Va.
Code §§29-12A-16(g) and 33-2-10.
1.3. Filing Date. -- April 19, 2011.
1.4. Effective Date. -- April 19, 2011. ### §114-65-2. Definitions.
2.1. "Administrator" means the individual, partnership corporation or other entity authorized to serve as a representative of a pool and its members in carrying out the policies of the board of directors and managing the pool's activities.
2.2. "Board" means the board of directors of a pool.
2.3. "Commissioner" means the West Virginia Insurance Commissioner.
2.4. "Contribution" means the amount of payments required of each member in order to fund the pool's obligations under the plan.
2.5. "Civil Liability" means an obligation arising from claims for damages in civil actions for injury, death, or loss to persons or property allegedly cause by an act or omission of the political subdivision or any of its employees.
2.6. "Member" means a political subdivision which has entered into a member agreement and thereby becomes a pool member.
2.7. "Member agreement" means the written agreement executed between each member and the pool which sets forth the conditions of membership in the pool, the obligations, if any, of each member to the other members and the terms, coverages, limits, and deductibles of the plan.
2.8. "Plan" means the plan of self-insurance for coverage of civil liability and workers' compensation risks offered by the pool to its members as specifically designated in the member agreement.
2.9. "Political subdivision" means any county commission, municipality and county board of education; any separate corporation or instrumentality established by one or more counties or municipalities, as permitted by law; any instrumentality supported in most part by municipalities; any public body charged by law with the performance of a government function and whose jurisdiction is coextensive with one or more counties cities or towns; a combined city-county health department created pursuant to article two, chapter sixteen of the West Virginia Code; public service districts; and other instrumentalities including, but not limited to, volunteer fire departments and emergency service organizations as recognized by an appropriate public body and authorized by law to perform a government function. "Political subdivision" does not include hospitals of a political subdivision and their employees.
2.10. "Pool" means a self-insurance program organized by two or more political subdivisions for the purpose of providing joint or cooperative action relating to their financial and administrative resources and providing risk management and coverage for civil liability, worker's compensation liability, or both, for pool members and their employees. Workers' compensation funds must be accounted for independently of any other funds of a pool.
2.11. "Workers' compensation risk" means an employer's liability for payment of benefits to injured workers and their dependents under the provisions of chapter twenty-three of the West Virginia Code. ### §114-65-3. Establishment of Pools Authorized.
3.1. Regardless of whether a political subdivision secures a policy or policies of workers' compensation insurance or civil liability insurance, establishes and maintains a self-insurance program, or enters into an agreement for the joint administration of a self-insurance program, the political subdivision may, subject to approval by the Commissioner and pursuant to a written agreement and to the extent that it considers necessary, join with one or more political subdivisions to purchase group insurance or to establish and maintain a pool to provide coverage for its workers' compensation, civil liability risks, or both.
3.2. Two or more political subdivisions may establish and maintain a joint riskmanagement program, including but not limited to the employment of a risk manager or managers and consultants, for the purpose of preventing and reducing the risks covered by insurance, self-insurance, or a pool.
3.3. A pool is not an insurance company, its operation does not constitute the transaction of insurance, and it is not subject to the insurance laws of this State unless otherwise specifically stated herein. ### §114-65-4. Criteria for Establishing and Maintaining Self-Insurance Pools.
4.1. Before a pool may begin to offer civil liability coverage to members, the following must be filed with the Commissioner:
4.1.a. A copy of a financial plan which must set forth:
4.1.a.1. The insurance coverages to be offered by the pool, applicable deductible levels, and the maximum level of claims to be self-insured against;
4.1.a.2. The pool's proposed rates, which should not be excessive, inadequate or unfairly discriminatory taking into account all underwriting, exposure and claims
history when pricing any current or prospective pool members. A pool's rates are not subject to prior approval by the Commissioner , however appropriate regulatory action may be taken if he or she determines that the rates are not in compliance with this rule;
4.1.a.3. The amount of cash reserves as are necessary, in the exercise of sound and prudent actuarial judgment, to cover potential pool members and employee liability, expense, loss, and damage, which cash reserves may be funded by the issuance of certificates of participation by the pool and its members and reinsurance; and
4.1.a.4. The amount of aggregate excess insurance or reinsurance coverage to be purchased in the event that the pool's resources are exhausted in a given fiscal period;
4.1.b. A copy of a plan of management which describes the governing authority of the pool, which must be a board of directors, and provides the following with regard to the board:
4.1.b.1. The manner in which member contributions to the pool will be determined;
4.1.b.2. The methods for maintaining reserves, levying and collecting assessments for deficiencies, the financing of cash reserves and reinsurance, and disposing of surplus;
4.1.b.3. The basis upon which new members may be admitted to, and existing members may leave or have membership terminated by the pool;
4.1.b.4. The identification of funds and reserves by exposure areas;
4.1.b.5. The manner in which the pool will be administered in the event of termination or insolvency; and
4.1.b.6. Any other provisions that may be considered by the members or the Commissioner to be necessary or desirable for the operation of the pool;
4.1.c. A copy of the articles of incorporation;
4.1.d. A copy of the bylaws of the proposed pool;
4.1.e. A copy of the form or forms to be used for the member agreement, which must set forth at a minimum the rights, privileges and obligations of the member and the terms, coverages, limits and deductibles of the plan;
4.1.f. A copy of the proposed policy form or forms, which are not subject to prior approval by the Commissioner;
4.1.g. Designation of the initial or interim supervisory board, at least a majority of which must be pool members, and the administrator, together with pertinent biographical information for each member of the board and for the administrator or the principal officers of the corporation serving as administrator;
4.1.h. The address within West Virginia where the books and records of the pool will be maintained at all times;
4.1.i. A confirmation of a fidelity bond covering the administrator and its employees in an amount sufficient to protect the pool against the misappropriation or misuse of any monies or securities;
4.1.j. A projection of administrative expenses for the first year of operation in a dollar amount and as a percentage of the estimated annual contributions;
4.1.k. Proof of payment of contributions by members into a depository account of an amount between $250,000 and $500,000 that, in the Commissioner's discretion, constitutes sufficient capital; and
4.1.1. A composite listing of the estimated annual gross contributions which may, in addition to cash contributions, be made up of proceeds from the sale of certificates of participation in the premium stream of the pool, to be developed by each organizing member of the pool individually and in the aggregate for the pool. Contributions must be based on reasonable assumptions and certified by an actuary as to the sufficiency of the contributions.
4.1.m. The authorization given in paragraph 3, subdivision a and paragraph 2, subdivision b of this subsection and in subdivision 1 of this subsection to issue certificates of participation as a means of providing capital for the pool, establishing adequate reserves and purchasing reinsurance is limited to those political subdivisions that are authorized to issue public debt pursuant to other applicable law.
4.2. A pool's application for authorization to offer workers' compensation coverage is subject to the requirements of W. Va. Code §23-2-9(a)(2) and W. Va. Code St. R. §85-18-5 except that:
4.2.a. In lieu of the requirement in §5.2 of such rule that an applicant submit financial statements for the last 3 years, the pool shall be required to fully secure all of its projected claims liabilities in a form of surety approved by the Commissioner, and shall continue to fully secure its projected liabilities on an ongoing basis until such time that the pool is able to produce 3 years of audited financial statements which do meet the Commissioner's financial condition benchmarks.
4.2.b. Instead of the application being subject to approval by the Industrial Council in accordance with §5.5.a of such rule, the Commissioner is responsible for approving or disapproving the application.
4.3. Any subsequent revisions to documents filed with the Commissioner pursuant to subsection 4.1 of this section must also be filed with the Commissioner.
4.4. Every member of a group self-insurance pool shall execute a member agreement which shall set forth the rights, privileges and obligations of the member, and the terms, coverages, limits, and deductibles of the Plan. Member agreements must, at a minimum, disclose the following:
4.4.a. The coverages provided; 4.4 b. The period of the coverage;
4.4.c. The amount of any deductible per claim and in the aggregate;
4.4.d. The maximum amount of coverage to be borne by the pool;
4.4.e. The contribution amount and dates payment are due for the member;
4.4.f. The basis upon which each member's contribution is determined and under what circumstances additional assessments of the members may be made, including the possibility that assessments may continue after the member's membership in the pool has been discontinued;
4.4.g. The circumstances under which a member's participation in the pool may be terminated, including for non payment of contributions or assessments, and a plan to be followed in the event the pool is dissolved;
4.4.h. A description of the excess coverage for the pool as to its coverage per occurrence, coverage per occurrence per person, if appropriate, and in the aggregate;
4.4.i. The pool's obligations to provide a defense for the member in the event of a claim; and
4.4.j. With respect to civil liability coverage, a prominent disclosure notice that must be signed by a duly authorized officer of the member, which must use the following or substantially similar language:
"The pool is not protected by any West Virginia insurance guaranty association against default due to insolvency. In the event of insolvency, members and persons filing claims against members may be unable to collect any amount owed to them by the pool regardless of the terms of this member agreement. In the event that the pool is in a deficit position, a member may be liable for any and all unpaid claims against the member."
4.4.k. With respect to workers' compensation coverage, a member agreement under which each member agrees to assume and discharge, jointly and severally, any liability under West Virginia workers' compensation laws of any and all employers party to the agreement and which provides that, in addition to the rights of the pool, in the event of failure of the pool to enforce such rights after reasonable notice to the pool, the Commissioner shall have the right independently to enforce on behalf of the pool the joint and several liability of its members under West Virginia workers' compensation laws and the liability of members for any unpaid contributions and assessments;
4.5. The costs of funding the pool may be allocated among the funds or accounts of the pool members on the basis of their relative exposure and loss experience. A pool member is not liable for any amount in excess of amounts payable pursuant to terms of the member agreement for participation in the pool.
4.6. The board must act diligently to limit the pool's exposure on any loss on any one risk or hazard.
4.7. The board's responsibilities include, but are not limited to, retaining control of all monies collected and directing the disbursement of such monies; levying upon the members additional assessments in proportionate amounts when needed to supplement the pool's surplus and to assure payment of its obligations; actively collecting delinquent accounts resulting from past due contributions of members and taking appropriate action to declare a delinquent member ineligible for coverage from the pool until such time as the delinquency and cost of collection have been fully recovered; and adopting its own rules and procedures as it considers necessary for the efficient and actuarially sound operation of the pool, provided the rules and procedures are consistent with this rule. ### §114-65-5. Authorization of Pools.
5.1. After review of the documents and information described in section four of this rule, the Commissioner may notify the pool that its operation is authorized if he or she determines that the pool meets the criteria set forth in this rule. Authorization to operate a pool shall remain in effect until terminated at the request of the board or revoked by the Commissioner.
5.2. The Commissioner is authorized to monitor as he or she considers necessary the financial solvency of pools, which may include reviewing the pool's rates, to ensure that the pool's liabilities for claims, present and contingent, and other expenses are at no time greater than its assets. If a pool is found by the Commissioner to be in a deficit condition the pool must file a financial plan acceptable to the Commissioner to correct the deficit condition. The Commissioner may examine the affairs, transactions, accounts, records, and assets of the pool as often as it deems necessary and may take appropriate regulatory action whenever in his or her judgment a pool is insolvent or otherwise financially impaired, which may include the withdrawal of the authorization to operate the pool.
5.3. Information regarding the portion of reserves of a pool established to satisfy a specific claim or cause of action is confidential and is not subject to discovery. 5.4.
5.4.a. A civil liability pool may voluntarily dissolve after presentation to and approval by the Commissioner of a plan of dissolution. The plan must provide for the payment of all incurred losses and expenses of the fund and its members, including all incurred but not reported losses, as certified by an actuary, to the extent of the pool's assets. No assets of the pool may be used for any other purpose until payment of all such losses and expenses is provided for.
Subject to approval of the Commissioner, a pool may merge with another pool if the resulting pool assumes in full all obligations of the merging pools.
5.4.b. Upon approval from the Commissioner, a workers' compensation pool may voluntarily dissolve. The pool and its members shall remain forever jointly and severally liable for all injuries and exposures, whether known, unknown, or contingent, occurring during the period in which the pool was in existence. Prior to dissolving, a pool shall post bond or security in a form acceptable to the Commissioner and in an amount sufficient to cover all past, present and future liabilities, whether known, unknown or contingent, resulting from the period in which the pool was self-insured, and provide adequate assurances for the continued administration of claims and payment of assessments, surcharges as required by chapter twenty-three of the West Virginia code and the rules promulgated thereunder. The pool shall further meet all other reasonable terms and conditions for dissolution as required by the Commissioner.
5.5. No member of a workers' compensation pool may be terminated unless at least 30 days written notice has been given to the member and the Commissioner: Provided, That the pool shall remain liable for all claims applicable to the period during which an employer was a member of an association, including the period of 30 days or more required for termination of membership.
5.6. If the Commissioner determines that a pool is not in compliance with this rule or with any applicable statute, rule or order of the Commissioner, he or she must notify the board by certified or registered mail in writing with a description of the non-compliance and a date by which the non-compliance must be corrected or by which a plan for correcting the noncompliance must be filed. If the non-compliance is thereafter not corrected, the Commissioner may, after notice and a hearing, withdraw the authorization of approval of the pool or assess a monetary penalty, or both. ### §114-65-6. Investments.
The board may invest funds in any type of investments authorized by W. Va. Code §33- 8-1 et seq. ### §114-65-7. Responsibilities of Board of Directors.
7.1. The board shall be responsible for holding and managing the assets of and directing the affairs of the pool and shall be elected in the manner prescribed by the pool's governing instruments. At least a majority of the board must be members of the pool, but a board member shall not be an owner, officer or employee of any service agent, its parent or any of its affiliated companies, under contract with the pool.
7.2. The board shall fix contributions to the pool and supervise the finances of the pool and the pool's operations to the extent necessary to assure conformity with law, this rule, the member agreement, and the pool's governing instruments.
7.3. The board shall take all necessary precautions to safeguard the assets of the pool, including, but not limited to, the following:
7.3.a. Doing all acts necessary to assure that each member continues to be able to fulfill the obligations of membership; and also reporting promptly to the Commissioner any grounds or change in circumstances which may affect the pool's ability to meet its obligations such as withdrawal of a member;
7.3.b. Designating an administrator to administer the affairs of the pool, to carry out the policies established by the board and to provide day to day management of the pool. The administrator shall furnish a fidelity bond in an amount sufficient to protect the pool against the misappropriation or misuse of any monies or securities. Evidence of the bond shall be filed with the Commissioner, said bond being one of the conditions required for approval of the pool. The administrator shall not be an owner, officer or employee of any service agent, its parent or any of its affiliated companies, any of which are under contract with the pool;
7.3.c. Retaining control of all monies collected for the pool and the disbursement of such monies by the pool. All assets of the pool shall remain in the custody of the board or the authorized administrator. However, a claims fund for payment of claims due and other related expenses may be established for the use of any authorized service agent;
7.3.d. Actively collecting delinquent accounts resulting from any past due contributions by members. Any member of a pool who fails to make the required contributions after due notice may be terminated from the pool until this past due account, including cost of collection, has been paid or adequately provided for: Provided, That prior to being terminated, the Commissioner must approve the termination by ensuring that the member being terminated has either obtained West Virginia workers' compensation coverage for its employees or is no longer operating its business: Provided, further, That the pool remains liable for all compensable injuries, exposures and deaths of member's employees occurring prior to the termination of the member; and
7.3.e. Assuring that, for workers' compensation pools, payroll verifications of all members of the pool are completed within 180 days after the close of a plan year and requiring that efforts are made to collect any additional amounts due within 30 days of the completion of each audit.
7.4. Neither the board nor the administrator shall use any of the monies collected for any
purpose unrelated to securing the members' liability or other rights and obligations under the member agreement and any administrative or other necessary expenses of the pool, and the board may not borrow any monies from the pool or in the name of the pool without advising the Commissioner of the nature and purpose of the loan and obtaining the Commissioner' s approval.
7.5. The board may dispose of any surplus as provided in section 12 of this rule.
7.6. The board shall assure that the office of the administrator of the pool and all pertinent records necessary to verify the accuracy and completeness of all reports submitted to the Commissioner are maintained within West Virginia.
7.7. The board may adopt its own operating procedures and protocols as it deems necessary for the operation of the pool provided these rules and procedures are not inconsistent with this rule.
7.8. The board may designate a service agent or agents. ### §114-65-8. Additional Requirements for Workers' Compensation Pools.
8.1. To the extent not inconsistent with this rule, each workers' compensation pool is subject to the requirements of West Virginia Code §§33-2-21 and 33-2-22 and West Virginia Code Chapter Twenty-Three and the rules promulgated thereunder, including but not limited to the payment of surcharges pursuant to West Virginia Code §§23-2C-3(f)(2) and 23-2C-3(f)(3)(B) and West Virginia Code St. R. Section 85-6-1 et seq .; the record retention requirements of West Virginia Code St. R. Section 85-18-13; and the data requirements of West Virginia Code St. R.
Section 85-2-1 et. seq .: Provided, That such a pool is subject to West Virginia Code St. R.
Section 85-18-1 et seq .; as if the pool was a single self-insured employer: Provided, however, That no provision of Chapter Twenty-Three of this code or any rule promulgated thereunder requiring participation in the self-insured guarantee risk pool and the self-insured security risk pool, or providing for industrial council approval of self-insured status, termination of selfinsured status or approval of security, shall apply. ### §114-65-9. Filing of Reports; Examination by Commissioner.
9.1. Every pool authorized by the Commissioner must file with the Commissioner and distribute to pool members within 180 days following the pool's fiscal year end an audited statement of its financial condition and business for the most recently completed fiscal year; such statement must be signed on behalf of the pool by two duly authorized officers or a duly authorized officer and the administrator.
9.2. The financial statement must be audited by an independent certified public accountant and verified by the signature and oath of the pool's authorized representative. If a pool fails to file the audited financial statement required by this section, the Commissioner may have the audit performed. If the audit is performed by the Commissioner's staff, it will be at the expense of the pool and all working papers will be confidential and not open for public inspection until the audit is final.
9.3. The audited financial statement shall contain a report in detail of the pool's assets, outstanding liabilities, including the amount of claims paid to date and current reserves for losses, revenues and disbursements during the year, the investments of the pool's assets and all other information that the Commissioner deems necessary to secure a full and accurate knowledge of the financial affairs and condition of the pool. The working papers of the certified public accountant and other records pertaining to the preparation of the audited financial statements may be reviewed by the Commissioner.
9.4. In addition to the annual audited financial statement, the Commissioner may require any pool to file additional financial information, including interim financial reports and additional reports, exhibits or statements considered necessary to secure complete information concerning the condition, solvency, experience, transactions or affairs of the pool. The Commissioner shall establish reasonable deadlines for filing these additional reports, exhibits or statements and may require verification as the Commissioner shall designate.
9.5. The pool must retain and have available for examination by the Commissioner all executed copies of the application of each political subdivision for membership in the pool and a certified copy of each political subdivision's resolution authorizing membership in the pool. ### §114-65-10. Reserves.
10.1. Every pool shall calculate the amount reasonably determined to be sufficient to provide for the payment of every loss or claim whether reported or unreported and whether arising on or prior to the date of any annual or other statement, and it shall maintain a reserve liability in an amount estimated in the aggregate to provide for the payment of all such losses or claims and any expenses related thereto.
10.2. Each pool shall maintain reserves equal to the unearned portion of the gross contribution or assessment, if any, on unexpired or unterminated risks.
10.3. Reserves for coverages based on life expectancy shall be computed according to tables of mortality and rates of interest prescribed in Section 415 of the Internal Revenue Code.
10.4. Every pool may receive credit for insurance or reinsurance recoverable from an insurance company licensed to transact such insurance in West Virginia or any state of the United States or the District of Columbia and meeting the standards of solvency at least equal to those required in West Virginia. A pool may receive credit for insurance or reinsurance with any other insurer to the extent that funds are withheld as security for the payment of obligations thereunder if such funds are held subject to withdrawal by and are under the control of the pool.
Such funds may include letters of credit subject to the approval of the Commissioner. Credit may be received for insurance or reinsurance recoverable on the basis of an agreement entered into with individual unincorporated underwriters having a trusteed surplus of at least $100,000,000.
10.5. Credit may be received for insurance or reinsurance when the contract is:
10.5.a. Not cancellable or terminable for any reason except upon not less than 60 days written notice sent by registered or certified mail to (i) the pool and (ii) the Commissioner;
10.5.b. Automatically renewable at the expiration of the policy period except upon 60 days written notice sent by registered or certified mail to (i) the pool, and (ii) the Commissioner.
10.6. No more than one pool, which shall be defined as the named insured, shall be covered by any contract or policy of excess liability insurance. Any contract of insurance or reinsurance shall be payable by the assuming insurer on the basis of the liability of the pool under the contract or contracts assumed without diminution because of the insolvency of the pool.
10.7. Copies of the complete contracts or policies of insurance or reinsurance, with all endorsements thereto entered into by the pool for the benefit of the pool, shall be filed with the Commissioner.
10.8. No pool shall expose itself to any loss on any one risk or hazard in an amount exceeding 10% of the aggregate annual contribution, unless authorized by the Commissioner. ### §114-65-11. Additional Contribution Requirements for Workers' Compensation Pools.
11.1. For the purpose of funding a workers' compensation pool, the members shall make contributions to the pool based on annual payrolls for all employees of each member using rates as adopted by the board and approved by the Commissioner. The rates to be used are those in effect as of the inception of each pool's fiscal year. A plan that allows for consideration of past experience in developing a factor to be applied to a member's contribution may be used provided this plan has been approved by the Commissioner.
11.2. Each workers' compensation pool shall file with the Commissioner the basis for establishing the annual contributions of its members; such contributions must be based on reasonable assumptions and certified by an actuary or other person satisfactory to the Commissioner as to the sufficiency of such contributions.
11.3. The total amount of each member's annual contribution to the workers' compensation pool shall be certified by the board to the governing body of each member at least one month prior to the beginning of the next fiscal year, if practical.
11.4. Each workers' compensation pool may impose upon its members and former members an additional assessment whenever needed to supplement the pool's surplus to assure payment of its obligations.
11.4.a. The workers' compensation pool may assess each participating member an additional proportionate amount, as provided in the pool's member agreement or as provided in the pool's plan filed with the Commissioner to correct a deficit condition.
11.4.b. The board shall submit to the Commissioner a report of the causes of the pool's insufficiency, the assessments necessary to replenish it and the steps taken to prevent a recurrence of such circumstances. ### §114-65-12. Distribution of Surplus Funds.
12.1. Any surplus accumulated within a pool's fiscal year, as determined from the annual audited financial statement, may be declared refundable by the board. No distribution of the surplus funds shall be made earlier than twenty-four months following the end of the pool's fiscal year for which a surplus was declared. Such distribution shall not be made until certified by an actuary and the plan has been filed with and approved by the Commissioner.
12.2. Surplus accumulated within a pool's fiscal year shall be used exclusively for the benefit of those members belonging to the pool during that year. The accounting for each pool's fiscal year shall be separate for each year: Provided, That the Commissioner may require, and shall permit upon application of the pool, that 5.0%, or such greater amount as the board may elect, of a pool's surplus accumulated within a fiscal year be allocated to a restricted surplus account at the end of that year: Provided, however, That the restricted surplus is, subject to the approval of the Commissioner, to be used at the direction of the pool's board.
Series 68 Valuation Of Life Insurance Companies
W. Va. Code R. § 114-68-1 General
1.1. Scope. --
1.1.a. The purpose of this rule is to provide:
1.1.a.1. Tables of select mortality factors and rules for their use;
1.1.a.2. Rules concerning a minimum standard for the valuation of plans with nonlevel premiums or benefits; and
1.1.a.3. Rules concerning a minimum standard for the valuation of plans with secondary guarantees.
1.1.b. The method for calculating basic reserves defined in this rule will constitute the commissioner’s reserve valuation method for policies to which this rule is applicable.
1.1.c. This rule is based upon the National Association of Insurance Commissioners’ “Valuation of Life Insurance Model Regulation,” Model 830, as amended in 2009.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-7-9(p)(2).
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- July 1, 2011.
W. Va. Code R. § 114-68-2 Applicability
2.1. This rule shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after the effective date of this rule, subject to the following exceptions and conditions.
2.2. Exceptions.
2.2.a. This rule shall not apply to any individual life insurance policy issued on or after the effective date of this rule if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before the effective date of this rule, that guarantees the premium rates of the new policy. This rule also shall not apply to subsequent policies issued as a result of the exercise of such a provision, or a derivation of the provision, in the new policy.
2.2.b. This rule shall not apply to any universal life policy that meets all the following requirements:
2.2.b.1. Secondary guarantee period, if any, is five (5) years or less;
2.2.b.2. Specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the CSO valuation tables as defined in subsection 3.6 of this rule and the applicable valuation interest rate; and
2.2.b.3. The initial surrender charge is not less than one hundred percent (100%) of the first year annualized specified premium for the secondary guarantee period.
2.2.c. This rule shall not apply to any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.
2.2.d. This rule shall not apply to any variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.
2.2.e. This rule shall not apply to a group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.
2.3. Conditions.
2.3.a. Calculation of the minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life insurance policies), or both, shall be in accordance with the provisions of section 5 of this rule.
2.3.b. Calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period shall be in accordance with the provisions of section 6 of this rule.
W. Va. Code R. § 114-68-3 Definitions
3.1. “Basic reserves” means reserves calculated in accordance with the principles of W. Va. Code §33-7-9(g).
3.2. “Contract segmentation method” means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO valuation tables, as defined in subsection 3.6 of this rule, or any other valuation mortality table adopted by the National Association of Insurance Commissioners (NAIC) after the effective date of this rule and promulgated by rule by the Commissioner for this purpose, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in subsection 4.2 of this rule. The length of a particular contract segment shall be set equal to the minimum of the value t for which Gt is greater than Rt (if Gt never exceeds Rt the segment length is deemed to be the number of years from the beginning of the segment to the mandatory expiration date of the policy), where Gt and Rt are defined as follows:
Gpx+k+t Gt = __________ GPx+k+t-1 where: x = original issue age; k = the number of years from the date of issue to the beginning of the segment; t = 1, 2, ...; t is reset to 1 at the beginning of each segment;
GPx+k+t-1 = Guaranteed gross premium per thousand of face amount for year t of the segment, ignoring policy fees only if level for the premium paying period of the policy. qx+k+t Rt = __________, However, Rt may be increased or decreased by one qx+k+t-1 percent in any policy year, at the company’s option, but Rt shall not be less than one; where: x, k and t are as defined above, and qx+k+t-1 = valuation mortality rate for deficiency reserves in policy year k+t but using the mortality of subdivision b of subsection 4.2 of this rule if subdivision c of subsection 4.2 of this rule is elected for deficiency reserves.
However, if GPx+k+t is greater than 0 and GPx+k+t-1 is equal to 0, Gt shall be deemed to be 1000. If GPx+k+t and GPx+k+t-1 are both equal to 0, Gt shall be deemed to be 0.
3.3. “Deficiency reserves” means the excess, if greater than zero, of
3.3.a. Minimum reserves calculated in accordance with the principles of W. Va. Code §33-7-9(k) over
3.3.b. Basic reserves.
3.4. “Guaranteed gross premiums” means the premiums under a policy of life insurance that are guaranteed and determined at issue.
3.5. “Maximum valuation interest rates” means the interest rates defined in W. Va. Code §33-7-9(f)(2) that are to be used in determining the minimum standard for the valuation of life insurance policies.
3.6. “1980 CSO valuation tables” means the National Association of Insurance Commissioners’ 1980 standard ordinary mortality table (1980 CSO Table), without ten-year select mortality factors, incorporated into the 1980 amendments to the NAIC standard valuation law and referred to in W. Va. Code §33-7-9(d)(1)(C), and variations of the 1980 CSO Table approved by the NAIC, such as the smoker and nonsmoker versions approved in December 1983.
3.7. “Scheduled gross premium” means the smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in subdivision c of subsection 6.1 of this rule, if any, or else the minimum premium described in subdivision d of subsection 6.1 of this rule.
3.8. “Segmented reserves” means reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective gross premiums within the segment.
3.8.a. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals:
3.8.a.1. The present value of the death benefits within the segment; plus
3.8.a.2. The present value of any unusual guaranteed cash surrender value (see subsection 5.4 of this rule) occurring at the end of the segment; less
3.8.a.3. Any unusual guaranteed cash value occurring at the start of the segment; plus
3.8.a.4. For the first segment only, the excess of the quantity described in subparagraph A of this paragraph over the quantity described in subparagraph B of this paragraph.
3.8.a.4.A. A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.
3.8.a.4.B. A net one-year term premium for the benefits provided for in the first policy year.
3.8.b. The length of each segment is determined by the contract segmentation method, as defined in this section.
3.8.c. The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy.
3.8.d. For both basic reserves and deficiency reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.
3.9. “Tabular cost of insurance” means the net single premium at the beginning of a policy year for one-year term insurance in the amount of the guaranteed death benefit in that policy year.
3.10. “Ten-year select factors” means the select factors adopted with the 1980 amendments to the NAIC standard valuation law and referred to in W. Va. Code §33-7-9(d)(1)(C)(ii).
3.11. “Unitary reserves” means the present value of all future guaranteed benefits less the present value of all future modified net premiums, where:
3.11.a. Guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and
3.11.b. Modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of the quantity described in paragraph 1 of this subdivision over the quantity described in paragraph 2 of this subdivision.
3.11.b.1. A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.
3.11.b.2. A net one-year term premium for the benefits provided for in the first policy year.
3.11.c. The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy.
3.12. “Universal life insurance policy” means any individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy.
W. Va. Code R. § 114-68-4 General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves
4.1. At the election of the company for any one or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors or any other valuation mortality table adopted by the NAIC after the effective date of this rule and promulgated by rule by the commissioner for this purpose. If select mortality factors are elected, they may be:
4.1.a. The ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law and referred to in W. Va. Code §33-7-9(d)(1)(C)(ii);
4.1.b. The select mortality factors in Appendix A of this rule; or
4.1.c. Any other table of select mortality factors adopted by the NAIC after the effective date of this rule and promulgated by rule by the commissioner for the purpose of calculating basic reserves.
4.2. Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero, of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the election of the company for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon the 1980 CSO valuation tables with select mortality factors or any other valuation mortality table adopted by the NAIC after the effective date of this rule and promulgated by rule by the commissioner. If select mortality factors are elected, they may be:
4.2.a. The ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law and referred to in W. Va. Code §33-7-9(d)(1)(C)(ii);
4.2.b. The select mortality factors in Appendix A of this rule;
4.2.c. For durations in the first segment, X percent of the select mortality factors in Appendix A of this rule, subject to the following:
4.2.c.1. X may vary by policy year, policy form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience;
4.2.c.2. X is such that, when using the valuation interest rate used for basic reserves, subparagraph A of this paragraph is greater than or equal to subparagraph B of this paragraph;
4.2.c.2.A. The actuarial present value of future death benefits, calculated using the mortality rates resulting from the application of X;
4.2.c.2.B. The actuarial present value of future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date;
4.2.c.3. X is such that the mortality rates resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first five (5) years after the valuation date;
4.2.c.4. The appointed actuary shall increase X at any valuation date where it is necessary to continue to meet all the requirements of this subdivision;
4.2.c.5. The appointed actuary may decrease X at any valuation date as long as X continues to meet all the requirements of this subdivision;
4.2.c.6. The appointed actuary shall specifically take into account the adverse effect on expected mortality and lapsation of any anticipated or actual increase in gross premiums;
4.2.c.7. If X is less than one hundred percent (100%) at any duration for any policy, the following requirements shall be met:
4.2.c.7.A. The appointed actuary shall annually prepare an actuarial opinion and memorandum for the company in conformance with the requirements of W. Va. 114CSR41; and
4.2.c.7.B. The appointed actuary shall disclose, in the Regulatory Asset Adequacy Issues Summary, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods; and
4.2.c.7.C. The appointed actuary shall annually opine for all policies subject to this rule as to whether the mortality rates resulting from the application of X meet the requirements of this subdivision. This opinion shall be supported by an actuarial report, subject to appropriate Actuarial Standards of Practice promulgated by the Actuarial Standards Board of the American Academy of Actuaries. The X factors shall reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience.
4.2.d. Any other table of select mortality factors adopted by the NAIC after the effective date of this rule and promulgated by rule by the commissioner for the purpose of calculating deficiency reserves.
4.3. This subsection applies to both basic reserves and deficiency reserves. Any set of select mortality factors may be used only for the first segment. However, if the first segment is less than ten (10) years, the appropriate ten-year select mortality factors incorporated into the 1980 amendments to the NAIC standard valuation law and referred to in W. Va. Code §33-7-9(d)(1)(C)(ii) may be used thereafter through the tenth policy year from the date of issue.
4.4. In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used where the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums, even if not included in the actual calculation of basic reserves.
4.5. Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one year after the date of the change shall be the greatest of the following:
4.5.a. Reserves calculated ignoring the guarantee;
4.5.b. Reserves assuming the guarantee was made at issue; and
4.5.c. Reserves assuming that the policy was issued on the date of the guarantee.
4.6. The commissioner may require that the company document the extent of the adequacy of reserves for specified blocks, including but not limited to policies issued prior to the effective date of this rule. This documentation may include a demonstration of the extent to which aggregation with other non-specified blocks of business is relied upon in the formation of the appointed actuary opinion pursuant to and consistent with the requirements of W. Va. Code of State Rules 114CSR41.
W. Va. Code R. § 114-68-5 Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other Than Universal Life Insurance Policies)
5.1. Basic Reserves. -- Basic reserves shall be calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy shall use the same valuation mortality table and select factors. At the option of the insurer, in calculating segmented reserves and net premiums, either of the adjustments described in subdivisions a and b of this subsection may be made:
5.1.a. Treat the unitary reserve, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the unitary reserve, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.
5.1.b. Treat the guaranteed cash surrender value, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the guaranteed cash surrender value, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.
5.2. Deficiency Reserves.
5.2.a. The deficiency reserve at any duration shall be calculated:
5.2.a.1. On a unitary basis if the corresponding basic reserve determined by subsection 5.1 of this rule is unitary;
5.2.a.2. On a segmented basis if the corresponding basic reserve determined by subsection 5.1 of this rule is segmented; or
5.3.a.3. On a segmented basis if the corresponding basic reserve determined by subsection 5.1 of this rule is equal to both the segmented reserve and the unitary reserve.
5.2.b. This subsection shall apply to any policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality (specified in subsection 4.2 of this rule) and rate of interest.
5.2.c. Deficiency reserves, if any, shall be calculated for each policy as the excess, if greater than zero, for the current and all remaining periods of the quantity A over the basic reserve, where quantity A is obtained as indicated in subsection 4.2 of this rule.
5.2.d. For deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves.
5.3. Minimum Value. -- Basic reserves may not be less than the tabular cost of insurance for the balance of the policy year, if mean reserves are used. Basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if later, but not beyond the next policy anniversary, if mid-terminal reserves are used. The tabular cost of insurance shall use the same valuation mortality table and interest rates as that used for the calculation of the segmented reserves. However, if select mortality factors are used, they shall be the ten-year select factors incorporated into the 1980 amendments of the NAIC standard valuation law and referred to in W. Va. Code §33-7-9(d)(1)(C)(ii). In no case may total reserves (including basic reserves, deficiency reserves and any reserves held for supplemental benefits that would expire upon contract termination) be less than the amount that the policyowner would receive (including the cash surrender value of the supplemental benefits, if any, referred to above), exclusive of any deduction for policy loans, upon termination of the policy.
5.4. Unusual Pattern of Guaranteed Cash Surrender Values.
5.4.a. For any policy with an unusual pattern of guaranteed cash surrender values, the reserves actually held prior to the first unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n-year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.
5.4.b. The reserves actually held subsequent to any unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the policy as an n-year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where:
5.4.b.1. n is the number of years from the date of the last unusual guaranteed cash surrender value prior to the valuation date to the earlier of:
5.4.b.1.A. The date of the next unusual guaranteed cash surrender value, if any, that is scheduled after the valuation date; or
5.4.b.2.B. The mandatory expiration date of the policy; and
5.4.b.2. The net premium for a given year during the n-year period is equal to the product of the net to gross ratio and the respective gross premium; and
5.4.b.3. The net to gross ratio is equal to the quantity described in subparagraph A of this paragraph divided by the quantity described in subparagraph B of this paragraph.
5.4.b.3.A. The present value, at the beginning of the n-year period, of death benefits payable during the n-year period plus the present value, at the beginning of the n-year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n-year period.
5.4.b.3.B. The present value, at the beginning of the n-year period, of the scheduled gross premiums payable during the n-year period.
5.4.c. For purposes of this subsection, a policy is considered to have an unusual pattern or guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior years guaranteed cash surrender value by more than the sum of:
5.4.c.1. One hundred ten percent (110%) of the scheduled gross premium for that year; and
5.4.c.2. One hundred ten percent (110%) of one year’s accrued interest on the sum of the prior year’s guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and
5.4.c.3. Five percent (5%) of the first policy year surrender charge, if any.
5.5. Optional Exemption for Yearly Renewable Term (YRT) Reinsurance. -- At the option of the company, the following approach for reserves on YRT reinsurance may be used.
5.5.a. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.
5.5.b. Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in subsection 5.3 of this rule.
5.5.c. Deficiency reserves.
5.5.c.1. For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.
5.5.c.2. Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with paragraph 1 of this subdivision.
5.5.d. For purposes of this subsection, the calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this rule by the NAIC and promulgated by rule by the commissioner for this purpose.
5.5.e. A reinsurance agreement shall be considered YRT reinsurance for purposes of this subsection if only the mortality risk is reinsured.
5.5.f. If the assuming company chooses this optional exemption, the ceding company’s reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.
5.6. Optional Exemption for Attained-Age-Based Yearly Renewable Term (YRT) Life Insurance Policies. -- At the option of the company, the following approach for reserves for attained-age-based YRT life insurance policies may be used:
5.6.a. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.
5.6.b. Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in subsection 5.3 of this rule.
5.6.c. Deficiency reserves.
5.6.c.1. For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.
5.6.c.2. Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with paragraph 1 of this subdivision.
5.6.d. For purposes of this subsection, the calculations use the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this rule by the NAIC and promulgated by rule by the commissioner for this purpose.
5.6.e. A policy shall be considered an attained-age-based YRT life insurance policy for purposes of this subsection if:
5.6.e.1. The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and
5.6.e.2. The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are the same as the premium rates for policies covering all insureds of the same sex, risk class, plan of insurance and attained age.
5.6.f. For policies that become attained-age-based YRT life insurance policies after an initial period of coverage, the approach of this subsection may be used after the initial period if:
5.6.f.1. The initial period is constant for all insureds of the same sex, risk class and plan of insurance; or
5.6.f.2. The initial period runs to a common attained age for all insureds of the same sex, risk class and plan of insurance; and
5.6.f.3. After the initial period of coverage, the policy meets the conditions of subdivision e of subsection 5.6 of this rule.
5.6.g. If this election is made, this approach must be applied in determining reserves for all attained-age-based YRT life insurance policies issued on or after the effective date of this rule.
5.7. Exemption From Unitary Reserves for Certain n-Year Renewable Term Life Insurance Policies. -- Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:
5.7.a. The policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than ten (10) years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;
5.7.b. The guaranteed gross premiums in all n-year periods are not less than the corresponding net premiums based upon the 1980 CSO Table with or without the ten-year select mortality factors; and
5.7.c. There are no cash surrender value in any policy year.
5.8. Exemption From Unitary Reserves for Certain Juvenile Policies. -- Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue:
5.8.a. At issue, the insured is age twenty-four (24) or younger;
5.8.b. Until the insured reaches the end of the juvenile period, which shall occur at or before age twenty-five (25), the gross premiums and death benefits are level, and there are no cash surrender values; and
5.8.c. After the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy.
W. Va. Code R. § 114-68-6 Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period
6.1. General.
6.1.a. Policies with a secondary guarantee include:
6.1.a.1. A policy with a guarantee that the policy will remain in force at the original schedule of benefits, subject only to the payment of specified premiums;
6.1.a.2. A policy in which the minimum premium at any future duration is less than the corresponding one-year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other adopted after the effective date of this rule by the NAIC and promulgated by rule by the commissioner for this purpose; or
6.1.a.3. A policy with any combination of the features described in paragraphs 1 and 2 of this subdivision.
6.1.b. A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in subsections 6.2 and 6.3 of this rule shall be recalculated from issue to reflect these changes.
6.1.c. Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed.
6.1.d. For purposes of this subdivision, the minimum premium for any policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors (including mortality charges, loads and expense charges) and the interest crediting rate, which are all guaranteed at issue.
6.1.e. The one-year valuation premium means the net one-year premium based upon the original schedule of benefits for a given policy year. The one-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in subdivisions b, c and d, of subsection 4.2 of this rule may not be used to calculate the one-year valuation premiums.
6.1.f. The one-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.
6.2. Basic Reserves for the Secondary Guarantees. -- Basic reserves for the secondary guarantees shall be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force, and the segments will be determined according to the contract segmentation method as defined in subsection 3.2 of this rule.
6.3. Deficiency Reserves for the Secondary Guarantees. -- Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in subsection 5.2 of this rule with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force.
6.4. Minimum Reserves. -- The minimum reserves during the secondary guarantee period are the greater of:
6.4.a. The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees; or
6.4.b. The minimum reserves required by other rules governing universal life plans.
APPENDIX A
SELECT MORTALITY FACTORS
This Appendix contains select mortality factors that are the bases to which the respective percentages of subdivisions b and c of subsection 4.1 of this rule and subdivisions b and c of subsection 4.2 of this rule are applied.
The six tables of select mortality factors contained herein include: (1) male aggregate, (2) male nonsmokers, (3) male smoker, (4) female aggregate, (5) female nonsmoker, and (6) female smoker.
These tables apply to both age last birthday and age nearest birthday mortality tables.
For sex-blended mortality tables, compute base select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are eighty percent (80%) of the appropriate male table in this Appendix, plus twenty percent (20%) of the appropriate female table in this Appendix.
SELECT MORTALITY FACTORS
Male, Aggregate Male, Aggregate Male, Aggregate Male, Non-Smoker Male, Non-Smoker Male, Non-Smoker Male, Non-Smoker Male, Smoker Male, Smoker Male, Smoker Female, Aggregate Female, Aggregate Female, Aggregate Female, Non-Smoker Female, Non-Smoker Female, Non-Smoker Female, Non-Smoker Female, Smoker Female, Smoker Female, Smoker
Series 69 Recognition Of The 2001 CSO Mortality Table For Use In Determining Minimum Reserve Liabilities And Nonforfeiture Benefits
W. Va. Code R. § 114-69-1 General
1.1. Scope. -- The purpose of this rule is to recognize, permit and prescribe the use of the 2001 Commissioners Standard Ordinary (CSO) Mortality Table in accordance with W. Va. Code §§33-7-9(d)(1)(C)(iii) and 33-13-30(4c)(h)(vii) and subsections 4.1' and 4.2 of WV 114CSR68.
1.2. Authority. -- This rule is promulgated pursuant to the authority of W. Va. Code §§33-2-10 and 33-7-9(d)(1)(C)(iii).
1.3. Filing Date. -- May 6, 2005.
1.4. Effective Date. -- May 6, 2005.
W. Va. Code R. § 114-69-2 Definitions
2.1. “2001 CSO Mortality Table” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the National Association of Insurance Commissioners (NAIC) in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002). Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables.
2.2. “2001 CSO Mortality Table (F)” means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.
2.3. “2001 CSO Mortality Table (M)” means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.
2.4. “Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.
2.5. “Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers.
W. Va. Code R. § 114-69-3 2001 CSO Mortality Table
3.1. At the election of the company for any one or more specified plans of insurance and subject to the conditions stated in this rule, the 2001 CSO Mortality Table may be used as the minimum standard for policies issued on or after the effective date of this rule and before the date specified in subsection 3.2 of this rule to which W. Va. Code §§33-7-9(d)(1)(C)(iii) and 33-13-30(4c)(h)(vii) and subsections 4.1 and 4.2 of WV 114CSR68 are applicable. If the company elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and nonforfeiture purposes.
3.2. Subject to the conditions stated in this rule, the 2001 CSO Mortality Table shall be used in determining minimum standards for policies issued on and after January 1, 2009, to which W. Va. Code §§33-7-9(d)(1)(C)(iii) and 33-13-30(4c)(h)(vii) and subsections 4.1 and 4.2 of WV 114CSR68 are applicable.
W. Va. Code R. § 114-69-4 Conditions
4.1. For each plan of insurance with separate rates for smokers and nonsmokers an insurer may use:
a. Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;
b. Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by W. Va. Code §33-7-9(k) and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or c. Smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.
4.2. For plans of insurance without separate rates for smokers and nonsmokers the composite mortality tables shall be used.
4.3. For the purpose of determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of the company for each plan of insurance, be used in its ultimate or select and ultimate form, subject to the restrictions of WV 114CSR68 and section 5 of this rule relative to use of the select and ultimate form.
4.4. When the 2001 CSO Mortality Table is the minimum reserve standard for any plan for a company, the actuarial opinion in the annual statement filed with the commissioner shall be based on an asset adequacy analysis as specified in section 4 of WV 114CSR41. A commissioner may exempt a company from this requirement if it only does business in this state and in no other state.
W. Va. Code R. § 114-69-5 Applicability of the 2001 CSO Mortality Table to WV 114CSR68
5.1. The 2001 CSO Mortality Table may be used in applying WV 114CSR68 in the following manner, subject to the transition dates for use of the 2001 CSO Mortality Table set forth in subsections 3.1 and 3.2 of this rule:
a. Paragraph 2, subdivision b, subsection 2.2 of WV 114CSR68: The net level reserve premium is based on the ultimate mortality rates in the 2001 CSO Mortality Table.
b. Subsection 3.2 of WV 114CSR68: All calculations are made using the 2001 CSO Mortality Rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in subdivision d of this subsection. The value of “qx+k+t-1” is the valuation mortality rate for deficiency reserves in policy year k+t, but using the unmodified select mortality rates if modified select mortality rates are used in the computation of deficiency reserves.
c. Subsection 4.1 of WV 114CSR68: The 2001 CSO Mortality Table is the minimum standard for basic reserves.
d. Subsection 4.2 of WV 114CSR68: The 2001 CSO Mortality Table is the minimum standard for deficiency reserves. If select mortality rates are used, they may be multiplied by X percent for durations in the first segment, subject to the conditions specified in paragraphs 1 through 9 of subdivision c of subsection 4.2. In demonstrating compliance with those conditions, the demonstrations may not combine the results of tests that utilize the 1980 CSO Mortality Table with those tests that utilize the 2001 CSO Mortality Table, unless the combination is explicitly required by rule or necessary to be in compliance with relevant Actuarial Standards of Practice.
e. Subsection 5.3 of WV 114CSR68: The valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO Mortality Table.
f. Subdivision d, subsection 5.5 of WV 114CSR68: The calculations specified in subsection 5.5 shall use the ultimate mortality rates in the 2001 CSO Mortality Table.
g. Subdivision d, subsection 5.6 of WV 114CSR68: The calculations specified in subsection 5.6 shall use the ultimate mortality rates in the 2001 CSO Mortality Table.
h. Subdivision b, subsection 5.7 of WV 114CSR68: The calculations specified in subsection 5.7 shall use the ultimate mortality rates in the 2001 CSO Mortality Table.
i. Paragraph 2, subdivision a, subsection 6.1 of WV 114CSR68: The one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO Mortality Table.
5.2. Nothing in this section shall be construed to expand the applicability of WV 114CSR68 to include life insurance policies exempted under subsection 2.2 of that rule.
W. Va. Code R. § 114-69-6 Gender-Blended Tables
6.1. For any ordinary life insurance policy delivered or issued for delivery in this state on and after the effective date of this rule, that utilizes the same premium rates and charges for male and female lives or is issued in circumstances where applicable law does not permit distinctions on the basis of gender, a mortality table that is a blend of the 2001 CSO Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of the company for each plan of insurance, be substituted for the 2001 CSO Mortality Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits. No change in minimum valuation standards is implied by this subsection of the rule.
6.2. The company may choose from among the blended tables developed by the American Academy of Actuaries CSO Task Force and adopted by the NAIC in December 2002.
6.3. It shall not, in and of itself, be a violation of article eleven, chapter thirty-three of the West Virginia Code (W. Va. Code §§33-11-1 et seq.) for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.
W. Va. Code R. § 114-69-7 Separability
7.1. If any provision of this rule or its application to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of the provision to other persons or circumstances shall not be affected.
114CSR69
114CSR69
114CSR69
Series 69A Recognition Of Preferred Mortality Tables For Use In Determining Minimum Reserve Liabilities
W. Va. Code R. § 114-69A-1 General
1.1. Scope. -- The purpose of this rule is to recognize, permit and prescribe the use of mortality tables that reflect differences in mortality between preferred and standard lives in determining minimum reserve liabilities in accordance with W. Va. Code §§33-7-9(d)(1)(C)(iii) and 33-13-30(4c)(h)(vii) and subsections 4.1 and 4.2 of W. Va. 114CSR68. This rule is based upon the National Association of Insurance Commissioners’ “Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities Model Regulation,” (Model 815) as amended in 2009.
1.2. Authority. -- This rule is promulgated pursuant to the authority of W. Va. Code §§33-2-10 and 33-7-9(d)(1)(C)(iii).
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- July 1, 2011.
W. Va. Code R. § 114-69A-2 Definitions
2.1. “2001 CSO Mortality Table” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the National Association of Insurance Commissioners (NAIC) in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO Preferred Class Structure Mortality Table defined below in subdivision b. Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables in the 2001 CSO Mortality Table include the following:
2.1.a. “2001 CSO Mortality Table (F)” means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.
2.1.b. “2001 CSO Mortality Table (M)” means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.
2.1.c. “Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.
2.1.d. “Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers.
2.2. “2001 CSO Preferred Class Structure Mortality Table” means mortality tables with separate rates of mortality for super preferred nonsmokers, preferred nonsmokers, residual standard nonsmokers, preferred smokers, and residual standard smoker splits of the 2001 CSO Nonsmoker and Smoker Tables, as adopted by the NAIC at the September, 2006 national meeting and published in the NAIC Proceedings {3rd Quarter 2006}. Unless the context indicates otherwise, the “2001 CSO Preferred Class Structure Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table. It includes both the smoker and nonsmoker mortality tables. It includes both the male and female mortality tables and the gender composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality table.
2.3. “Statistical agent” means an entity with proven systems for protecting the confidentiality of individual insured and insurer information; demonstrated resources for and history of ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and a history of and means for aggregation of data and accurate promulgation of the experience modifications in a timely manner.
W. Va. Code R. § 114-69A-3 2001 CSO Preferred Class Structure Table
At the election of the company, for each calendar year of issue, for any one or more specified plans of insurance and subject to satisfying the conditions stated in this rule, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum valuation standard for policies issued on or after January 1, 2007. For policies issued on or after January 1, 2005 and prior to January 1, 2007, these tables may be substituted with the consent of the Commissioner and subject to the conditions of section 4 of this rule. In determining such consent, the Commissioner may rely on the consent of the commissioner of the company’s state of domicile. No election may be made until the company demonstrates at least 20% of the business to be valued on this table is in one or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements of this rule, will be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to the requirements of 114CSR69.
W. Va. Code R. § 114-69A-4 Conditions
4.1. For each plan of insurance with separate rates for preferred and standard nonsmoker lives, an insurer may use the super preferred nonsmoker, preferred nonsmoker, and residual standard nonsmoker tables to substitute for the nonsmoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, except for business valued under the residual standard nonsmoker table, the appointed actuary shall certify that:
4.1.a. The present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.
4.1.b. The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.
4.2. For each plan of insurance with separate rates for preferred and standard smoker lives, an insurer may use the preferred smoker and residual standard smoker tables to substitute for the smoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, for business valued under the preferred smoker table, the appointed actuary shall certify that:
4.2.a. The present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table corresponding to the valuation table being used for that class.
4.2.b. The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table.
4.3. Unless exempted by the commissioner, every authorized insurer using the 2001 CSO Preferred Class Structure Table shall annually file with the commissioner, with the NAIC, or with a statistical agent designated by the NAIC and acceptable to the commissioner, statistical reports showing mortality and such other information as the commissioner may deem necessary or expedient for the administration of the provisions of this rule. The form of the reports shall be established by the commissioner or the commissioner may require the use of a form established by the NAIC or by a statistical agent designated by the NAIC and acceptable to the commissioner.
4.4. The use of the 2001 CSO Preferred Class Structure Table for the valuation of policies issued prior to January 1, 2007 shall not be permitted in any statutory financial statement in which a company reports, with respect to any policy or portion of a policy coinsured, either of the following:
4.4.a. In cases where the mode of payment of the reinsurance premium is less frequent than the mode of payment of the policy premium, a reserve credit that exceeds, by more than the amount specified in this paragraph as Y, the gross reserve calculated before reinsurance. Y is the amount of the gross reinsurance premium that (a) provides coverage for the period from the next policy premium due date to the earlier of the end of the policy year and the next reinsurance premium due date, and (b) would be refunded to the ceding entity upon the termination of the policy.
4.4.b. In cases where the mode of payment of the reinsurance premium is more frequent than the mode of payment of the policy premium, a reserve credit that is less than the gross reserve, calculated before reinsurance, by an amount that is less than the amount specified in this paragraph as Z. Z is the amount of the gross reinsurance premium that the ceding entity would need to pay the assuming company to provide reinsurance coverage from the period of the next reinsurance premium due date to the next policy premium due date minus any liability established for the proportionate amount not remitted to the reinsurer.
For purposes of this condition, the reserve (i) for the mean reserve method shall be defined as the mean reserve minus the deferred premium asset, and (ii) for the mid-terminal reserve method shall include the unearned premium reserve. A company may estimate and adjust its accounting on an aggregate basis in order to meet the conditions to use the 2001 CSO Preferred Class Structure Table.
114CSR69A
114CSR69A
Series 70 Rebates And Referrals
W. Va. Code R. § 114-70-1 General
1.1. Scope. -- The purpose of this interpretive rule is to set a reasonable monetary limit upon the value of items given to a consumer or prospective consumer by insurance companies or producers in connection with the solicitation or sale of insurance products and to specify what constitutes a “nominal fee” with respect to referrals to insurance companies or producers by individuals not licensed to sell insurance in this state.
1.2. Authority. -- W. Va. Code §33-2-10.
1.3. Filing Date. -- August 26, 2004.
1.4. Effective Date. -- September 25, 2004.
W. Va. Code R. § 114-70-2 Interpretive Note
2.1. The Insurance Commissioner routinely receives questions concerning whether a company or producer may give away items such as pens, key chains, clocks, and other similar items without violating the anti-rebating provisions set forth in W. Va. Code §33-11-4(8). Likewise, the Insurance Commissioner fields many questions about how much an individual may charge for providing a referral to an insurance company or producer without violating the prohibition on referral fees set forth in WV 114CSR2. In order to provide practical and useful guidance to the insurance industry and to the public at large, this interpretive rule sets forth reasonable standards in these areas. This interpretive rule should be read in pari materia with W. Va. Code §33-11-4(8) and WV 114CSR2.
W. Va. Code R. § 114-70-3 Limitation on Items of Value with Respect to Rebates
3.1. For the purposes of W. Va. Code §33-11-4(8), the phrases “valuable consideration” and “anything of value” shall not include any educational materials, promotional materials, or articles of merchandise that cost twenty-five dollars ($25.00) or less, regardless of whether a policy or contract is purchased.
3.2. For the purpose of determining the value of any item pursuant to W. Va. Code §33-11-4(8), an insurance company or producer shall retain the original invoice for such item for five (5) years beyond the later of the date the offer is discontinued or the date the last item is given.
W. Va. Code R. § 114-70-4 Defining Nominal Fee with Respect to Referrals
4.1. For the purposes of subsection 6.1 of WV 114CSR2 the phrase “nominal fee” means a one-time fee of twenty-five dollars ($25.00) or less.
4.2. The payment of any referral fee cannot depend on whether the referral results in the sale or issuance of an insurance product or service.
114CSR70
114CSR70
Series 71 Insurance Fraud Prevention
W. Va. Code R. § 114-71-1 General
1.1. Scope. -- This legislative rule establishes standards for reporting insurance fraud.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-41-10.
1.3. Filing Date. -- May 6, 2005.
1.4. Effective Date. -- May 6, 2005.
W. Va. Code R. § 114-71-2 Designation of Primary Contact
2.1. Every insurer shall designate at least one (1) primary contact person but not more than four (4) primary contact persons who shall communicate with the Insurance Fraud Unit on matters relating to the reporting, investigation, and prosecution of suspected fraudulent insurance acts.
2.2. Every insurer shall notify the Insurance Fraud Unit in writing of the names, titles, addresses, and telephone numbers of the insurer's primary contact person or persons. Any changes to information relating to the contact person or persons must be reported to the Insurance Fraud Unit within ten (10) days of the changes.
W. Va. Code R. § 114-71-3 Reporting of Insurance Fraud or Criminal Offenses Otherwise Related to the Business of Insurance
3.1. All persons identified in W. Va. Code §33-41-5(a) shall report in writing all suspected fraudulent insurance acts to the Insurance Fraud Unit.
3.2. The report shall be filed with the Insurance Fraud Unit within fourteen (14) days of the determination by the reporter that a suspected fraudulent insurance act has been committed.
3.3. When a suspected fraudulent insurance act is reported, the following information, if known, shall be reported to the Insurance Fraud Unit:
a. Date of preparation of the report.
b. The following information about the reporting insurance company:
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Name of insurance company;
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Telephone number and fax number of insurance company;
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Policy number or claim number; and 4. Insurance policy type.
c. The following information about the reporting person if not an insurance company:
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Complete name;
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Occupation and title;
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Complete address; and 4. Telephone number and fax number.
d. The following information about the loss or occurrence:
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Date of loss or occurrence;
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Location of loss including the complete address;
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Estimated value of claim for loss; and 4. Whether claim was paid or not paid.
e. The following information concerning the parties involved and their roles:
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Complete names of all parties;
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Business and alias names of parties;
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Roles of each party;
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Complete address of each party;
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Phone number of each party;
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Date of birth or age of each party;
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Social Security number of each party;
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Tax identification number of each party; and 9. Driver's license number of each party.
f. A detailed narrative of what fraudulent insurance act is suspected and the circumstances leading to the suspicion of fraud.
g. A list of the type of documents in the possession of the reporter, for example police reports, photographs, or falsified documents, supporting the suspicion of fraud.
h. Any other agency or entity to which the reporter has reported suspected fraud, including the name, address, and telephone number of the other agency.
3.4. The report provided must be signed and dated by the reporting party or an authorized representative of the reporting party.
3.5. The required information shall be submitted on a form prescribed by the commissioner.
114CSR71
114CSR71
Series 72 Personal Private Passenger Automobile Liability Insurance And Property Insurance Withdrawal Plan Procedures
W. Va. Code R. § 114-72-1 General
1.1. Scope. -- The purpose of this rule is to provide orderly and uniform procedures, as required by law and dictated by sound public policy, for any authorized insurer filing a plan of withdrawal with the insurance commissioner pursuant to section twenty, article two, chapter thirty-three of West Virginia Code. This rule establishes the general procedure to be followed by insurers that intend to withdraw from the line of automobile liability for personal private passenger automobiles covered by article six-a, chapter thirty-three of the West Virginia Code and policies of property insurance, other than inland marine policies, covered by article seventeen-a, chapter thirty-three of the West Virginia Code.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-2-20.
1.3. Filing Date. -- August 26, 2004.
1.4. Effective Date. -- September 25, 2004.
W. Va. Code R. § 114-72-2 Definitions
Definition of certain terms. The following words and terms, when used in this rule shall have the following meanings, unless the context clearly indicates otherwise:
2.1. “Annual statement” means the annual statement most recently filed by the insurer with the Insurance Commissioner.
2.2. “Commissioner” means the West Virginia Insurance Commissioner.
2.3. “Withdrawal” means the termination, cancellation, or nonrenewal of the line of personal private passenger automobile liability or physical damage insurance subject to article six-a, chapter thirty-three of the West Virginia Code; or the termination, cancellation, or nonrenewal of the line of property insurance, other than policies of inland marine insurance, subject to article seventeen-a, chapter thirty-three of the West Virginia Code; or the transfer from one affiliated insurer within a holding company system to another insurer within that same holding company system of the line of personal private passenger automobile liability or physical damage insurance or property insurance; or the cessation of business entirely in this state.
2.4. “Withdrawal plan” means a written document which contains the required elements listed in section 4 of this rule and is filed with the commissioner for purposes of withdrawal from the line of personal private passenger automobile liability or physical damage insurance subject to article six-a, chapter thirty-three of the West Virginia Code; or for withdrawal from the line of policies of property insurance, other than policies of inland marine insurance, subject to article seventeen-a, chapter thirty-three of the West Virginia Code; or for withdrawal from doing business in this state.
W. Va. Code R. § 114-72-3 When a Withdrawal Plan is Required
3.1. Any licensed insurer must file with the commissioner a withdrawal plan before the insurer undertakes a withdrawal.
3.2. An insurer undertakes a withdrawal when it takes any action on its own initiative that will result in the insurer's ceasing to write the line of personal private passenger automobile liability or physical damage insurance subject to article six-a, chapter thirty-three of the West Virginia Code; or ceasing to write the line of policies of property insurance, other than policies of inland marine insurance, subject to article seventeen-a, chapter thirty-three of the West Virginia Code; or ceasing to operate in the state.
3.3. An insurer will not be considered to have acted on its own initiative in effecting a withdrawal when it acts pursuant to a disciplinary or administrative directive or order of the commissioner or insurance department of another state, when it acts pursuant to a court order, or when the insurer acts pursuant to a directive of a supervisor, conservator, or receiver. If any out-of-state directive or order is not provided to the commissioner within thirty (30) days of the issuance of any such directive or order, the insurer will be considered to have acted on its own initiative.
3.4. Nothing in this rule authorizes or allows an insurer to withdraw from any coverage if such withdrawal would violate any federal or state law or any provisions contained in a contract or evidence of coverage or a policy or certificate of insurance itself. This rule does not modify or supercede any requirement under chapter thirty-three of the West Virginia Code or any other state or federal law to notify policyholders that an insurer will not renew any coverage. If a withdrawal plan is required by this section because an insurer is ceasing to write the line of personal private passenger automobile liability or physical damage insurance in this state, before any such notice is given a withdrawal plan must be filed with and approved by the commissioner pursuant to section 5 of this rule. If the insurer’s withdrawal relates to the line of property insurance, other than policies of inland marine insurance, then the commissioner’s approval of the withdrawal plan is not required prior to the insurer issuing notice of nonrenewal or cancellation: Provided, that the withdrawal plan must be filed with the commissioner at least forty-five (45) days before the insurer initiates any kind of withdrawal activity.
W. Va. Code R. § 114-72-4 Contents of a Withdrawal Plan
4.1. An insurers’ withdrawal plan must contain the following:
a. Identification of the line or lines of insurance being withdrawn;
b. Identification of the policy forms by number and type affected by the withdrawal;
c. The dates the insurer intends to begin and complete its withdrawal;
d. An explanation of the reasons for the withdrawal;
e. Provisions for notifying all of the affected policyholders and certificateholders of the dates of the beginning and completion of the withdrawal and how the withdrawal will affect them, including, but not limited to:
- A copy of the notice and an explanation of the manner in which the notice will be provided to policyholders and certificateholders; and 2. Either affirmation that such notice will be provided within thirty (30) days of the approval of the withdrawal plan if approval is required, or a request that the commissioner allow the notice to be provided at some other specified date or time;
f. Provisions for meeting all of the insurer's contractual obligations, including, but not limited to:
- Notification of all affected agents of the insurer of the date the insurer intends to begin and complete the withdrawal; and 2. If applicable, a statement affirming the insurer's compliance with the provisions of article six-a, chapter thirty-three of the West Virginia Code relating to cancellation and nonrenewal of automobile liability or physical damage insurance coverage;
g. Provisions for providing the same level of services to the insurer's West Virginia policyholders and claimants as set forth in the insurer’s contracts;
h. Information on the insurer’s West Virginia business, including:
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The total annual premium volume and the number of policies and certificates and covered persons in West Virginia for each line of business to be withdrawn;
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An estimate of what percentage of the West Virginia market the withdrawal constitutes; and 3. Any information necessary to assist the commissioner in determining whether a market availability problem will be created by the withdrawal, the extent of the problem, and what market assistance may be needed to alleviate the problem, including, but not limited to, the following:
A. Type of location and geographic area subject to the withdrawal (identify type of area such as suburban, urban, rural, or list specific rating territories) and zip codes; and B. If applicable, types of risks no longer being covered, for example, if insurer is no longer writing private passenger auto insurance coverage for single-car families or for persons without supporting business;
i. If an insurer is unable to provide the exact number of policies and certificates and covered persons, the insurer must provide estimates of these numbers and explain how the estimates were determined;
j. The number of and estimated amount of all losses outstanding in West Virginia, including claims incurred but not reported;
k. A plan to handle the losses specified in subdivision j of this subsection, including, but not limited to:
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Identification of what assets will be available for paying outstanding incurred but not reported claims, claims in the course of settlement, and associated loss adjustment expenses;
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Identification of who specifically will administer the run-off of the business; and 3. An actuarial opinion certifying that adequate reserves are available to pay outstanding claims;
l. If West Virginia policyholders or certificateholders are to be reinsured, then the filing of a reinsurance agreement meeting all statutory and regulatory requirements and, when applicable, the filing of an assumption certificate;
m. Provisions for meeting any applicable statutory obligations, including, but not limited to:
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Payment of any guaranty fund assessments;
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Participation in any assigned risk plan, pool, fund, facility, or joint underwriting arrangement; and 3. Payment of any taxes;
n. A list of any other programs or products the insurer will continue to offer in West Virginia; and o. An affirmation that no new business in the same line as that from which the insurer has withdrawn will be solicited by the insurer in this state during or within the three years subsequent to the filing of the withdrawal plan unless the commissioner waives this requirement.
4.2. The filing of a single consolidated withdrawal plan for all withdrawing insurance companies in the same holding company system does not meet the requirements of this section. A separate withdrawal plan must be filed for each insurance company intending to withdraw.
4.3. The withdrawal plan must be signed by at least one officer of the insurer.
W. Va. Code R. § 114-72-5 Withdrawal Plan Submission and Approval Procedures
5.1. An insurer must submit its withdrawal plan to the commissioner at least forty-five (45) days prior to the date the insurer anticipates initiating any type of withdrawal activity.
5.2. If the withdrawal plan relates to personal private passenger automobile policies, the withdrawal plan shall be deemed approved if the commissioner has not held a hearing within forty-five (45) days after a complete withdrawal plan is filed, or if approval has not been denied within forty-five (45) days after the hearing. If the withdrawal plan relates to policies of property insurance, other than policies of inland marine insurance, the commissioner’s approval of the plan is not required in order for the insurer to effect its withdrawal, however the plan must be on file with the commissioner for at least forty-five (45) days before the insurer may initiate withdrawal activities.
5.3. No plan shall be considered "filed" until such date as the withdrawing insurer has provided to the commissioner all information and material necessary to constitute a complete withdrawal plan, as required under this rule.
5.4. A withdrawal plan relating to personal private passenger automobile liability or physical damage insurance will not be approved unless the insurer establishes to the satisfaction of the commissioner that allowing it to withdraw would be in the best interest of the insurer, its policyholders and the citizens of this state. To assist in making this determination, the commissioner may consider any or all of the following:
a. Whether the insurer has an agreement with an affiliated or nonaffiliated insurer to transition the affected policies or certificates, the terms and conditions of which provide the policyholders with the same rights that existed under the withdrawing insurer’s policies or certificates;
b. The insurer’s financial condition;
c. The insurer’s A.M. Best rating;
d. Any disciplinary, regulatory, or administrative action taken by another state;
e. The timing of the withdrawal;
f. The effect the withdrawal will have on the insurer’s other products, programs, or lines of business in this state;
g. The effect the withdrawal will have on the insurance market in this state; and h. Any other criteria considered relevant by the commissioner.
W. Va. Code R. § 114-72-6 Filing of Annual Financial Statement and Other Required Data and Information
Any insurer filing a withdrawal plan shall continue to file all annual financial statement data, other required statistical and data filings, other required reporting, and any other information requested by the commissioner applicable to any withdrawn line until all policyholder obligations for the line in this state are fulfilled. This section does not exempt an insurer from any filings or information requests required by the commissioner.
W. Va. Code R. § 114-72-7 Requirements to Resume Writing Insurance
Any insurer withdrawing from writing any line of insurance in this state and required to file a withdrawal plan pursuant to this rule may not resume writing the withdrawn line in this state without complying with all applicable statutory and regulatory provisions governing authorization to write such line of insurance in this state.
114CSR72
114CSR72
Series 74 Nonrenewal Of Property Insurance Policies
W. Va. Code R. § 114-74-1 General
1.1. Scope. -- This rule addresses various aspects of the alternative percentage method for the nonrenewal of property insurance policies set forth in W. Va. Code §33-17A-4a (2005), including requirements for the nonrenewal notices, the establishment of the procedure for resolving complaints by persons whose property insurance policies have been nonrenewed and the filing of underwriting standards by insurers.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-17A-4a (2005).
1.3. Filing Date. -- April 13, 2006.
1.4. Effective Date. -- April 24, 2006.
W. Va. Code R. § 114-74-2 Notice of Cancellation or Nonrenewal
2.1. All nonrenewal notices issued by insurers pursuant to W. Va. Code §33-17A-4a (2005) shall state the specific reason or reasons for refusal to renew and shall advise the insured that nonrenewal of the policy for any reason is subject to a hearing and review by the Insurance Commissioner as provided in W. Va. Code §33-17A-7 (2005). The notice shall also advise the insured of possible eligibility for coverage through the West Virginia Essential Property Insurance Association or “Fair Plan.” The written reason or reasons in a notice of nonrenewal must be sufficiently clear to be understood by a reasonable person; statements such as “underwriting reasons,” “claims” or “increase in risk” will not be considered sufficiently clear. Nothing in this rule will prevent the insurer from providing more information in the notice relating to the reason or reasons for nonrenewal than is required by this section.
W. Va. Code R. § 114-74-3 Hearing Regarding Nonrenewal
3.1. Hearing at request of policyholder or insurer. The commissioner shall review each complaint from every insured whose property insurance policy has been nonrenewed pursuant to the percentage method set forth in W. Va. Code §33-17A-4a and shall send to both the complainant and the insurer a notice as to whether the commissioner has found any violation of W. Va. Code §33-17A-4a(e). Within thirty (30) days of the date on which such notice was mailed, either party may demand a formal hearing before the commissioner.
3.2. Hearing called by Commissioner. If, after review of the complaint, the commissioner feels a hearing is necessary to resolve the complaint, he or she may call a hearing by virtue of the authority provided in W. Va. Code §33-2-13.
3.3. Hearing. The hearing, whether it be initiated by the complainant, the insurer or the commissioner, shall be conducted in accordance with the procedures set forth in 114CSR13. The subject matter of the hearing will be limited to the following issues:
a. Whether the nonrenewal notice provided at least thirty (30) days advance notice to the named insured of the insurer’s intent to nonrenew the policy;
b. Whether the decision to refuse to renew was based on a discriminatory reason;
c. Whether the nonrenewal notice was based upon an underwriting standard found to be in violation of chapter thirty-three of the West Virginia Code; or d. Whether the nonrenewal causes the insurer to exceed the percentage limitation set forth in W. Va. Code §33-17A-4a(d) for either the state or the county of the policyholder’s residence.
W. Va. Code R. § 114-74-4 Filing of Underwriting Guidelines
4.1. Each insurer writing property insurance policies in this state shall file with the Commissioner a copy of its underwriting standards for property insurance and any subsequent modifications to the insurer’s underwriting standards within thirty (30) business days after the modifications have been implemented. The commissioner will review these standards to ensure consistency with generally accepted underwriting principles.
114CSR74
114CSR74
Series 76 Rules Of Practice And Procedure For Administrative Proceedings Brought By Third Pary Claimants
W. Va. Code R. § 114-76-1 General
1.1. Scope. -- These procedural rules shall govern the initiation and conduct of administrative proceedings before the Insurance Commissioner upon the filing of an administrative complaint by a third party claimant alleging an unfair claims settlement practice in violation of W. Va. Code §33-11-4(9) or WV 114 CSR 14.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-11-4a(d).
1.3. Filing Date. -- March 28, 2006.
1.4. Effective Date. -- April 27, 2006.
1.5. These rules are intended to be read in conjunction with the procedural rule at WV 114 CSR 13. In the event of any conflict between the two rules, the provisions of this rule would control.
1.6. These rules are intended to compliment W. Va. Code §§29A-5-1 et seq.
W. Va. Code R. § 114-76-2 Definitions
The following definitions apply to this rule:
2.1. “Claimant” means a third party claimant as defined in WV 114 CSR 14-2.8.
2.2. “Commissioner” means the West Virginia Insurance Commissioner.
2.3. “Complaint” means an administrative complaint filed by a third party claimant pursuant to W. Va. Code §33-11-4a(b).
2.4. “Egregious act” means conduct that is fraudulent or malicious and reckless, whether or not the act constituted a pattern corresponding to an unfair claims settlement practice committed with such frequency as to constitute a general business practice. An act, or failure to act, that is due to negligence, lack of judgment, incompetence, or bureaucratic confusion, is not an egregious act.
2.5. “Natural person” means a human being, as distinguished from an artificial person created by law.
2.6. “Person” includes any individual, company, insurer, association, organization, society, reciprocal, business trust, corporation or any other legal entity, including agents, adjusters and brokers.
2.7. “Respondent” means a person(s) against whom a complaint is filed with the commissioner pursuant to W. Va. Code §33-11-4a(b).
2.8. “Sixty-day period” means the 60-day period following the respondent’s receipt of a complaint.
W. Va. Code R. § 114-76-3 Representation of Claimants and Respondents
3.1. Pro hac vice admission. -- Representation or appearance of parties in proceedings before the commissioner shall be only by attorneys at law admitted to practice before the courts of this state, before the courts of last resort of other states, or before the Supreme Court of the United States; Provided, That attorneys appearing before the commissioner who are not licensed to practice in West Virginia shall have sought and obtained permission to practice before the commissioner in compliance with Rule 8.0 of the Rules for Admission to the Practice of Law of the State of West Virginia. Documentation of permission granted by the West Virginia State Bar shall be supplied to the commissioner before such attorney files any pleading, motion or other paper or otherwise makes any appearance before the commissioner.
3.2. Pro se appearance. -- Any claimant who is a natural person may appear at and represent himself or herself in any matter before the commissioner.
3.3. Partner representing partnership. -- A partner may represent his or her partnership upon permission by the commissioner.
3.4. Representation of corporation. -- A corporate entity may be represented only by an attorney duly licensed or authorized to practice law in the state of West Virginia, although an employee of a corporation may testify at a hearing without the presence of counsel.
3.5. Representation by lay person prohibited. -- A party may not be represented in a matter before the commissioner by a spokesperson, lay representative or any other natural person not admitted or authorized to practice law in the state of West Virginia.
W. Va. Code R. § 114-76-4 Filing of an Administrative Complaint
4.1. Time within which complaint must be filed. -- A written administrative complaint must be received by the commissioner no later than one (1) year following the actual or implied discovery of the alleged unfair claims settlement practice.
4.2. Receipt of complaint. -- For purposes of the time limit imposed by W. Va. Code §33-11-4a(b) and subsection 4.1 of this section, a complaint shall be deemed to have been received on the date on which a written document describing acts that could reasonably be construed as an unfair claims settlement practice is received by the commissioner, regardless of whether such document is on a form as described in subsection 4.3 of this section.
4.3. Complaint form. -a. A complaint shall be on a form provided by the commissioner and shall state with specificity the following:
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The statutory provision, if known, which the person allegedly violated;
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The facts and circumstances giving rise to the violation;
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The name of any individual or other entity involved in the violation;
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Reference to specific policy language that is relevant to the violation, if known; and 5. Any other information the commissioner may require.
b. If the complaint does not provide sufficient information, the commissioner shall contact the claimant within fifteen (15) days of receipt of the complaint advising that the complaint does not provide sufficient information. The claimant may amend, within an additional fifteen (15) days from the date of contact, the original complaint to clarify it, add and/or delete parties, and make any other necessary changes. If the claimant fails to provide information for a sufficiently complete complaint within fifteen (15) days from contact by the Commission, no further action will be taken on the complaint.
c. Upon receipt of a sufficiently complete complaint, the commissioner must, within five (5) working days thereafter, mail or by electronic means provide a copy to the respondent(s).
4.4. Reporting status of negotiations. -- Within forty-five (45) days after receiving a complaint, the respondent must advise the commissioner in writing of the status of negotiations with the claimant unless the complaint has been resolved and the commissioner has been so advised or the respondent has advised the commissioner that he or she does not intend to take any further action to resolve the complaint.
W. Va. Code R. § 114-76-5 Resolution Without Hearing
5.1. Closing of complaint. -- Except as provided in W. Va. Code §33-11-4a(i) and subsection 5.4 of this section, the commissioner shall close the complaint and no further action shall lie on the matter if he or she determines that the respondent:
a. Substantially corrected the circumstances that gave rise to the complaint within the sixty-day period;
b. Offered to resolve the complaint in a reasonable manner within the sixty-day period; or c. Provided sufficient information to satisfy the commissioner that the complaint lacks merit.
5.2. When complaint may be closed. -- A determination to close the complaint pursuant to subsection 5.1 of this section may be made at any time after the expiration of the sixty-day period, including during or after a hearing conducted pursuant to section 7 of this rule.
5.3. Right to contest closure. -- This section shall not affect the right of a claimant to make a written demand for a hearing pursuant to the provisions of W. Va. Code §33-2-13 on the issue of whether the commissioner properly decided to close the complaint pursuant to subsection 5.1 of this section. If the commissioner determines after such hearing that the closure was in error, the complaint shall be reopened and the matter shall proceed as if the commissioner had not made the determination to close the complaint pursuant to subsection 5.1 of this section. In the event of a reopening of the complaint pursuant to this subsection, all time periods in this rule shall be tolled pending the final determination of the proceedings instituted to contest the closure under subsection 5.1 of this section.
5.4. Effect of closure. -- The closure of a complaint pursuant to subsection 5.1 of this section does not limit the authority of the commissioner to consider evidence related to the factual allegations of the complaint in determining, in the context of a proceeding other than that involving the closed complaint itself, whether the alleged unfair settlement practice was, when considered in conjunction with other similar violations, part of a general business practice.
W. Va. Code R. § 114-76-6 Determination of Need For Hearing
6.1. When investigations may begin. -- Upon the expiration of the sixty-day period without a resolution of the complaint or a declaration by the respondent that he or she does not intend to take any further action to resolve the complaint within the sixty-day period, the commissioner may conduct any investigation he or she considers necessary to determine whether the allegations contained in the complaint are meritorious. Upon finding, after hearing, that an unfair claims settlement practice has been committed, the commissioner may also conduct an investigation to determine whether the unfair claims settlement practice was committed with such frequency as to constitute a general business practice.
6.2. Complaint provided to Office of Consumer Advocacy. -- If the complaint has not been closed pursuant to subsection 5.1 of this rule or has been reopened pursuant to subsection 5.3 of this rule, and the commissioner makes a preliminary finding that the complaint has merit, he or she shall forward a complete copy of the complaint and the respondent’s response, if any, to the Office of Consumer Advocacy.
W. Va. Code R. § 114-76-7 Hearings
7.1. Scheduling of hearing. -- A hearing on a complaint shall be scheduled to be held within ninety (90) days from the date of filing the complaint, unless continued by agreement of all parties or by the commissioner for good cause. Good cause includes but is not limited to a determination by the commissioner that additional investigation is necessary.
7.2. Notice of hearing. -- The commissioner shall assign a time and place for a hearing and shall mail written notice of the hearing to the parties at least ten (10) days in advance thereof.
7.3. Pre-hearing matters. -- The provisions of WV 114 CSR 13.4 are specifically made applicable to proceedings under this rule.
7.4. Location of hearing. -- Hearings are to be conducted in the geographical region of the state where the complainant resides, as determined by the commissioner. Upon concurrence of all parties, the commissioner may conduct the hearing by telephone conference call.
7.5. Conduct of hearings.
a. To the extent such provisions are not in conflict with this rule, hearings shall be conducted in accordance with the procedures set forth in WV 114 CSR 13.
b. All testimony and evidence at any such hearing shall be reported by stenographic notes and characters or by mechanical means.
7.6. Required findings. -- The commissioner shall determine whether or not the respondent committed an unfair claims settlement practice.
7.7. Required determinations. -- If an unfair claims settlement practice is found, the commissioner shall determine:
a. Whether the violation was intentional;
b. Whether the violation was a result of an egregious act; and c. Whether the violation was committed with such frequency as to constitute a general business practice upon further investigation and, if necessary, a hearing brought pursuant to an administrative proceeding initiated by the commissioner.
7.8. Continuation and adjournment. -- The commissioner may continue a hearing from one day to another or adjourn it to a later date to hear evidence that may relate to the determinations required by subsection 7.7 of this section.
W. Va. Code R. § 114-76-8 Commissioner’s Authority
8.1. Commissioner’s authority not limited by rule. -- Nothing in this rule may be construed to limit the authority of the commissioner to conduct an investigation of or to take action against a respondent whom the commissioner has reason to believe has:
a. Intentionally committed an unfair claims settlement practice;
b. Committed an unfair claims settlement practice with such frequency as to constitute a general business practice; or c. Consistently used the sixty-day period to resolve or settle third party claims.
W. Va. Code R. § 114-76-9 Penalties, Restitution and Judicial Review
9.1. Penalties. -- If the commissioner determines after hearing that the respondent has committed an unfair claims settlement practice, he or she shall issue an order directing the respondent to cease and desist from such practice and may, in addition, impose one or more of the penalties as prescribed by W. Va. Code §33-11-6(a) through (d), inclusive.
9.2. Restitution. -a. The commissioner may, in addition to any penalties imposed pursuant to subsection 9.1 of this section, grant restitution to the claimant if the commissioner determines that the claimant has suffered damages as a result of:
- A general business practice; or 2. An egregious act committed by the respondent, regardless of whether the act occurred within a general business practice.
b. Restitution permitted under W. Va. Code §33-11-6(e)(1) and subdivision a of this subsection may include non-economic damages not to exceed ten thousand dollars ($10,000) and actual economic damages. Restitution may not be given for attorney fees or punitive damages.
c. The payment of any restitution award shall be made from the Unfair Claims Settlement Practice Trust Fund established by W. Va. Code §33-11-4b.
9.3. Judicial review. -- Any person aggrieved by any act, which includes the entry of an order, or failure to act of the commissioner under this rule may seek judicial review as provided in W. Va. Code §§33-2-14 and 33-11-6(g).
114CSR76
114CSR76
Series 77 Rate Filing Requirements For Title Insurance Companies
W. Va. Code R. § 114-77-1 General
1.1. Scope. -- This rule establishes guidelines and procedures under which title insurance companies shall submit rate filings.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-20-3(e)(2)(B) (2006).
1.3. Filing Date. -- April 6, 2007.
1.4. Effective Date. -- April 6, 2007.
W. Va. Code R. § 114-77-2 Applicability
This rule sets forth the requirements for the filing of rates for title insurance in this State. The requirements set forth in W. Va. Code §§33-20-1 et seq. are applicable to title rate filings.
W. Va. Code R. § 114-77-3 Definitions
As used in this rule:
3.1. “Commercial” means any title insurance not meeting the definition of “non-commercial.
3.2. “Commissioner” means the West Virginia Insurance Commissioner.
3.3. “Noncommercial” means insurance that insures title to (a) property, other than property of a business or professional nature, which is used predominantly for residential, personal, family or household purposes; and (b) unimproved property that is intended for such purposes. 3.4 “Title insurance” means insurance of owners of property or others having an interest therein, or liens or encumbrances thereon, against loss by encumbrance, defective title, invalidity or adverse claim to title.
W. Va. Code R. § 114-77-4 Information Required To Be Reported
4.1. Except to the extent they are inconsistent with this rule, rate filings for title insurance shall follow the procedures applicable to other rate filings pursuant to 114CSR67.
4.2. Every rate filing by a title insurer shall differentiate between the rates proposed for commercial and non-commercial properties.
4.3. No title insurer may charge any rates after September 1, 2006 except in accordance with the premium rate schedule and manual filed with and approved by the Commissioner pursuant to this rule.
4.4. A title insurer or title insurance agent may satisfy its obligation to file premium rates, rating manuals and forms by becoming a member of or a subscriber to a rating organization licensed under the provisions of W. Va. Code §33-20-6 that makes filings on behalf of insurers: Provided, That nothing in this rule shall be construed as requiring any title insurer or title insurance agent to become a member of or a subscriber to any rating organization. Nothing in this rule prohibits any rating organization member or subscriber from making deviation filings in accordance with the provisions of W. Va. Code §33-20-7.
4.5. Every rate schedule for non-commercial title insurance must be filed with the Commissioner and shall be on file for a waiting period of sixty days before it becomes effective. Upon written application by an insurer or rating organization, the Commissioner may authorize a filing to become effective before the expiration of the waiting period. A filing shall be deemed to meet the requirements of article twenty, chapter thirty-three of the West Virginia Code unless disapproved by the Commissioner during the waiting period.
4.6. Rate schedules for commercial title insurance must be filed with, but need not be approved by, the Commissioner. The Commissioner may request additional information to ensure compliance with applicable statutory standards, but if the Commissioner does not disapprove the filing within thirty days after receipt, the rate filing will become effective upon first usage after filing: Provided, That the Commissioner may at any time thereafter, after notice and for cause shown, disapprove any rate filing.
114CSR77
114CSR77
Series 80 Viatical Settlements
W. Va. Code R. § 114-80-1 General
1.1. Scope. -- The purpose of this rule is to implement W. Va. Code §33-13C relating to the regulation of persons and institutions engaged in the business of viatical settlements in West Virginia and to protect the public from unfair and unconscionable practices in the course of that business. This rule is based on the National Association of Insurance Commissioners' "Viatical Settlement Regulation" (Model 698), as amended in 2004.
1.2. Authority. -- W. Va. Code §§33-2-10, 33-13C-3(b), 33-13C-5(b), 33-13C-12(d) and 33-13C-17.
1.3. Filing Date. -- April 14, 2010.
1.4. Effective Date. -- April 14, 2010.
W. Va. Code R. § 114-80-2 Definitions
In addition to the definitions in W.Va. Code §33-13C-2, the following definitions apply:
2.1. "Escrow agent" means an independent third-party person who, pursuant to a written agreement signed by the viatical settlement provider, viatical settlement broker and viator, provides escrow services related to the acquisition of a life insurance policy pursuant to a viatical settlement contract. "Escrow agent" does not include any person associated with, affiliated with, or under the control of a person licensed under W.Va. Code §33-13C-3 or any person retained to represent a viator who is licensed as an attorney, certified public accountant or financial planner accredited by a nationally recognized accreditation agency whose compensation is not paid directly or indirectly by the viatical settlement provider, and whose viatical settlement activities are incidental to the professional practice of the attorney, certified public accountant or financial planner. "Escrow agent" also does not include an insurance producer authorized to act under W. Va. Code §33-13C- 3(2)(A).
2.2. "Insured" means the person covered under the policy being considered for viatication.
2.3. "Life expectancy " means the arithmetic mean of the number of months the individual insured under the life insurance policy to be viaticated can be expected to live as determined by an independent life expectancy provider considering medical records and appropriate experiential data..
2.4. "Net death benefit" means the amount of the life insurance policy or certificate to be viaticated less any outstanding debts or liens.
2.5. "Patient identifying information" means an insured's address, telephone number, facsimile number, electronic mail address, photograph or likeness, employer, employment status, social security number, or any other information that is likely to lead to the identification of the insured.
2.6. “Brochure” means an informational brochure that is distributed to viators explaining viatical settlement contracts. The brochure shall be in the National Association of Insurance Commissioners' (NAIC) format unless the Commissioner develops or adopts another version and makes it available on the Insurance Commission's website: Provided, That a licensed provider may apply to the Commissioner for permission to use a specific brochure in lieu of the NAIC brochure or other one approved by the Commissioner.
2.7. “Proposal” means the documents distributed to a viator by a viatical settlement provider pursuant to section 10 of this rule that outlines the terms and conditions of the viatical settlement contract.
W. Va. Code R. § 114-80-3 Viatical Settlement Provider Licensing and Renewal Requirements
3.1. A person shall not operate as a viatical settlement provider without first obtaining a license from the Commissioner pursuant to W. Va. Code §33-13C-3 and this rule.
3.2. A person must submit the following to obtain a license to act as a viatical settlement provider in this state:
3.2.a. A fully completed Viatical Settlement Provider Application (VSP-2);
3.2.b. A $600.00 non-refundable application fee;
3.2.c. A certificate of good standing from state of domicile;
3.2.d. A West Virginia business license;
3.2.e. A copy of the last certified public accountant audit and if any, the latest financial and market conduct examination reports from the state of domicile;
3.2.f. An unaudited financial statement for the most recent quarter;
3.2.g. Evidence of a minimum equity of not less than $250,000 in cash or cash equivalents reflected in the applicant's audited financial statements or through a surety bond executed and issued by an insurer authorized to issue bond in this state in the amount of $250,000;
3.2.h. A detailed plan of operations;
3.2.i. An anti-fraud plan that meets the requirements of W. Va. Code §33-13C-14;
3.2.j. National Association of Insurance Commissioners' UCAA biographical affidavit for each individual, member, officer or principal owner (ownership of ten percent or more of the company) of applicant and each person to be authorized to act under the license;
3.2.k. If the applicant is a member of a holding company system, submit an organizational chart which depicts the affiliate relationships among the members. "Affiliate" means a person that directly or indirectly through one or more intermediaries is controlled by or is under common control with the member specified. "Control" shall be presumed to exist if any person directly or indirectly owns, controls, holds with the power to vote or holds proxies representing collectively ten percent or more of the voting securities of any other person;
3.2.l. Samples of all forms the provider uses or plans to use to enter into viatical settlement contracts with viators and viator application forms;
3.2.m. Samples of all advertising and other solicitation materials the provider plans to use in the state; and
3.2.n. Samples of all informational brochures.
3.3. An incomplete application, as determined by the commission, that remains incomplete four months from the date filed will be considered withdrawn and a new application and application fee will be required.
3.4. A viatical settlement provider license must be renewed annually by payment of $300 on or before the thirty-first day of May next following the date of issuance. If a viatical settlement provider fails to pay the renewal fee, the nonpayment shall result in a lapse of the license. A viatical settlement provider that allows its license to lapse may, within twelve months from the due date of the renewal fee, reinstate the same license, however, a penalty in the amount of $300 shall be required for any renewal fee received after the due date.
3.5. If a viatical settlement provider has, at the time of renewal, viatical settlement contracts where the insured has not died, it shall do one of the following:
3.5.a. Renew or maintain its current license status until the earlier of the following events:
3.5.a.1. The date the viatical settlement provider properly assigns, sells or otherwise transfers the viatical settlement contract where the insured has not died; or
3.5.a.2. The date that the last insured covered by viatical settlement contract has died.
3.5.b. Appoint, in writing, either the viatical settlement provider that entered into the viatical settlement contract, the broker who received commissions from the viatical settlement contract, if applicable, or any other viatical settlement provider or broker licensed in this state to make all inquiries to the viator, or the viator's designee, regarding health status of the insured or any other matters.
3.6. A license issued to a legal entity pursuant to W.Va. Code §33-13C-3 and subsection 3.2 of this rule authorizes all partners, officers, members and designated employees to act as viatical settlement providers under the license and all those persons shall be named in the application and any supplements to the application.
W. Va. Code R. § 114-80-4 Viatical Settlement Broker Licensing and Renewal Requirements
4.1. A person or entity shall not operate as a viatical settlement broker without first obtaining a license from the Commissioner pursuant to W. Va. Code §33-13C-3 and this rule.
4.2. A person or entity must submit the following to obtain a license to act as a viatical settlement broker in this state:
4.2.a. A fully completed Viatical Settlement Broker Application (VSB-2);
4.2.b. If a legal entity, a certificate of good standing from state of domicile;
4.2.c. Evidence of a minimum equity of not less than $250,000 in cash or cash equivalents reflected in the applicant's audited financial statements or through a surety bond executed and issued by an insurer authorized to issue bond in this state in the amount of $250,000: Provided, That the Commissioner may permit an applicant for a broker’s license to demonstrate evidence of financial responsibility through a policy of insurance covering legal liability resulting from erroneous acts or failure to act in their capacity as a viatical settlement broker and inuring to the benefit of any aggrieved party as the result of any single occurrence in the sum of not less than $100,000 and $300,000 in the aggregate for all occurrences within one year;
4.2.d. An anti-fraud plan that meets the requirements of W. Va. Code §33-13C-14(g);
4.2.e. If a legal entity, National Association of Insurance Commissioners' UCAA biographical affidavit for each individual, member, officer or principal owner (ownership of ten percent or more of the company) of applicant;
4.2.f. Samples of informational brochures to be provided to prospective viators describing the viatical settlement process. 4.3.
4.3.a. An individual applicant for a viatical settlement broker's license shall pass the Viatical Settlements Brokers Examination. An examination fee of $25 shall be paid by each applicant and the examination shall be administered by a designated independent testing service selected by the Commissioner. The examination fees will be collected by the independent testing service and remitted to the Commissioner. Any additional fees charged by the independent testing service shall be paid by the applicant.
4.3.b. An applicant who holds or has held a life insurance producer's license for at least five consecutive years and is in good standing with the Insurance Commission shall be exempt from licensing and continuing education requirements set forth in subsection 4.10 and W.Va. Code §33-13C-3(g) as long as the viatical settlement activities of the producer are incidental to the producer’s insurance business activities. Viatical settlement activities are “incidental” to a producer’s insurance business activities if that producer receives a commission or other remuneration as a result of no more than one viatical settlement contract completed in the calendar year for which the exemption is claimed.
4.4. The Insurance Commissioner may waive any requirement for an individual’s nonresident viatical settlement broker’s license , including the examination and continuing education requirements, for an applicant with a valid license from his or her home state if the applicant's home state awards nonresident licenses to residents of this state on a reciprocal basis. For instance, an individual nonresident broker’s satisfaction of his or her home state's continuing education requirements for licensed viatical settlement brokers shall constitute satisfaction of this state's continuing education requirements if the nonresident broker’s home state recognizes the satisfaction of its continuing education requirements imposed upon brokers from this state on substantially the same basis. An application for a nonresident’s license may include a request for a waiver of any requirements of W.Va. Code §33-13C-3 and this rule.
4.5. A passing score for the Viatical Settlements Broker Examination shall be a minimum score of 70%.
4.6. In addition to the information required in W. Va. Code §33-13C-3 and subsection 4.2 of this section, the Commissioner reserves the right to request other information as determined necessary for issuance of a license, to ensure that the applicant for a license as a viatical settlement provider or a viatical settlement broker complies with W. Va. Code §33-13C-3.
4.7. The application of a viatical settlement broker shall be accompanied by a fee of $200 for an entity license and $50 for an individual license. The date upon which the viatical settlement broker license shall expire for individuals and entities shall be at the discretion of the Commissioner. The license may be renewed annually by payment of $200 for an entity license and $50 for an individual license and a current copy of a letter of good standing obtained from the filing officer of the applicant's state of domicile.
4.8. If a viatical settlement broker fails to pay the renewal fee, the nonpayment shall result in a lapse of the license. A viatical settlement broker that allows its license to lapse may, within twelve months from the due date of the renewal fee, reinstate the same license without the necessity of passing a written examination. However, a penalty in the amount of $200 for an entity and $50 for an individual shall be required for any renewal fee received after the due date. 4.9.
4.9.a. An individual licensed as a viatical settlement broker shall complete fifteen hours of commission-approved continuing education every two years. Such requirement shall be met in accordance with directions posted on the Commissioner’s website.
4.9.b. An individual who fails to comply with the continuing education requirement and who has not been granted an extension of time to comply shall promptly surrender their license to the Commissioner without demand.
W. Va. Code R. § 114-80-5 Standards for Evaluation of Reasonable Payments for Terminally or Chronically Ill Insureds
5.1. In order to assure that viators who are terminally or chronically ill receive a reasonable return for viaticating an insurance policy, the return for viaticating a policy shall be no less than the following payout:
5.1.a. If the life expectancy is less than six months, eighty percent of the net death benefit.
5.1.b. If the life expectancy is at least six months but less than twelve months, seventy percent of the net death benefit.
5.1.c. If the life expectancy is at least twelve months but less than eighteen months, sixty-five percent of the net death benefit.
5.1.d. If the life expectancy is at least eighteen months but less than twenty-five months, sixty percent of the net death benefit.
5.1.e. If the life expectancy is twenty-five months or more, the viator must receive at least the greater of the cash surrender value or accelerated death benefit in the policy.
5.2. Except where the cash surrender value is paid, the percentage may be reduced by five percent for viaticating a policy written by an insurer rated less than the highest four categories by A.M. Best, or a comparable rating by another rating agency.
W. Va. Code R. § 114-80-6 Reporting Requirements
6.1. On or before March 1 of each year, each licensed provider shall make an annual report of all viatical settlement contract transactions in which the viators were residents at the time the contract was initiated. Relocation out of state by a viator does not relieve the licensed provider from reporting transaction activities for such viator. The report shall contain the following information for the previous calendar year:
6.1.a. For each viatical settlement contract entered into during the reporting period:
6.1.a.1. Date of viatical settlement contract;
6.1.a.2. Viator's state of residence at the time of the contract;
6.1.a.3. Life expectancy of the insured at the time of contract in months;
6.1.a.4. Face amount of policy viaticated;
6.1.a.5. Net death benefit viaticated;
6.1.a.6. Estimated total premiums to keep policy in force for mean life expectancy;
6.1.a.7. Net amount paid to viator;
6.1.a.8. Source of policy (B-Broker, D-Direct Purchase);
6.1.a.9. Type of coverage (I-Individual or G-Group);
6.1.a.10. Whether or not the viatical settlement contract was entered into during the policy's contestable or suicide period, or both;
6.1.a.11. Classification of the viator's or insured's diseases or injuries:
6.1.a.11.A. Cardiovascular diseases;
6.1.a.11.B. Diseases of the central nervous system;
6.1.a.11.C. Diseases of the peripheral nervous system;
6.1.a.11.D. Elders with nonspecific disease processes;
6.1.a.11.E. Infectious diseases and autoimmune diseases;
6.1.a.11.F. Liver and renal diseases;
6.1.a.11.G. Neoplasms;
6.1.a.11.H. Non-neoplastic pulmonary diseases;
6.1.a.12. Type of funding for viatical settlement contracts (P-purchaser, L-licensee, I-accredited investor, F-financing entity, S-special purpose entity, R-related provider trust); and
6.1.a.13. Rating of insurer that issued the policy at the time the policy was viaticated.
6.1.b. In addition to the requirements stated in subdivision a of this subsection, when death has occurred the following information should also be provided:
6.1.b.1. In place of the net death benefit viaticated provided in paragraph 5, subdivision a of this subsection the net death benefit collected;
6.1.b.2. In place of the estimated total premiums to keep the policy in force for the mean life expectancy provided in paragraph 6, subdivision a of this subsection, the total of the premiums paid to maintain the policy;
6.1.b.3. Date of death;
6.1.b.4. Difference between the number of months that passed between the date of contract and the date of death and the mean life expectancy in months as determined by the reporting company;
6.1.b.5. Type of coverage (I-Individual or G-Group); and
6.1.b.6. Whether or not the viatical settlement contract was entered into during the policy's contestable or suicide period, or both;
6.1.c. Name and address of each viatical settlement broker through whom the reporting provider purchased a policy from a viator who resided in this state at the time of contract; and
6.1.d. Number of policies purchased from an individual or entity other than the original viator as a percentage of total policies purchased.
6.2. On March 1 of each year, each licensed broker and each insurance producer whose viatical settlement activities are incidental to their business activities shall make an annual report of all viatical settlement contract transactions during the previous year in which the viators were residents of this state at the time the contract was initiated. The report shall be in the format on the Insurance Commission website.
W. Va. Code R. § 114-80-7 General Rules
7.1. Payment of the proceeds of a viatical settlement contract pursuant to W. Va. Code §33-13C-10 shall be by means of wire transfer to an account designated by the viator or by certified check or cashier's check.
7.2. Payment of the proceeds payable to the viator pursuant to a viatical settlement contract shall be made in a lump sum except where the viatical settlement provider has purchased an annuity or similar financial instrument issued by a licensed insurance company, bank or an affiliate of either. Retention of a portion of the proceeds not disclosed or described in the viatical settlement contract by the viatical settlement provider or escrow agent is not permissible without written consent of the viator.
7.3. A viatical settlement provider or a viatical settlement broker shall not discriminate in the making or soliciting of viatical settlement contracts or discriminate between viators with dependents and without.
7.4. A viatical settlement provider shall not knowingly solicit purchasers who have treated or have been asked to treat the illness of the viator whose coverage would be the subject of the investment.
7.5. If a viatical settlement provider enters into a viatical settlement contract that allows the viator to retain an interest in the policy, the viatical settlement contract shall contain the following:
7.5.a. A provision that the viatical settlement provider will effect the transfer of the amount of the death benefit only to the extent or portion of the amount viaticated. The contract shall provide that benefits in excess of the amount viaticated shall be paid directly to the viator's beneficiary by the insurance company.
7.5.b. A provision that the viatical settlement provider will, upon acknowledgment of the completion of the transfer by the insurance company, either;
7.5.b.1. Advise the viator, in writing, that the insurance company has confirmed the viator's interest in the policy; or
7.5.b.2. Send a copy of the instrument sent from the insurance company to the viatical settlement provider that acknowledges the viator's interest in the policy.
7.5.c. A provision that apportions the premiums to be paid by the viatical settlement provider and the viator, provided that the contract provides premium payment terms and nonforfeiture options no less favorable, on a proportional basis, than those included in the policy.
7.6. In all cases where the viator is a minor child, disclosures to and permission of a parent or legal guardian shall satisfy the requirements of W. Va. Code §33-13C-8 and this rule.
W. Va. Code R. § 114-80-8 Contracts and Payment of Proceeds
8.1. Every viatical settlement provider shall file for approval with the Commissioner each contract form, application form, brochure and disclosure state form pursuant to W. Va. Code §33-13C-5.
8.2. In addition to the requirements in W. Va. Code §33-13C-10, every contract shall include the following provisions:
8.2.a. If the viator elects the right to rescind the contract, the provider's rights or interest in the policy will terminate immediately upon the viator giving notice of the rescission and tendering of the settlement proceeds together with any escrow interest received by the viator.
8.2.b. The amount of the fee or fees to be paid by the viator to the provider in conjunction with the contract shall be clearly stated, along with any conditions of payment or receipt of the fee or fees.
8.2.c. The contract together with the application constitutes the entire agreement between the parties.
8.2.d. If the contract provides for the payment of an additional settlement amount to the viator upon the exercise of a guaranteed insurability option by the viator, the contract shall disclose the amount of the additional settlement and the terms upon which it shall be payable.
8.2.e. If the policy to be viaticated provides a guaranteed insurability option, the option may only be exercised for the benefit of a person who has an insurable interest in the life to be insured.
8.2.f. The viatical settlement provider shall instruct the viator to send the executed documents required to effect the change in ownership, assignment or change in beneficiary directly to the escrow agent. Upon the escrow agent’s receipt of the acknowledgment of the properly completed transfer of ownership, assignment or designation of beneficiary from the insurance company, the escrow agent shall pay the settlement proceeds to the viator, broker and any other persons pursuant to the viatical settlement contract and the escrow agreement. The escrow agent shall make payment within three business days of the date the escrow agent received the acknowledged forms from the insurance company.
8.3. Every application for a contract shall:
8.3.a. Contain the viator's printed name and signature;
8.3.b. Be notarized by a person who does not have a financial interest in the policy or viatical settlement contract; and
8.3.c. Provide for an acknowledgment by the viator of receipt of the information booklet required by W. Va. Code §33-13C-8.
W. Va. Code R. § 114-80-9 Advertising and Marketing
9.1. A viatical settlement provider may not use any advertising directed at prospective viators unless filed with the Commissioner: Provided, That this requirement is met if the advertising used is substantially similar to the sample advertising filed with the application for a license or for a renewal of such license and the provider retains copies of all advertising for five years after last use and is able to provide access to such copies to the Commissioner upon request. Marketing materials directed at brokers, financial advisors and persons other than prospective viators do not have to be filed with the Commissioner prior to use.
W. Va. Code R. § 114-80-10 Disclosures
10.1. The provider, upon receipt of a completed application to viaticate and after determining the value to be offered in return for the assignment or transfer of the death benefit or ownership of a policy to the provider, shall deliver a proposal to the viator no later than the date the contract for a viatical settlement contract is to be signed. The proposal shall disclose the following information:
10.1.a. Amount of death benefit to be viaticated;
10.1.b. Policy cash value before deducting any loan;
10.1.c. Policy net cash value after deducting any loan;
10.1.d. Policy death benefit less net cash value;
10.1.e. Amount offered to viator;
10.1.f. Whether any supplemental benefit or benefits are present, will be continued and, if so, the source of premium payment and the beneficiary of the proceeds of such supplemental benefit, and the provider's interest in each benefit for the following:
10.1.f.1. Accidental death and dismemberment benefit, including the amount of the benefit;
10.1.f.2. Disability income;
10.1.f.3. Waiver of premium or of monthly deduction waiver;
10.1.f.4. Guaranteed insurability options; or
10.1.f.5. Children or spouse coverage;
10.1.g. Name of the insurer, and whether the insurer does or does not have an accelerated death benefit program for which the viator qualifies; and
10.1.h. That an escrow agent shall provide escrow services to the parties pursuant to a written agreement, signed by the viatical settlement provider, the viatical settlement broker and the viator. All persons to receive any form of compensation under the escrow agreement shall be clearly identified, including name, business address, telephone number and tax identification number.
10.2. The provider shall disclose on the application or in the brochure that the identity of the viator will not be disclosed except under the permissible conditions set forth in W. Va. Code §33-13C-6, or as otherwise required by law. The provider shall provide an explanation of these conditions found in W. Va. Code §33-13C-6 to the viator.
W. Va. Code R. § 114-80-11 Prohibited Practices
11.1. A viatical settlement provider or viatical settlement broker shall obtain from a person that is provided with patient identifying information a signed affirmation that the person or entity will not further divulge the information without procuring the express, written consent of the insured for the disclosure. Notwithstanding the foregoing, if a viatical settlement provider or viatical settlement broker is served with a subpoena and, therefore, compelled to produce records containing patient identifying information, it shall notify the viator and the insured in writing at their last known addresses within five business days after receiving notice of the subpoena.
11.2. A viatical settlement provider may not act also as a viatical settlement broker, whether entitled to collect a fee directly or indirectly, in the same viatical settlement contract.
11.3. A viatical settlement broker shall not, without the written agreement of the viator obtained prior to performing any services in connection with a viatical settlement contract, seek or obtain any compensation from the viator.
W. Va. Code R. § 114-80-12 Insurance Company Practices
12.1. Life insurance companies licensed to do business in this state shall respond to a request for verification of coverage from a viatical settlement provider or a viatical settlement broker within thirty calendar days of the date a request is received, subject to the following conditions:
12.1.a. An authorization or release signed by the policy owner or certificate holder, accompanies the request; and
12.1.b. In the case of an individual policy or group insurance coverage where details with respect to the certificate holder's coverage are maintained by the insurer, submission of a form substantially similar to the format prescribed by the National Association of Insurance Commissioners available on the Insurance Commission website, which has been completed by the viatical settlement provider or the viatical settlement broker in accordance with the instructions on the form.
12.2. Nothing in this section shall prohibit a life insurance company and a viatical settlement provider or a viatical settlement broker from using another verification of coverage form that has been mutually agreed upon.
12.3. A life insurance company may not charge a fee for responding to a request for information from a viatical settlement provider or a viatical settlement broker in compliance with this section in excess of any usual and customary charges to contract holders, certificate holder or insureds for similar services.
12.4. The life insurance company shall send an acknowledgment of receipt of the request for verification of coverage to the policy owner or certificate holder and, where the policy owner or certificate holder is other than the insured, to the insured. The acknowledgment must contain a general description of any accelerated death benefit that is available under a provision of or rider to the life insurance contract.
12.5. A life insurance company shall not require the viator to sign any request for change in a policy or a group certificate from a viatical settlement provider that is the owner or assignee of the insured's insurance coverage, unless the viator or insured has ownership, assignment or irrevocable beneficiary rights under the policy. In such a situation, the viatical settlement provider shall provide timely notice to the insured that a settlement transaction on the policy has occurred. Notice shall be provided within fifteen calendar days of the change in a policy or group certificate.
114CSR80
114CSR80
Series 82 Military Sales Practices
W. Va. Code R. § 114-82-1 General
1.1. Scope. -- This rule applies only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance producer to an active duty service member of the United States Armed Forces.
a. The purpose of this rule is to set forth standards to protect active duty service members of the United States Armed Forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive or unfair.
b. Nothing herein shall be construed to create or imply a private cause of action for a violation of this rule.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-4-21.
1.3. Filing Date. -- May 5, 2008.
1.4. Effective Date. -- August 1, 2008.
W. Va. Code R. § 114-82-2 Definitions
2.1. “Active duty” means full-time service in the United States Armed Forces and includes members of the reserve component (National Guard and Reserve) while serving under published orders for active duty or full-time training. The term does not include members of the reserve component who are performing active duty or active duty for training under military calls or orders specifying periods of less than thirty-one (31) calendar days.
2.2. “Department of Defense (DoD) personnel” means all active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the Department of Defense.
2.3. “Door to door” means a solicitation or sales method whereby an insurance producer proceeds randomly or selectively from household to household without prior specific appointment.
2.4. “General advertisement” means an advertisement having as its sole purpose the promotion of the reader's or viewer's interest in the concept of insurance or the promotion of the insurer or the insurance producer.
2.5. “Insurer” means an insurance company required to be licensed under the laws of this state to provide life insurance products, including annuities.
2.6. “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate life insurance, including annuities.
2.7. “Known” or “Knowingly” means, depending on its use herein, the insurance producer or insurer had actual awareness, or in the exercise of ordinary care should have known, at the time of the act or practice complained of, that the person solicited:
a. Is a service member; or b. Is a service member with a pay grade of E-4 or below.
2.8. “Life insurance” means insurance coverage on human lives, including benefits of endowment and annuities and, unless otherwise excluded, includes individually issued annuities. “Life insurance” may include benefits in the event of death or dismemberment by accident and benefits for disability income.
2.9. “Military installation” means any federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which service members are assigned for duty, including barracks, transient housing, and family quarters.
2.10. “MyPay” is a Defense Finance and Accounting Service (DFAS) web-based system that enables service members to process certain discretionary pay transactions or provide updates to personal information data elements without using paper forms.
2.11. “Service member” means any active duty officer (commissioned and warrant) or enlisted member of the United States Armed Forces.
2.12. “Side fund” means a fund or reserve that is part of or otherwise attached to a life insurance policy (excluding individually issued annuities) by rider, endorsement or other mechanism which accumulates premium or deposits with interest or by other means. The term does not include:
a. Accumulated value, cash value or secondary guarantees provided by a universal life policy;
b. Cash values provided by a whole life policy which are subject to standard nonforfeiture law for life insurance; or c. A premium deposit fund which:
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Contains only premiums paid in advance which accumulate at interest;
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Imposes no penalty for withdrawal;
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Does not permit funding beyond future required premiums;
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Is not marketed or intended as an investment; and 5. Does not carry a commission, either paid or calculated.
2.13. “Specific appointment” means a prearranged appointment agreed upon by both parties and definite as to place and time.
2.14. “United States Armed Forces” means all components of the Army, Navy, Air Force, Marine Corps and Coast Guard.
W. Va. Code R. § 114-82-3 Exemptions
3.1. This rule does not apply to solicitations or sales involving:
a. Credit insurance;
b. Group life insurance or group annuities where there is no in-person, face-to-face solicitation of individuals by an insurance producer or where the contract or certificate does not include a side fund;
c. An application to the insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the Insurance Commissioner or when a term conversion privilege is exercised among corporate affiliates;
d. Individual stand-alone health policies, including disability income policies;
e. Contracts offered by Servicemembers’ Group Life Insurance (SGLI) or Veterans’ Group Life Insurance (VGLI), as authorized by 38 U.S.C. Section 1965 et seq.;
f. Life insurance contracts offered through or by a non-profit military association, qualifying under Section 501 (c) (23) of the Internal Revenue Code (IRC), and which are not underwritten by an insurer; or g. Contracts used to fund:
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An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);
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A plan described by Sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the IRC, as amended, if established or maintained by an employer;
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A government or church plan defined in Section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the IRC;
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A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;
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Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or 6. Prearranged funeral contracts.
3.2. Nothing in this rule abrogates the ability of nonprofit organizations (and/or other organizations) to educate members of the United States Armed Forces in accordance with Department of Defense DoD Instruction 1344.07 – Personal Commercial Solicitation on DoD Installations or successor directive.
3.3. For purposes of this rule, general advertisements, direct mail and internet marketing does not constitute “solicitation.” Telephone marketing does not constitute “solicitation” provided the caller explicitly and conspicuously discloses that the product concerned is life insurance and makes no statements that avoid a clear and unequivocal statement that life insurance is the subject matter of the solicitation. Nothing in this subsection exempts an insurer or insurance producer from this rule in any in-person, face-to-face meeting established as a result of the “solicitation” exemptions identified in this subsection.
W. Va. Code R. § 114-82-4 Practices Declared False, Misleading, Deceptive or Unfair on a Military Installation
4.1. The following acts or practices, when committed on a military installation by an insurer or insurance producer with respect to the in-person, face-to-face solicitation of life insurance, are declared to be false, misleading, deceptive or unfair:
a. Knowingly soliciting the purchase of any life insurance product “door to door” or without first establishing a specific appointment for each meeting with the prospective purchaser;
b. Soliciting service members in a group or “mass” audience or in a “captive” audience where attendance is not voluntary;
c. Knowingly making appointments with or soliciting service members during their normally scheduled duty hours;
d. Making appointments with or soliciting service members in barracks, day rooms, unit areas, or transient personnel housing or other areas where the installation commander has prohibited solicitation;
e. Soliciting the sale of life insurance without first obtaining permission from the installation commander or the commander’s designee;
f. Posting unauthorized bulletins, notices or advertisements;
g. Failing to present DD Form 2885, Personal Commercial Solicitation Evaluation, to service members solicited or encouraging service members solicited not to complete or submit a DD Form 2885; or h. Knowingly accepting an application for life insurance or issuing a policy of life insurance on the life of an enlisted member of the United States Armed Forces without first obtaining for the insurer’s files a completed copy of any required form which confirms that the applicant has received counseling or fulfilled any other similar requirement for the sale of life insurance established by regulations, directives or rules of the DoD or any branch of the United States Armed Forces.
4.2. The following acts or practices, when committed on a military installation by an insurer or insurance producer, constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:
a. Using DoD personnel, directly or indirectly, as a representative or agent in any official or business capacity with or without compensation with respect to the solicitation or sale of life insurance to service members; or b. Using an insurance producer to participate in any United States Armed Forces sponsored education or orientation program.
W. Va. Code R. § 114-82-5 Practices Declared False, Misleading, Deceptive or Unfair Regardless of Location
5.1. The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:
a. Submitting, processing or assisting in the submission or processing of any allotment form or similar device used by the United States Armed Forces to direct a service member’s pay to a third party for the purchase of life insurance. The foregoing includes, but is not limited to, using or assisting in using a service member's “MyPay” account or other similar internet or electronic medium for such purposes. This subsection does not prohibit assisting a service member by providing insurer or premium information necessary to complete any allotment form;
b. Knowingly receiving funds from a service member for the payment of premium from a depository institution with which the service member has no formal banking relationship. For purposes of this section, a formal banking relationship is established when the depository institution:
- Provides the service member a deposit agreement and periodic statements and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. § 4301 et seq. and the regulations promulgated thereunder; and 2. Permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums;
c. Employing any device or method or entering into any agreement whereby funds received from a service member by allotment for the payment of insurance premiums are identified on the service member’s Leave and Earnings Statement or equivalent or successor form as “Savings” or “Checking” and where the service member has no formal banking relationship as defined in subdivision b of this subsection;
d. Entering into any agreement with a depository institution for the purpose of receiving funds from a service member whereby the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship;
e. Using DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity with or without compensation with respect to the solicitation or sale of life insurance to service members who are junior in rank or grade, or to the family members of such personnel;
f. Offering or giving anything of value, directly or indirectly, to DoD personnel to procure their assistance in encouraging, assisting or facilitating the solicitation or sale of life insurance to another service member;
g. Knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for his or her attendance at any event where an application for life insurance is solicited; or h. Advising a service member with a pay grade of E-4 or below to change his or her income tax withholding or state of legal residence for the sole purpose of increasing disposable income to purchase life insurance.
5.2. The following acts or practices by an insurer or insurance producer lead to confusion regarding source, sponsorship, approval or affiliation and are declared to be false, misleading, deceptive or unfair:
a. Making any representation, or using any device, title, descriptive name or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance producer or product offered is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the United States Government, the United States Armed Forces, or any state or federal agency or government entity. Examples of prohibited insurance producer titles include, but are not limited to, “Battalion Insurance Counselor,” “Unit Insurance Advisor,” “Servicemen's Group Life Insurance Conversion Consultant” or “Veteran’s Benefits Counselor.” Nothing in this subdivision prohibits a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of higher learning. Such designations include, but are not limited to, Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science In Financial Services (MSFS), or Masters of Science Financial Planning (MS); or b. Soliciting the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States Armed Forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance producer or insurance product is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the United States Government, or the United States Armed Forces.
5.3. The following acts or practices by an insurer or insurance producer lead to confusion regarding premiums, costs or investment returns and are declared to be false, misleading, deceptive or unfair:
a. Using or describing the credited interest rate on a life insurance policy in a manner that implies that the credited interest rate is a net return on premium paid; or b. Exempt for individually issued annuities, misrepresenting the mortality costs of a life insurance product, including stating or implying that the product “costs nothing” or is “free.”
5.4. The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are declared to be false, misleading, deceptive or unfair:
a. Making any representation regarding the availability, suitability, amount, cost, exclusions or limitations to coverage provided to a service member or dependents by SGLI or VGLI, which is false, misleading or deceptive;
b. Making any representation regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of SGLI or VGLI to private insurers which is false, misleading or deceptive; or c. Suggesting, recommending or encouraging a service member to cancel or terminate his or her SGLI policy or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement takes effect upon or after the service member’s separation from the United States Armed Forces.
5.5. The following acts or practices by an insurer and or insurance producer regarding disclosure are declared to be false, misleading, deceptive or unfair:
a. Deploying, using or contracting for any lead-generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance producer, if that is the case, for the purpose of soliciting the purchase of life insurance;
b. Failing to disclose that a solicitation for the sale of life insurance will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser;
c. Except for individually issued annuities, failing to clearly and conspicuously disclose the fact that the product being sold is life insurance;
d. Failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by Section 10 of the “Military Personnel Financial Services Protection Act,” Pub. L. No. 109-290, p.16; or e. Except for individually issued annuities, when the sale is conducted in-person face-to-face with an individual known to be a service member, failing to provide the applicant at the time the application is taken:
- An explanation of any free look period with instructions on how to cancel if a policy is issued; and 2. Either a copy of the application or a written disclosure. The copy of the application or the written disclosure shall clearly and concisely set out the type of life insurance, the death benefit applied for and its expected first year cost. A basic illustration that meets the requirements of 114 CSR 11C is sufficient to meet this requirement for a written disclosure.
5.6. The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products are declared to be false, misleading, deceptive or unfair:
a. Except for individually issued annuities, recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable; or b. Offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant’s SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant’s insurable needs for life insurance.
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“Insurable needs” are the risks associated with premature death, taking into consideration the financial obligations and immediate and future cash needs of the applicant’s estate and/or survivors or dependents.
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“Other military survivor benefits” include, but are not limited to: the Death Gratuity, Funeral Reimbursement, Transition Assistance, Survivor and Dependents’ Educational Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare benefits, Survivor Housing Benefits and Allowances, Federal Income Tax Forgiveness, and Social Security Survivor Benefits.
c. Except for individually issued annuities, offering for sale or selling any life insurance contract which includes a side fund:
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Unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;
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Unless the applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product. For this disclosure, the effective rate of return will consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage. This schedule will be provided for at least each policy year from one (1) to ten (10) and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and 3. Which by default diverts or transfers funds accumulated in the side fund to pay, reduce or offset any premiums due.
d. Except for individually issued annuities, offering for sale or selling any life insurance contract which, after considering all policy benefits, including but not limited to endowment, return of premium or persistency, does not comply with the standard nonforfeiture law for life insurance, W. Va. Code §33-13-30; or e. Selling any life insurance product to an individual known to be a service member that excludes coverage if the insured’s death is related to war, declared or undeclared, or any act related to military service, except for an accidental death coverage, e.g., double indemnity, which may be excluded.
114CSR82
114CSR82
Series 83 Discount Medical Plan Organizations And Discount Prescription Drug Plan Organizations
W. Va. Code R. § 114-83-1 General
1.1. Scope. -- The purpose of this rule is to implement W. Va. Code §33-15E, et seq. relating to Discount Medical Plan Organizations and Discount Prescription Drug Plan Organizations. This rule establishes standards to protect consumers from unfair or deceptive marketing, licensing requirements and disclosures to be made to plan members.
1.2. Authority. -- W. Va. Code §§33-2-10, 33-15E-4(b) and 33-15E-17.
1.3. Filing Date. -- May 14, 2009.
1.4. Effective Date. -- May 14, 2009.
W. Va. Code R. § 114-83-2 Definitions
2.1. “Discount medical plan organization” means an entity that contracts with providers, provider networks or other discount medical plan organizations to offer access to medical or ancillary services at a discount to plan members, provides access for discount medical plan members to the services in exchange for fees, dues, charges or other consideration, and determines the charges to plan members.
2.2. “Discount prescription drug plan organization” means an entity that contracts with providers, pharmacy networks or other discount prescription drug plan organizations to offer access to pharmacy services to plan members at a discount, provides access for discount prescription drug plan members to the services in exchange for fees, dues, charges or other consideration, and determines the charges to plan members.
W. Va. Code R. § 114-83-3 Licensing and Renewal Requirements
3.1. All Discount Medical Plan Organizations must obtain a license pursuant to W. Va. Code §33-15E-4 and this rule to continue conducting business and prior to commencing operations in the state of West Virginia.
3.2. A person or entity must submit the following to obtain a license to conduct business as a Discount Medical Plan Organization:
3.2.a. A fully completed Discount Medical Plan Organization Application for License (Form DMP-1);
3.2.b. A $300 non-refundable application fee;
3.2.c. An original certificate of authority from the state of domicile;
3.2.d. Copies of all registration documents and licenses required by the State of West Virginia;
3.2.e. Articles of Incorporation and by-laws;
3.2.f. A description of the proposed method of marketing, including types of discounts to be offered and the advertising media to be used, including the procedures in place to approve advertising, prior to use;
3.2.g. An audited financial statement prepared in accordance with generally accepted accounting principals certified by an independent certified public accountant, including the balance sheet, income statement and statement of changes in cash flow for the preceding year or if an affiliate of a parent entity that is publicly traded, those audited financial statements and a written guarantee that the minimum capital as set forth in W. Va. Code §33-15E-5 will be met by the parent entity;
3.2.h. List of names, official positions and addresses of all persons responsible for the conduct of the organization’s affairs, including company officers, directors and shareholders owning ten percent or more shares in the organization;
3.2.i. The number of discount medical plan members in the state;
3.2.j. A copy of the form of all provider agreements offering medical or ancillary services to its members;
3.2.k. A list of all participating pharmacies offering discounts on prescription drugs to plan members or an Internet website address where such a list can be accessed by the Commissioner;
3.2.l. Organization chart including all entities within the ultimate parent company structure, if applicable;
3.2.m. Biographical affidavits for company officers, directors and shareholders owning ten percent or more shares in the organization;
3.2.n. Proof of compliance with the net worth requirement of $150,000; and
3.2.o. A surety bond in an amount not less than $35,000 for the benefit of any person that is damaged by any violation of W. Va. Code §33-15E, et seq. and this rule.
3.2.p. A description of the member complaint procedures.
3.3. Any incomplete application, as determined by the Commissioner, that remains incomplete for a period of four months will be considered withdrawn and a new application and new application fees are required.
3.4. The license of a Discount Medical Plan Organization must be renewed annually on or before the thirty first day of May next following the date of issuance. The renewal fee shall be in an amount of $100. If a Discount Medical Plan Organization fails to pay the renewal fee, the nonpayment shall result in a lapse of the license. A Discount Medical Plan Organization that allows its license to lapse may, within twelve months from the due date of the renewal fee, reinstate the same license, however, a penalty in the amount of $100 shall be required for any renewal fee received after the due date.
3.5. Along with the renewal fee, each licensee shall provide the Commissioner with the following in order to renew their license:
3.5.a. An audited financial statement prepared in accordance with generally accepted accounting principals certified by an independent certified public accountant, including the balance sheet, income statement and statement of changes in cash flow for the preceding year. If the Discount Medical Plan Organization is an affiliate of a parent entity that is publicly traded, those audited financial statements and a written guarantee that the minimum capital will be met by the parent entity;
3.5.b. Any changes in the list of names and addresses of all persons responsible for the conduct of the organization’s affairs, including company officers, directors and shareholders owning ten percent or more shares in the organization;
3.5.c. The number of discount medical plan members in the state; and
3.5.d. Proof of compliance with the net worth requirement of $150,000.
3.6. The Insurance Commissioner may waive any requirement for a Discount Medical Plan Organization license for an applicant with a valid license from the organization’s home state if the applicant’s home state awards nonresident licenses to residents of this state on a reciprocal basis.
3.7. In the event a problem occurs with a particular provider, the Discount Medical Plan Organization shall provide that particular provider agreement to the Commissioner upon request by the Commissioner.
W. Va. Code R. § 114-83-4 Marketing Restrictions
4.1. Upon request, the Discount Medical Plan Organization or Discount Prescription Drug Plan Organization shall submit to the Commissioner all advertising, marketing materials and brochures regarding a discount medical plan. 4.2.
4.2.a. All advertisements, marketing materials, brochures, discount medical plan cards and any other communications of a Discount Medical Plan Organization or Discount Prescription Drug Plan Organization that are provided to prospective members and members shall be truthful and not misleading in fact or in implication.
4.2.b. An advertisement, any marketing material, brochure, discount medical plan card or other communication is misleading in fact or in implication if it has a capacity or tendency to mislead or deceive based on the overall impression that it is reasonably expected to create within the segment of the public to which it is directed. 4.3.
4.3.a. A Discount Medical Plan Organization or Discount Prescription Drug Plan Organization must prominently display in their advertising, marketing materials, brochures, discount medical plan cards, or other communication provided to members or prospective members, the website address where a list of participating providers can be accessed.
4.3.b. The website address provided to members of a Discount Medical Plan Organization or Discount Prescription Drug Plan Organization must (i) prominently display on such website the e-mail address of the organization where a plan member may cancel a discount medical plan, or (ii) allow the member to cancel a plan by sending an e-mail to the organization through the website.
4.4. A Discount Medical Plan Organization or Discount Prescription Drug Plan Organization shall not:
4.4.a. Use in its advertisements, marketing material, brochures and discount medical plan cards the term “insurance,” except as a disclaimer of any relationship between discount medical plan benefits and insurance or as a description of an insurance product connected with a discount medical plan;
4.4.b. Describe or characterize the discount medical plan as being insurance whenever a discount medical plan is bundled with an insured product and the insurance benefits are incidental to the discount medical plan benefits;
4.4.c. Use in its advertisements, marketing material, brochures and discount medical plan cards the terms “health plan,” “coverage,” “copay,” “copayments,” “deductible,” “preexisting conditions,” “guaranteed issue,” “premium,” “PPO,” “preferred provider organization,” or other terms in a manner that could reasonably mislead an individual into believing that the discount medical plan is health insurance;
4.4.d. Make misleading, deceptive or fraudulent representations regarding the discount or range of discounts offered by the discount medical plan card or the access to any range of discounts offered by the discount medical plan card;
4.4.e. Have restrictions on access to discount medical plan providers, including, except for hospital services, waiting periods and notification periods; or
4.4.f. Pay providers any fees for medical or ancillary services or collect or accept money from a member to pay a provider for medical or ancillary services provided under the discount medical plan, unless the Discount Medical Plan Organization has an active certificate of authority to act as a third party administrator in accordance with W. Va. Code §33-46-1, et seq.
4.5. The marketing restrictions found in this subsection shall not go into effect until July 1, 2008 in order to allow Discount Medical Plan Organizations or Discount Prescription Drug Plan Organizations the necessary time to change marketing materials to comply with the provisions of this section.
W. Va. Code R. § 114-83-5 Disclosure Requirements. 5.1
5.1.a. Each Discount Medical Plan Organization shall make the following general disclosures, in writing not less than twelve-point font, on the first content page of any advertisements, marketing materials or brochures made available to the public relating to a discount medical plan and along with any enrollment forms given to a prospective member:
5.1.a.1. That the plan is a discount plan and is not insurance coverage;
5.1.a.2. That the range of discounts for medical or ancillary services provided under the plan will vary depending on the type of provider and medical or ancillary service received;
5.1.a.3. That the plan does not make payments to providers for the medical or ancillary services received under the discount medical plan;
5.1.a.4. That the plan member is obligated to pay for all medical or ancillary services, but will receive a discount from those providers that have contracted with the Discount Medical Plan Organization; and
5.1.a.5. The toll-free telephone number and Internet website address for the licensed Discount Medical Plan Organization for prospective members to obtain additional information about and assistance on the discount medical plan and up-to-date lists of providers participating in the discount medical plan.
5.1.b. If the initial contract with a prospective member is by telephone, the disclosures required under subdivision a of this subsection shall be made orally and included in the initial written materials that describe the benefits under the discount medical plan provided to the prospective or new member. 5.2.
5.2. a. In addition to the disclosures required under subsection 5.1 of this section, each Discount Medical Plan Organization shall provide to:
5.2.a.1. Each prospective member, at the time of enrollment, information that describes the terms and conditions of the discount medical plan, including any limitations or restrictions on the refund of any processing fees or periodic charges associated with the discount medical plan; and
5.2.a.2. Each new member a written document that contains the terms and conditions of the discount medical plan.
5.2.b. The written document required under paragraph 2, subdivision a of this subsection shall be clear and include the following information:
5.2.b.1. The name of the member;
5.2.b.2. The benefits to be provided under the discount medical plan;
5.2.b.3. Any processing fees and periodic charges associated with the discount medical plan, including any limitations or restrictions on the refund of any processing fees and periodic charges;
5.2.b.4. The mode of payment of any processing fees and periodic charges, such as monthly, quarterly, etc., and procedures for changing the mode of payment;
5.2.b.5. Any limitations, exclusions or exceptions regarding the receipt of discount medical plan benefits;
5.2.b.6. Any waiting periods for certain medical or ancillary services under the discount medical plan benefits;
5.2.b.7. Procedures for obtaining discounts under the discount medical plan, such as requiring members to contact the Discount Medical Plan Organization to make an appointment with a provider on the member’s behalf;
5.2.b.8. Cancellation procedures, including information on the member’s thirty-day cancellation rights and refund requirements, procedures for obtaining refunds and the process for cancelling the plan by e-mail in accordance with subdivision b, subsection 4.3 of this rule.
5.2.b.9. Renewal, termination and cancellation terms and conditions;
5.2.b.10. Procedures for adding new members to a family discount medical plan;
5.2.b.11. Procedures for filing complaints under the Discount Medical Plan Organization’s complaint system and information that, if the member remains dissatisfied after completing the organization’s complaint system, the plan member may contact the Offices of the West Virginia Insurance Commissioner; and
5.2.b.12. The name and mailing address of the licensed Discount Medical Plan Organization or other entity where the member can make inquiries about the plan, send cancellation notices and file complaints.
W. Va. Code R. § 114-83-6 Bundled Products
6.1. W. Va. Code §33-15E-8(c) recognizes that the discount medical plan may be combined together with other products. The bundled product shall clearly identify the discount medical plan component separately from each other component. The Discount Medical Plan Organization must (i) provide the charges for each discount medical plan in writing to the member or (ii) reimburse the member for periodic charges on both the discount medical plan and any other product if the member chooses to cancel plan membership.
6.2. Any health carrier that provides a discount medical plan product that is incidental to the insured product is not subject to this section. For the purposes of this subsection, “incidental” means costing less than ten percent of the cost of the insured product.
6.3. If a marketer or Discount Medical Plan Organization and Discount Prescription Drug Plan Organization solicits, markets or sells a discount plan together with any insurance product, the marketer or organization shall disclose clearly or conspicuously that the plan is not insurance.
W. Va. Code R. § 114-83-7 Discount Prescription Drug Plan Organizations
A Discount Prescription Drug Plan Organization shall annually submit to the Commissioner a list of all the participating pharmacies offering discounts on prescription drugs to plan members, or an Internet website address where such a list can be accessed by the Commissioner.
114CSR83
114CSR83
Series 85 Professional Employer Organizations
W. Va. Code R. § 114-85-1 General
1.1. Scope. -- This rule establishes procedures for the licensing and regulation of professional employer organizations (“PEOs”) doing business in the State of West Virginia.
1.2. Authority. -- W. Va. Code §§33-46A-7 and 33-46A-10.
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- May 10, 2011.
W. Va. Code R. § 114-85-2 Definitions
In addition to the definitions set forth in W. Va. Code §33-46A-2, the following definitions apply:
2.1. “Controlling Person” means an officer or director of a corporation operating as a professional employer organization, a shareholder holding twenty-five percent (25%) or more of the voting stock of a corporation operating as a professional employer organization, or a person or partner that possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of a company or partnership operating as a professional employer organization, or a person that possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of a company operating as a professional employer organization through the ownership of voting securities, by contract or otherwise, and who is actively involved in the day-to-day management of the company.
2.2. “PEO” means a professional employer organization as defined in W. Va. Code §33-46A-2(g).
2.3. “Temporary Help Services” means services consisting of a person:
2.3.a. Recruiting and hiring his, her or its own employees;
2.3.b. Finding other organizations that need the services of those employees;
2.3.c. Assigning those employees to perform work at or services for the other organizations to support or supplement the other organizations’ workforces, or to provide assistance in special work situations such as, but not limited to, employee absences, skill shortages, seasonal workloads, or to perform special assignments or projects, and
2.3.d. Customarily attempting to reassign the employees to other organizations when they finish each assignment.
W. Va. Code R. § 114-85-3 Licensing and Renewal Requirements
3.1. After July 31, 2009, no person may provide, advertise or otherwise hold himself, herself, or itself out as providing professional employer organization services to employers in this state without first obtaining a license pursuant to W. Va. Code §33-46A-4 and this rule.
3.2. Each applicant for a PEO license shall provide the West Virginia Insurance Commissioner (“Commissioner”) with the following information:
3.2.a. Fully completed PEO licensing application;
3.2.b. Application fee of $200, and an annual report fee of $100;
3.2.c. The name or names under which the PEO conducts business;
3.2.d. The address of the PEO’s principal place of business and the address of each office it maintains in this state. The address of the principal place of business provided will be the address of record and any correspondence from the Commissioner will be directed there unless the applicant requests that another address be used for such purposes; changes to the address of record shall be promptly communicated to the Commissioner;
3.2.e. The PEO’s taxpayer or employer identification number;
3.2.f. A list by jurisdiction of each name under which the PEO has operated in the preceding five (5) years, including any alternative names, names of predecessors and successor business entities;
3.2.g. A statement of ownership, which must include the names and business experience of any person who, acting individually or in concert with one or more other persons, owns or controls, directly or indirectly, twenty-five percent (25%) or more of the equity interests of the PEO.
3.2.h. A statement of management which includes the name and evidence of business experience of any person who serves as a president, chief executive officer or otherwise has the authority to act as a senior executive officer of the PEO.
3.2.i. The PEO’s most recent audited financial statement setting forth the financial condition of the PEO or PEO Group, which may not be older than thirteen (13) months, performed by a CPA licensed in the jurisdiction in which the CPA is located;
3.2.j. Proof of financial responsibility in the form of $100,000 in working capital, as defined by generally accepted accounting principles and as reflected in financial statements submitted to the Commissioner. As an alternative, a PEO may provide a bond, irrevocable letter of credit or securities with a minimum market value of $100,000 to the Commissioner;
3.2.k. A complete and current listing of all client-employers located in West Virginia or who have covered employees in West Virginia; and
3.2.l. If the applicant is a corporation, a certified copy of the corporation’s Articles of Incorporation filed with the Secretary of State of West Virginia must be submitted to the Commissioner. If the applicant is a partnership, a copy of the Partnership Agreement or an affidavit signed by all partners that no written partnership exists must be submitted to the Commissioner. If the applicant is a limited partnership they must additionally provide and file a certified copy of its Certificate of Limited Partnership to the Commissioner. If the applicant is a non-resident, then a certificate of authority to do business in the state, issued by the Secretary of State, must be submitted to the Commissioner.
3.3. A PEO who has not had sufficient operating history to have an audited financial statement as required by subdivision i, subsection 3.2 of this section must meet the $100,000 working capital or bond requirements set forth in subdivision j, subsection 3.2 of this section. The amount of the bond for a PEO whose financial statements do not indicate positive working capital must be $100,000 plus an amount sufficient to cover the deficit in working capital. An applicant may apply to the Commissioner for an extension of time for filing its financial statements so long as the request for an extension is accompanied by a letter from an independent certified public accountant stating the reasons for the delay and the anticipated completion date of the financial statement.
3.4. A PEO must file for renewal of its' license annually no later than one hundred eighty (180) days after the close of the PEO’s fiscal year. Each application for renewal of a license shall be accompanied by a fee of $200 for the application fee and $100 for the annual report. The applicant for renewal shall submit to the Commissioner its most recent audited financial statements meeting the same requirements for initial licensure, together with any changes in the information required for initial licensure set forth in subsection 3.2 of this section. The applicant shall also submit to the Commissioner an update of the PEO’s list of West Virginia clients. A late fee of $300 will be assessed to any PEO that does not timely submit the renewal application and supporting documentation.
3.5. An applicant for a PEO license that is a small start-up PEO may make a request to the Commissioner that any of the above licensing or financial requirements be reduced as determined necessary by the Commissioner.
3.6. An applicant for a PEO license in this state shall respond to any requests for more information regarding an application from the Commissioner within thirty (30) days. Failure to provide the requested information within the time period provided shall be grounds for denial of an application.
3.7. Any incomplete application, as determined by the Commissioner, that remains incomplete for a period of four (4) months from the date of notice from the Commissioner that the application is incomplete will be considered withdrawn and a new application and application fees will be required. An existing license, not suspended, revoked or otherwise limited by the Commissioner, shall remain in effect during the review of a renewal application by the Commissioner.
3.8. Accreditation services: The Commissioner may provide for the acceptance of filings and assurances of a PEO’s compliance with this rule and other applicable laws by a bonded, independent and qualified assurance organization approved by the Commissioner.
W. Va. Code R. § 114-85-4 Combined or Consolidated Licenses
4.1. PEOs in a PEO group may satisfy the financial and reporting requirements of W. Va. Code §33-46A on a combined or consolidated basis by filing a combined or consolidated application for a license of multiple PEOs majority-owned by the same parent, entity or persons and may do so on forms prescribed and approved by the Commissioner.
4.1.a. A subsidiary corporation may submit with its license application the combined or consolidated financial statement of its parent corporation in lieu of its own along with a parental guarantee.
4.1.b. Multiple PEOs may only file reports and meet financial requirements on a combined or consolidated basis if each company that is part of the multiple employer organization group provides a guarantee of the obligations of W. Va. Code §33-46A-1 et seq. of each other member of the group.
4.1.c. Such a guarantee may be in the form of an indemnification agreement or a resolution of the board of directors of the parent company authorizing the guarantee of workers’ compensation, unemployment tax liabilities and other obligations of a subsidiary PEO in the combined or consolidated license.
4.1.d. Each PEO involved in a combined or consolidated license must pay a separate application fee.
4.2. PEOs applying for a PEO Group license must submit evidence showing that the professional employer organizations that are commonly held in the PEO Group is held under common control of a person or entity in the PEO Group. This can be documented by submission of a corporate registration, shareholder report, corporate resolution or interest holder report.
4.3. Any incomplete application, as determined by the Commissioner, that remains incomplete for a period of four (4) months from the date of notice from the Commissioner that the application is incomplete will be considered withdrawn and new application and application fees will be required. An existing license, not suspended, revoked or otherwise limited by the Commissioner, shall remain in effect during the review of a renewal application by the Commissioner.
W. Va. Code R. § 114-85-5 Limited Licenses
5.1. The Commissioner may, under terms he or she determines appropriate, grant a limited license to a PEO. An applicant for a limited license must demonstrate at a minimum that it is licensed or registered as a PEO in another state under terms that are substantially similar to those required by this state, that it does not maintain an office in this state or directly solicit employers located in this state, and that it does not have more than fifty (50) covered employees in this state on any given day.
5.2. In addition to the showing required by subsection 5.1 of this section, an applicant for a limited license shall complete an application on forms prescribed and approved by the Commissioner. Proof of financial responsibility shall be in the amount and form determined appropriate by the Commissioner.
5.3. Each application for a limited license shall be accompanied by an application fee of $200.
5.4. Any incomplete application, as determined by the Commissioner, that remains incomplete for a period of four (4) months from the date of notice from the Commissioner that the application is incomplete will be considered withdrawn and new application and application fees will be required. An existing license, not suspended, revoked or otherwise limited by the Commissioner, shall remain in effect during the review of a renewal application by the Commissioner.
W. Va. Code R. § 114-85-6 Denial of a License Application or Renewal
6.1. The Commissioner may deny an application for license:
6.1.a. Where the application is not fully completed, improperly executed or otherwise deficient on its face;
6.1.b. Where documents required to supplement the application are not included in the application packet;
6.1.c. Where any fee required by sections 3, 4 or 5 of this rule and W. Va. Code §33-46A-4 is not submitted;
6.1.d. Where the applicant has had a PEO license revoked in this or any other state, unless such revocation has subsequently been rescinded or otherwise suspended and the problems remedied to the reasonable satisfaction of the Commissioner;
6.1.e. Where the applicant, or any person named in the application, has made a material misrepresentation in the application; or
6.1.f. Upon finding that any person named in the application, any controlling person or any person in a management or policy-making position with any applicant, is not of good moral character, business integrity or financial responsibility, or that there is good and sufficient reason within the meaning and purpose of this rule or of W. Va. Code §33-46A-1 et seq. to deny the application.
6.2. If the Commissioner determines:
6.2.a. That the application is not complete or not properly executed, the Commissioner shall provide a notice of deficiency and provide a reasonable opportunity for the applicant to correct the deficiency, or
6.2.b. That the applicant does not meet the requirements to obtain a license, a written notice of denial shall be furnished to the applicant along with the reasons for the denial of the application. The applicant may request a hearing before the Commissioner within thirty (30) days of receipt of the written notice of denial to protest the decision of the Commissioner.
W. Va. Code R. § 114-85-7 Suspension, Revocation or Probation of a License
7.1. If a PEO fails to comply with any of the requirements for a license or renewal of a license, the Commissioner may suspend or revoke the license or place the PEO on probation until such time the PEO comes into compliance with the licensing requirements.
7.2. The Commissioner may suspend or revoke the license of a PEO or place a PEO on probation for a violation of any provision of this rule, W. Va. Code §33-46A-1 et seq., any order of the Commissioner or any law relating to the conduct of the business of the PEO.
7.3. In determining an appropriate sanction, the Commissioner may consider the following:
7.3.a. The record of previous violations by the PEO;
7.3.b. The significance or scale of the violation;
7.3.c. The existence of outstanding reports or failures to pay;
7.3.d. Failure to respond to a request to produce records, documents or proof of payment;
7.3.e. Submission of falsified or altered records, forms, documents or proof of payment;
7.3.f. Whether the violations were willful or knowing; and
7.3.g. Good faith efforts by the PEO to remedy any violations.
7.4. Hearings. Any hearing regarding actions taken pursuant to this rule or W. Va. Code §33-46A-1 et. seq. shall be conducted pursuant to W. Va. Code §33-2-13 and W. Va. CSR §114CSR13-1 et. seq.
W. Va. Code R. § 114-85-8 Investigations
8.1. The Commissioner may request information, perform an investigation and audit and review documents necessary to determine whether a PEO has violated any provision of W. Va. Code §33-46A-1 et seq. or this rule. In conducting an investigation of a PEO, the Commissioner or his or her representatives may enter the business premises during reasonable business hours and may examine and copy records pertinent to the investigation in accordance with the provisions of W. Va. Code §33-2-9.
8.2. An applicant or licensed PEO shall respond to any requests for information and comply with any investigations that are initiated by the Commissioner. Information gathered pursuant to an investigation is confidential and not open to public inspection pursuant to W. Va. Code §33-46A-5.
8.3. The Commissioner may charge the licensee the actual cost of any investigation undertaken at the direction of the Commissioner.
W. Va. Code R. § 114-85-9 Complaints
9.1. Any person may file a written complaint with the Commissioner regarding a PEO. The Commissioner shall receive any complaints and shall investigate and determine whether action is necessary involving allegations of any misconduct as provided in W. Va. Code §33-46A-8 and this rule. The complainant, the PEO and the nature of the alleged misconduct and the circumstances surrounding it shall be clearly identified, and supporting documentation shall be attached.
9.2. The Commissioner shall mail a copy of the complaint to the PEO in question and request a written response.
9.3. If a PEO fails to respond within thirty (30) days to a request made pursuant to subsection 9.2 of this section or to a request for information during an investigation, the Commissioner may take action pursuant to W. Va. Code §33-46A-8.
W. Va. Code R. § 114-85-10 Responsibilities of a Professional Employer Organization
An applicant or licensed PEO shall notify the Commissioner in writing within ten (10) days of any of the following:
10.1. Conviction, judgment, guilty plea or no contest plea of the applicant or any of the applicant’s controlling persons for any violation listed in W. Va. Code §33-46A-8.
10.2. Final action by a state or federal regulatory agency for violations related to the operation of a PEO;
10.3. Determination of any court of competent jurisdiction, including federal courts, located in any state, that the applicant or any of the applicant's controlling persons were found, or pled guilty to fraud related to the operation of a PEO; or
10.4. PEO’s failure to stay current with obligations that relate to payroll, payroll related taxes, workers’ compensation insurance premiums for covered employees and employee benefits.
W. Va. Code R. § 114-85-11 Notification of Change in Identifying Information
11.1. Each PEO has a continuing duty to timely notify the Commissioner, in a format and manner prescribed by the Commissioner, of changes in its identifying information provided pursuant to subdivisions c through h, inclusive, of subsection 3.2 of this rule.
11.2. Failure by a PEO to timely notify the Commissioner of a change in this information shall subject the PEO to the penalties provided in W. Va. Code §33-46A-8 and section 7 of this rule.
W. Va. Code R. § 114-85-12 Enforcement and penalties
12.1. If the Commissioner finds that any licensed PEO has violated any provisions of this rule or any provisions in W. Va. Code §33-46A-1 et seq., the Commissioner may, in lieu of a suspension or revocation, order the PEO to pay a penalty in a sum not to exceed $10,000. If the PEO fails to pay the penalty within thirty days after notice of the penalty, the Commissioner may revoke or suspend the license of the PEO.
12.2. With respect to any person operating as a PEO without a license, the Commissioner may, pursuant to W. Va. Code §33-46A-4a(a), do one or more of the following:
12.2.a. File a complaint in the Circuit Court of Kanawha County or in any county in which illegal PEO activities are alleged to have occurred to enjoin the person from engaging in any act that constitutes a PEO service; and
12.2.b. After notice and hearing in accordance with W. Va. Code §33-2-13, assess restitution in an amount sufficient to reimburse any person adversely affected by the operation of the unlicensed PEO and, in addition to or in lieu of restitution, impose a fine in a sum not to exceed $20,000 for each unauthorized act.
114CSR85
114CSR85
Series 86 Preneed Life Insurance Minimum Standards For Determining Reserve Liabilities And Nonforfeiture Values
W. Va. Code R. § 114-86-1 General
1.1. Scope. -- This rule establishes minimum mortality standards to be used in determining reserve and nonforfeiture values for insurance policies used to fund preneed funeral contracts. This rule is based on the National Association of Insurance Commissioners’ “Preneed Life Insurance Minimum Standards for Determining Reserve Liabilities and Nonforfeiture Values Model Regulation” (Model 817) adopted in March, 2008.
1.2. Authority. -- W. Va. Code §33-2-10.
1.3. Filing Date. -- May 14, 2009.
1.4. Effective Date. -- May 14, 2009.
W. Va. Code R. § 114-86-2 Definitions
2.1. “2001 CSO Mortality Table” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries Commissioner’s Standard Ordinary (“CSO”) Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force and set forth in W. Va. Code of St. R. §114 CSR 69. Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table, and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables.
2.2. “Preneed funeral contract” means any contract that is financed by the purchase of an insurance policy or annuity under which a person promises to furnish or make available funeral services, funeral goods or burial goods for use at a time determinable by the death of the contract beneficiary who is either named or implied therein.
2.3. “Preneed insurance policy” means a life insurance policy, annuity contract or other insurance contract issued by an insurance company which, whether by assignment or otherwise, has for its purpose the funding of a preneed funeral contract.
2.4. “Ultimate 1980 CSO” means the National Association of Insurance Commissioners’ 1980 standard ordinary mortality table (1980 CSO Table), without ten-year selection mortality factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law and referenced in W. Va. Code §33-7-9(d)(1)(C).
W. Va. Code R. § 114-86-3 Minimum Valuation Mortality Standards
3.1. For preneed insurance contracts, the minimum mortality standard for determining reserve liabilities and nonforfeiture values for both male and female insureds is the Ultimate 1980 CSO.
W. Va. Code R. § 114-86-4 Minimum Valuation Interest Rate Standards
4.1. The interest rates used in determining the minimum standard for valuation of preneed insurance are the calendar year statutory valuation interest rates as defined in W. Va. Code §33-7-9.
4.2. The interest rates used in determining the minimum standard for nonforfeiture values for preneed insurance are the calendar year statutory nonforfeiture interest rates as defined in W. Va. Code §33-13-30.
W. Va. Code R. § 114-86-5 Minimum Valuation Method Standards
5.1. The method used in determining the standard for the minimum valuation of reserves of preneed insurance is the method defined in W. Va. Code §33-7-9.
5.2. The method used in determining the standard for the minimum nonforfeiture values for preneed insurance is the method defined in W. Va. Code §33-13-30.
W. Va. Code R. § 114-86-6 Transition Rules
6.1. For preneed insurance policies issued on or after the effective date of this rule and before January 1, 2012, the 2001 CSO mortality table may be used as the minimum standard for reserves and minimum standard for nonforfeiture benefits for both male and female insureds.
6.2. If an insurer elects to use the 2001 CSO mortality table as a minimum standard for any policy issued on or after the effective date of this rule and before January 1, 2012, the insurer shall provide, as part of the actuarial opinion memorandum submitted in support of the company’s asset adequacy testing, an annual written notification to the domiciliary commissioner. The notification shall include:
6.2.a. A complete list of all preneed policy forms that use the 2001 CSO as a minimum standard;
6.2.b. A certification signed by the appointed actuary stating that the reserve methodology employed by the insurer in determining reserves develops adequate reserves for preneed insurance policies issued after the effective date of this rule and using the 2001 CSO as a minimum standard. For the purposes of this certification, the preneed insurance policies using the 2001 CSO as a minimum standard cannot be aggregated with any other policies; and
6.2.c. Supporting information regarding the adequacy of reserves for preneed insurance policies issued after the effective date of this rule and using the 2001 CSO as a minimum standard for reserves.
6.3. Preneed insurance policies issued on or after January 1, 2012, must use the Ultimate 1980 CSO in the calculation of minimum nonforfeiture values and minimum reserves.
114CSR86
114CSR86
Series 89 Use Of Senior-Specific Certifications And Professional Designations In The Sale Of Life Insurance And Annuities
W. Va. Code R. § 114-89-1 General
1.1. Purpose. -- The purpose of this rule is to set forth standards to protect consumers from misleading and fraudulent marketing practices with respect to the use of senior-specific certifications and professional designations in the solicitation, sale or purchase of, or advice made in connection with, a life insurance or annuity product.
1.2. Scope. -- This rule applies to any solicitation, sale or purchase of, or advice made in connection with, a life insurance or annuity product by an insurance producer. The rule is based on the “Model Regulation on the Use of Senior Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities (#278),” as adopted by the National Association of Insurance Commissioners in the 3rd quarter of 2008.
1.3. Authority. -- W. Va. Code §§33-2-10 and 33-12-35.
1.4. Filing Date. -- April 14, 2010.
1.4. Effective Date. -- July 1, 2010.
W. Va. Code R. § 114-89-2 Prohibited Uses of Senior-Specific Certifications and Professional Designations
2.1. No producer may use a senior-specific certification or professional designation that indicates or implies in such a way as to mislead a purchaser or prospective purchaser to believe that the insurance producer has special certification or training in advising or servicing seniors in connection with the solicitation, sale or purchase of a life insurance or annuity product or in the provision of advice as to the value of or the advisability of purchasing or selling a life insurance or annuity product, either directly or indirectly through publications or writings, or by issuing or promulgating analyses or reports related to a life insurance or annuity product.
2.2. The prohibited use of senior-specific certifications or professional designations includes, but is not limited to, the following:
2.2.a. Use of a certification or professional designation by an insurance producer who has not actually earned or is otherwise ineligible to use such certification or designation;
2.2.b. Use of a nonexistent or self-conferred certification or professional designation;
2.2.c. Use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training or experience that the insurance producer using the certification or designation does not have; and
2.2.d. Use of a certification or professional designation that was obtained from a certifying or designating organization that:
2.2.d.1. Is primarily engaged in the business of instruction in sales or marketing;
2.2.d.2. Does not have reasonable standards or procedures for assuring the competency of its certificants or designees;
2.2.d.3. Does not have reasonable standards or procedures for monitoring and disciplining its certificants or designees for improper or unethical conduct; or
2.2.d.4. Does not have reasonable continuing education requirements for its certificants or designees in order to maintain the certificate or designation.
2.3. There is a rebuttable presumption that a certifying or designating organization is not disqualified solely for purposes of subdivision d, subsection 2.2 of this rule when the certification or designation issued from the organization does not primarily apply to sales or marketing and when the organization or the certification or designation in question has been accredited by:
2.3.a. The American National Standards Institute (ANSI);
2.3.b. The National Commission for Certifying Agencies; or
2.3.c. Any organization that is on the U.S. Department of Education's list entitled "Accrediting Agencies Recognized for Title IV Purposes."
2.4. In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing seniors, factors to be considered shall include:
2.4.a. Use of one or more words such as "senior," "retirement," "elder," or like words combined with one or more words such as "certified," "registered," "chartered," "advisor," "specialist," "consultant," "planner," or like words, in the name of the certification or professional designation; and
2.4.b. The manner in which those words are combined. 2.5.
2.5.a. For purposes of this rule, a job title within an organization that is licensed or registered by a State or federal financial services regulatory agency, is not a certification or professional designation, unless it is used in a manner that would confuse or mislead a reasonable consumer, when the job title indicates seniority or standing within the organization or specifies an individual's area of specialization within the organization.
2.5.b. For purposes of this subsection, financial services regulatory agency includes, but is not limited to, an agency that regulates insurers, insurance producers, broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940.
114CSR89
114CSR89
Series 91 Health Maintenance Organization Point Of Service Option
W. Va. Code R. § 114-91-1 General
1.1. Scope. -- The purpose of this rule is to set forth requirements to be followed by health maintenance organizations that offer a point of service option to its enrollees.
1.2. Authority. -- W. Va. Code §§33-25A-5(b) and 33-2-10.
1.3. Filing Date. -- May 10, 2011.
1.4. Effective Date. -- July 1, 2011.
W. Va. Code R. § 114-91-2 Definitions
2.1. “Commissioner” means the Insurance Commissioner of the State of West Virginia.
2.2. “Enrollee” means an individual who has been voluntarily enrolled in a health maintenance organization, including individuals on whose behalf a contractual arrangement has been entered into with a health maintenance organization to receive health care.
2.3. “Health care services” means any services or goods included in the furnishing to any individual of medical, mental or dental care, or hospitalization or incident to the furnishing of the care or hospitalization, osteopathic services, chiropractic services, podiatric services, home health, health education or rehabilitation, as well as the furnishing to any person of any and all other services or goods for the purpose of preventing, alleviating, curing or healing human illness or injury.
2.4. “In-plan covered services” means health care services provided by a provider that is within the panel of providers with which a health maintenance organization has a contractual agreement.
2.5. “Out-of-plan covered services” means health care services provided by a provider that is not within the panel of providers with which a health maintenance organization has a contractual agreement.
2.6. “Point of service option” means a delivery system that permits an enrollee to receive health care services from a provider outside of the panel of providers with which a health maintenance organization has a contractual agreement under the terms and conditions of the enrollee’s contract with the health maintenance organization or an insurance carrier that provides the point of service option.
2.7. “Provider” means a person or other entity which holds a valid license to provide health care services.
W. Va. Code R. § 114-91-3 Requirements for Point of Service Option
3.1. A health maintenance organization that offers a point of service option pursuant to W. Va. Code §33-25A-5(a):
3.1.a. Must include as in-plan covered services all services required by law to be provided by a health maintenance organization;
3.1.b. Must provide incentives, which shall include financial incentives, for enrollees to use in-plan covered services;
3.1.c. May not offer services out of plan without providing those services on an in-plan basis;
3.1.d. May not consider the following services as out-of-plan covered services subject to the point of service option:
3.1.d.1. Emergency medical services as defined by W. Va. Code §33-25A-8d(b)(5)(A); and
3.1.d.2. Any service performed by an out-of-network provider that has been preapproved or preauthorized by the health maintenance organization due to not having a panel provider available or capable to perform the service; and
3.1.e. Must include the following disclosure on its point of service contracts and evidences of coverage:
“WARNING, LIMITED BENEFITS WILL BE PAID WHEN NON-PARTICIPATING PROVIDERS ARE USED. You should be aware that when you elect to utilize the services of a non-participating provider for a covered service in non-emergency situations, benefit payments to such non-participating providers are not based upon the amount billed. The basis of your benefit payment will be determined according to your policy’s fee schedule, usual and customary charge (which is determined by comparing charges for similar services adjusted to the geographical area where the services are performed), or other method as defined by the policy. YOU CAN EXPECT TO PAY MORE THAN THE COINSURANCE AMOUNT DEFINED IN THE POLICY AFTER THE PLAN HAS PAID ITS REQUIRED PORTION. Non-participating providers may bill members for any amount up to the billed charge after the plan has paid its portion of the bill. Participating providers have agreed to accept discounted payments for services with no additional billing to the member other than co-insurance and deductible amounts. You may obtain further information about the participating status of professional providers and information on out-of-pocket expenses by calling the toll free telephone number on your identification card.”
3.2. A health maintenance organization offering a point of service option is subject to all of the following limitations:
3.2.a. The health maintenance organization may not expend in any calendar year more than twenty percent (20%) of its total expenditures for all its members for out-of-plan covered services.
3.2.b. If the amount specified in subdivision a of this subsection is exceeded by two percent (2%) in a reporting year, the health maintenance organization must effect compliance with subdivision a of this subsection by the end of the following year.
3.2.c. If compliance with the amount specified in subdivision a of this subsection is not demonstrated in the health maintenance organization’s next yearly report, the health maintenance organization may not offer the point of service option to new groups or include the point of service option in the renewal of an existing group until compliance with the amount specified in subdivision a of this subsection is demonstrated or until otherwise allowed by the Commissioner.
3.2.d. A health maintenance organization failing, without just cause, to comply with the provisions of this subsection shall be required, after notice and hearing, to pay a penalty of $250 for each day out of compliance, to be recovered by the Commissioner. The Commissioner may reduce the penalty if the health maintenance organization demonstrates to the Commissioner that the imposition of the penalty would constitute a financial hardship to the health maintenance organization.
3.3. A health maintenance organization that offers a point of service option must do all of the following:
3.3.a. File an annual financial statement detailing compliance with the requirements of subsection 3.2 of this rule.
3.3.b. Track out-of-plan, point of service utilization separately from in-plan or non-point of service, out-of-plan emergency care, referral care, and urgent care out of the service area utilization.
3.3.c. Record out-of-plan utilization in a manner that will permit such utilization and cost reporting as the Commissioner may require.
3.3.d. Demonstrate to the Commissioner’s satisfaction that the health maintenance organization has the fiscal, administrative, and marketing capacity to control its point of service enrollment, utilization, and costs so as not to jeopardize the financial security of the health maintenance organization.
3.3.e. Maintain cash and cash equivalents of sufficient amount to fully liquidate ten days’ average claim payments, subject to review by the Commissioner.
3.3.f. Maintain and file with the Commissioner, reinsurance or stop-loss coverage protecting against catastrophic losses concerning out-of-plan covered services. The reinsurance or stop-loss coverage must have deductible levels acceptable to the Commissioner and be placed with licensed authorized reinsurers qualified to do business in West Virginia.
3.4. A health maintenance organization may not issue a point of service contract until it has filed and had approved by the Commissioner a plan to comply with the provisions of this section. The compliance plan must, at a minimum, include provisions demonstrating that the health maintenance organization will do all of the following:
3.4.a. Design the benefit levels and conditions of coverage for in-plan covered services and out-of-plan covered services as required by this rule.
3.4.b. Provide or arrange for the provision of adequate systems to:
3.4.b.1. Process and pay claims for all out-of-plan covered services;
3.4.b.2. Meet the requirements for point of service options set forth in this rule and any additional requirements that may be set forth by the Commissioner; and
3.4.b.3. Generate accurate data and financial and regulatory reports on a timely basis so that the Commissioner can evaluate the health maintenance organization’s experience with the point of service option and monitor compliance with point of service option provisions.
3.4.c. Comply with the requirements of subsections 3.2 and 3.3 of this rule.
3.5. If the Commissioner does not disapprove of the compliance plan required by subsection 3.4 of this rule within the initial thirty-day period after receipt, the compliance plan shall be deemed approved.
114CSR91
114CSR91
Series 93 Mini COBRA
W. Va. Code R. § 114-93-1 General
1.1. Scope. -- This rule provides guidelines with respect to the continuation of health insurance coverage for former employees of certain small employers, their dependents and other qualified beneficiaries who are not entitled to such coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
This rule does not apply if continuation of coverage benefits are available to covered employees or other qualified beneficiaries pursuant to a ‘COBRA continuation provision,’ as that term is defined in W. Va. Code §33-16-3m(a)(1)(A).
1.2. Authority. -- W. Va. Code §33-2-10.
1.3. Filing Date. -- April 20, 2012.
1.4. Effective Date. -- July 1, 2012.
W. Va. Code R. § 114-93-2 Definitions
2.1. "Applicable premium" means, with respect to any period of continuation of coverage for qualified beneficiaries, the premium charged by the health benefit plan for such period of coverage for beneficiaries with respect to whom a qualifying event has not occurred, regardless of whether such premium or portions thereof are paid by the employer or employee.
2.2. "Carrier" means an insurer licensed in this state to transact accident and sickness insurance that has issued a health benefit plan.
2.3. "Commissioner" means the West Virginia Insurance Commissioner.
2.4. "Continuation coverage" means coverage under the health benefit plan that meets the requirements of section 3 of this rule.
2.5. "Covered employee" means an employee of a small employer who is covered under a health benefit plan by virtue of the employee’s employment.
2.6. "Health benefit plan" means any group accident and sickness policy issued to a small employer that provides coverage for the employer's employees (including continuation coverage provided in accordance with this rule) and their dependents.
2.7. "Qualified beneficiary" means any individual who, on the day of the qualifying event for the covered employee, was covered under the health benefit plan by virtue of the individual being the covered employee, his or her spouse, or a dependent of the covered employee.
2.8. "Qualifying event" means the involuntary layoff or termination of an employee from employment for reasons other than misconduct that would disqualify such employee for unemployment benefits.
2.9. "Small employer" means any employer that is not subject to COBRA because it employs fewer than 20 employees.
W. Va. Code R. § 114-93-3 Continuation of Coverage under Health Benefit Plan
3.1. Policy provisions regarding continuation coverage rights. Every health benefit plan policy and certificate of coverage delivered or issued in this state must provide that, in the event of a qualifying event with respect to a covered employee, such employee and any other qualified beneficiary may elect continuation coverage for up to 18 months under the same terms and rates as would have been applicable had the qualifying event not occurred, except to the degree such rates and terms may be modified in accordance with this rule.
3.1.a. Every plan booklet or other explanation of rights under a health benefit plan must include all information necessary for a qualified beneficiary to comply with the election requirements of subsection 3.6 of this section and either a form for notice of such election to the carrier or directions on how such a form may be found on the Commissioner’s website.
3.2. Periods of continuation coverage. Continuation coverage under the health benefit plan must, at a minimum, extend for the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following: Provided, That whenever a policy subject to this rule is terminated by the carrier for any reason permitted by law, the coverage of all qualified beneficiaries is terminated as well:
3.2.a. The date that is 18 months after the date on which the qualified beneficiary's benefits under the health benefit plan would otherwise have ceased because of a qualifying event;
3.2.b. The date on which coverage ceases under the health benefit plan by reason of a failure to make timely payment of the applicable premium with respect to any qualified beneficiary. A cancellation for failure to pay premium is subject to the same process as is applicable to other covered employees;
3.2.c. The date a qualified beneficiary becomes covered under any other group health plan if the qualified beneficiary will not be subject to any exclusion or limitation because of a preexisting condition of that beneficiary;
3.2.d. The date a qualified beneficiary is entitled to benefits under either part A or part B of Title XVIII of the Social Security Act (Medicare); or
3.2.e. The date on which the employer terminates coverage under the health benefit plan for all employees; however, if the employer terminates coverage under the health benefit plan for all employees and if such health benefit plan is replaced by similar coverage under another health benefit plan, the qualified beneficiary shall have the right to become covered under the new health benefit plan for the balance of the period that she or he would have remained covered under the prior health benefit plan.
3.3. Notice to carrier. Any qualified beneficiary may give written notice to the carrier within 20 days after a qualifying event of his or her intent to apply for continuation coverage. The notice must, at a minimum, identify the covered employee, the employer and, to the extent that such information is known, the names and addresses of all other qualified beneficiaries and the health benefit plan number. Notice to the carrier by the employee should be to the address specified in the benefit document.
3.4. Notice to beneficiaries by carrier. Within 15 days after receipt of written notice under subsection 3.3 of this section, the carrier shall send each adult qualified beneficiary an election and premium notice, in a form approved by the Commissioner, which must provide for each qualified beneficiary's election or nonelection of continuation of coverage under the health benefit plan and, if elected, the applicable premium amount due. A separate mailing of notices to qualified beneficiaries residing in the same household is not required, but a separate mailing for each separate household in which a qualified beneficiary resides is required. Such notices may be sent by first class mail or, if the qualified beneficiary requests, by fax or e-mail.
3.5. Election of coverage by beneficiary. A covered employee or other qualified beneficiary who wants to elect continuation coverage must do so in writing to the carrier within 30 days after receiving a notice under subsection 3.4 of this section and must include payment of the initial premium set forth in such notice. The premium payment due shall be for the period beginning on the date coverage would have otherwise terminated due to the qualifying event. The premium charged for continuation of coverage may not exceed 100% of the applicable premium.
3.5.a. The carrier or its designee shall process all elections promptly and provide coverage retroactively to the date coverage would otherwise have terminated on the basis of the qualifying event. Employers are required to promptly provide to the carrier or its designee any information and paperwork necessary to facilitate the processing of a request for continuation of coverage. After an election and initial premium remittance, the carrier must bill the beneficiary for premiums no more often than monthly and with an allowance for a 30-day grace period for payment.
3.5.b. Except as otherwise specified in an election form, an election by a qualified beneficiary shall be deemed to include an election of continuation of coverage on behalf of any other qualified beneficiaries residing in the same household who had lost or would lose coverage under the health benefit plan by reason of the qualifying event. Any qualified beneficiary may elect continuation of coverage on behalf of any other qualified beneficiary.
3.6. Remedies in the event of carrier noncompliance. If a carrier fails to comply with the requirements of this rule, including the notice requirements of subsection 3.4 of this section, and such noncompliance results in the failure of an eligible adult qualified beneficiary of a covered employee to timely elect continuation coverage, every qualified beneficiary of the covered employee covered on the day of the qualifying event shall remain covered under the health benefit plan until the qualified beneficiaries are afforded the opportunity to elect such coverage.
3.6.a. Coverage in accordance with subsection 3.6 of this section shall be limited to the period from the effective date of coverage, had an election been made, through 30 days beyond the date on which the qualified beneficiary or someone on his or her behalf receives actual notice, unless at an earlier date such coverage is affirmatively rejected or such coverage would have terminated for one of the reasons set forth in subdivisions c, d or e, subsection 3.2 of this section.
3.6.b. If a qualified beneficiary who is deemed to be covered pursuant to subsection 3.7 of this section subsequently receives the notice in the form required by subsection 3.5 of this section and affirmatively elects continuation coverage, the initial premium payable may include those amounts that would have been due had the election been made pursuant to a notice timely received pursuant to subsection 3.5 of this section.
3.6.c. This subsection does not apply to the extent that the failure of the carrier to comply with applicable notice requirements was due to noncompliance by a qualified beneficiary with notice requirements under subsections 3.3 or 3.5 of this section.
114CSR93
114CSR93
Series 94 Workers' Compensation Insurance For State Agencies
W. Va. Code R. § 114-94-1 General
1.1. Scope. -- The purpose of this rule is to establish the procedure by which the Insurance Commissioner will procure workers’ compensation coverage for various state agencies and boards.
1.2. Authority. -- W. Va. Code §§33-2-10 and 33-2-21a(f).
1.3. Filing Date. -- April 20, 2012.
1.4. Effective Date. -- April 20, 2012.
W. Va. Code R. § 114-94-2 Definitions
2.1. “Commissioner” means the West Virginia Insurance Commissioner.
2.2. “Discretionary participant” means any discretionary participant as defined in W. Va. Code §33-2-21a(a)(1).
2.3. “Executive state entity” means the Governor's Office, including the Governor’s Mansion, Office of Economic Opportunity, Commission for National and Community Service, Equal Employment Opportunity Office and the Governor’s Office of Health Enhancement and Lifestyle Planning; the Bureau of Senior Services; and any other entity transferred to and incorporated in one of the executive departments created in W. Va. Code §5F-1-2 and which is required to provide a detailed expenditure schedule to the Secretary of Revenue pursuant to W. Va. Code §11B-2-12.
2.4. “Experience rating” means a statistical procedure utilizing past risk experience to produce a prospective premium credit, debit or unity modification.
2.5. “Loss costs” are incurred losses on an accrual basis per $100 of payroll for the period under measurement.
2.6. “NCCI” means the National Council of Compensation Insurers, which was designated by the Commissioner as the state’s rating organization in 2007 pursuant to W. Va. Code §23-2C-18a; the term also includes any successor rating organization designated by the Commissioner.
2.7. “Participation agreement” or “Agreement” means the document published on the Commissioner’s website that contains the requirements to which all participants must adhere and which must be executed by the person who has the authority to legally bind that participant.
2.8. “State Agency Workers’ Compensation” or “SAWC” means the procedure established by the Commissioner pursuant to W. Va. Code §33-2-21a and this rule to provide for the mandatory coverage of workers’ compensation risks for all executive state entities and for those discretionary participants that participate in SAWC.
W. Va. Code R. § 114-94-3 Participation in SAWC; Agreement; Involuntary Removal
3.1. The Commissioner shall determine which entities meet the definition of executive state entity or discretionary participant.
3.1.a. The Commissioner shall inform: (i) Executive state entities that they will be required to meet their mandatory workers’ compensation coverage responsibilities through SAWC as of the date set by the Commissioner; and (ii) Discretionary participants that they may apply for participation in SAWC during such periods and in such manner established by the Commissioner.
3.1.b. Any entity that believes it should have been classified differently, or any entity that did not receive a notice of eligibility, but believes it should have, may request the Commissioner to reconsider the classification decision. Pending a determination in response to such a request, the Commissioner may take such temporary measures he or she deems necessary to meet the exigencies presented by the need to prevent a lapse of that entity’s workers’ compensation coverage.
3.2. The Commissioner may make participation in SAWC by a discretionary participant contingent on the execution of the Agreement.
3.3. The Commissioner shall, at such times and in such manner as he or she deems necessary but no less often than once every calendar year, conduct an open enrollment period during which discretionary participants that have never before participated in SAWC or that have voluntarily withdrawn may apply for acceptance or reacceptance into SAWC.
3.3.a. A discretionary participant may be removed from SAWC for failure to adhere to the Agreement or other noncompliance with program requirements after notice of violation and reasonable opportunity to cure. Grounds for removal include, but are not limited to, actions that constitute an unacceptable risk to the other participants in SAWC.
3.3.b. Removal from SAWC shall be upon at least 30 days’ written notice to the participant.
3.3.c. A participant removed from SAWC pursuant to subdivision a of this subsection may be excluded from participation for a period of not more than one year to be determined by the commissioner based on the seriousness of the non-compliance and the efforts of the participant to come into compliance.
3.3.d. After an involuntary removal from SAWC, a former participant that owes no prior assessments arising out of its prior participation shall be readmitted upon written request and expiration of the exclusion period determined in accordance with subdivision 3.3.c. of this subsection.
3.3.e. A discretionary participant may withdraw from SAWC upon at least 30 days’ written notice to the Commissioner. Any unpaid fees shall constitute a debt of the former participant and shall constitute a bar to reacceptance.
3.4. The Commissioner shall develop rates utilizing NCCI loss costs to be applied to each participant's exposure units so as to produce the funding level required. The Commissioner will utilize a rating plan for experience rating participants based on actual historical losses. Participants agree to make payments computed in accordance with the rating plan.
3.4.a. Any participant may contest the amount of any assessment imposed by the Commissioner by filing a “notice of disputed charge” in the form and manner set forth on the Commissioner’s website, but the filing of such notice does not stay the participant’s duty to remit the assessment pending a final decision on the dispute unless the Commissioner expressly determines otherwise. Failure to timely remit the full amount of such assessment constitutes sufficient cause for removal from SAWC regardless of the pendency of a dispute regarding such amount and regardless of the ultimate resolution of such dispute.
3.4.b. Upon the removal or voluntary withdrawal of a discretionary participant from SAWC, the Commissioner will determine what portion of the assessment paid, if any, should be returned and remit that amount to the former participant.
W. Va. Code R. § 114-94-4 Dispute Resolution Process
4.1. Any participant may dispute any decision by the Commissioner regarding its application to, participation in, or removal from SAWC in the manner set forth in W. Va. Code §33-2-13.
4.2. The Commissioner may designate another person to consider the matter under dispute, including conducting any hearing deemed necessary, and to make recommendations for resolution.
114CSR94
114CSR94
Series 95 Utilization Review and Benefit Determination
W. Va. Code R. § 114-95-1 General
1.1. Scope. -- This rule establishes standards and criteria for the structure and operation of utilization review and benefit determination, processes designed to facilitate ongoing assessment and management of health care services. This rule applies to any issuer offering a health benefit plan that provides or performs utilization review services, including prospective review or retrospective review benefit determinations and to any designee of the issuer or any utilization review organization that performs such functions on the issuer’s behalf. This rule is based on the National Association of Insurance Commissioners’ “Utilization Review Model Act” (Model 73), as amended in 2012.
1.2. Authority. -- W. Va. Code §33-2-10 & §33-16H-4.
1.3. Filing Date. -- June 6, 2014.
1.4. Effective Date. -- July 6, 2014.
W. Va. Code R. § 114-95-2 Definitions
2.1. “Adverse determination” means a determination by an issuer or its designee utilization review organization that an admission, availability of care, continued stay or other health care service that is a covered benefit has been reviewed and, based upon the information provided, does not meet the issuer’s requirements for medical necessity, appropriateness, health care setting, level of care or effectiveness and the requested service or payment for the service is therefore denied, reduced or terminated.
2.2. “Ambulatory review” means utilization review of health care services performed or provided in an outpatient setting.
2.3. “Authorized representative” means:
2.3.a. A person to whom a covered person has given express written consent to represent the covered person in an external review;
2.3.b. A person authorized by law to provide substituted consent for a covered person;
2.3.c. In a situation in which a covered person is unable to provide consent, a family member of the covered person or the covered person’s treating health care professional;
2.3.d. A health care professional when the covered person’s health benefit plan requires that a request for a benefit under the plan be initiated by the health care professional; or
2.3.e. In the case of an urgent care request, a health care professional with knowledge of the covered person’s medical condition.
2.4. “Case management” means a coordinated set of activities conducted for individual patient management of serious, complicated, protracted or other health conditions.
2.5. “Certification” means a determination by an issuer or its designee utilization review organization that an admission, availability of care, continued stay or other health care service that is a covered benefit under the issuer’s health benefit plan has been reviewed and, based on the information provided, satisfies the issuer’s requirements for medical necessity, appropriateness, health care setting, level of care and effectiveness.
2.6. “Clinical peer” means a physician or other health care professional who holds a non-restricted license in a state of the United States and in the same or similar specialty that typically manages the medical condition, procedure or treatment under review.
2.7. “Clinical review criteria” means the written screening procedures, decision abstracts, clinical protocols and practice guidelines used by the issuer to determine the medical necessity and appropriateness of health care services.
2.8. “Commissioner” means the West Virginia Insurance Commissioner.
2.9. “Concurrent review” means utilization review conducted during a patient’s stay or course of treatment in a facility, the office of a health care professional or other inpatient or outpatient health care setting.
2.10. “Covered benefits” or “benefits” means those health care services to which a covered person is legally entitled under the terms of a health benefit plan.
2.11. “Covered person” means a policyholder, subscriber, enrollee or other individual participating in a health benefit plan; whenever this rule provides for action by or notice to a covered person, it shall be deemed to include action by or notice to such covered person’s authorized representative.
2.12. “Discharge planning” means the formal process for determining, prior to discharge from a facility, the coordination and management of the care that a patient receives following discharge from a facility.
2.13. “Emergency medical condition” means a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that a prudent layperson who possesses an average knowledge of health and medicine could reasonably expect that the absence of immediate medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person’s health or, with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy.
2.14. “Emergency services” means with respect to an emergency medical condition:
2.14.a. A medical screening examination that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition; and
2.14.b. Such further medical examination and treatment, to the extent they are within the capability of the staff and facilities available at a hospital, to stabilize a patient.
2.15. “Facility” means an institution providing health care services or a health care setting, including but not limited to hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory and imaging centers, and rehabilitation and other therapeutic health settings.
2.16. “Health benefit plan” means a policy, contract, certificate or agreement entered into, offered or issued by an issuer to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including short-term and catastrophic health insurance policies and a policy that pays on a costincurred basis, but excluding the excepted benefits defined in 42 U.S.C. § 300gg-91 and as otherwise specifically excepted in this rule.
2.16.a. “Health benefit plan” does not include:
2.16.a.1. Coverage only for accident, or disability income insurance or any combination thereof;
2.16.a.2. Coverage issued as a supplement to liability insurance;
2.16.a.3. Liability insurance, including general liability insurance and automobile liability insurance;
2.16.a.4. Workers’ compensation or similar insurance;
2.16.a.5. Automobile medical payment insurance;
2.16.a.6. Credit-only insurance;
2.16.a.7. Coverage for on-site medical clinics; and
2.16.a.8. Other similar insurance coverage specified in federal regulations issued pursuant to Pub. L. No. 104-191, under which benefits for medical care are secondary or incidental to other insurance benefits.
2.16.b. “Health benefit plan” does not include the following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan:
2.16.b.1. Limited scope dental or vision benefits;
2.16.b.2. Benefits for long-term care, nursing home care, home health care, communitybased care, or any combination thereof; or
2.16.b.3. Other similar, limited benefits specified in federal regulations issued pursuant to Pub. L. No. 104-191.
2.16.c. “Health benefit plan” does not include the following benefits if the benefits are provided under a separate policy, certificate or contract of insurance, there is no coordination between the provision of the benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor, and the benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor:
2.16.c.1. Coverage only for a specified disease or illness; or
2.16.c.2. Hospital indemnity or other fixed indemnity insurance.
2.16.d. “Health benefit plan” does not include the following if offered as a separate policy, certificate or contract of insurance:
2.16.d.1. Medicare supplemental health insurance as defined under Section 1882(g)(1) of the Social Security Act;
2.16.d.2. Coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code (Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)); or
2.16.d.3. Similar supplemental coverage provided to coverage under a group health plan.
2.17. “Health care professional” means a physician or other health care practitioner licensed, accredited or certified to perform specified health care services consistent with West Virginia law.
2.18. “Health care provider” or “provider” means a health care professional or a facility.
2.19. “Health care services” means services for the diagnosis, prevention, treatment, cure or relief of a health condition, illness, injury or disease.
2.20. “Issuer” means an entity required to be licensed under the insurance laws and regulations of West Virginia that contracts or offers to contract to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services, including an accident and sickness insurance company, a health maintenance organization, a nonprofit hospital or health service corporation, fraternal benefit society, or any other entity providing a health benefit plan.
2.21. “Managed care plan” means a health benefit plan that either requires a covered person to use, or creates incentives, including financial incentives, for a covered person to use health care providers managed, owned, under contract with or employed by the issuer.
2.22. “Network” means the group of participating providers providing services to a managed care plan.
2.23. “Participating provider” means a provider who, under a contract with the issuer or with its contractor or subcontractor, has agreed to provide health care services to covered persons with an expectation of receiving payment, other than coinsurance, copayments or deductibles, directly or indirectly from the issuer.
2.24. “Person” means an individual, a corporation, a partnership, an association, a joint venture, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing.
2.25. “Prospective review” means utilization review conducted prior to an admission or the provision of a health care service or a course of treatment in accordance with an issuer’s requirement that the health care service or course of treatment, in whole or in part, be approved prior to its provision.
2.26. “Rescission” means a cancellation or discontinuance of coverage under a health benefit plan that has a retroactive effect. “Rescission” does not include a cancellation or discontinuance of coverage under a health benefit plan if:
2.26.a. The cancellation or discontinuance of coverage has only a prospective effect; or
2.26.b. The cancellation or discontinuance of coverage is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage.
2.27. “Retrospective review” means any review of a request for a benefit that is not a prospective review request. “Retrospective review” does not include the review of a claim that is limited to veracity of documentation or accuracy of coding.
2.28. “Second opinion” means an opportunity or requirement to obtain a clinical evaluation by a provider other than the one originally making a recommendation for a proposed health care service to assess the medical necessity and appropriateness of the initial proposed health care service.
2.29. “Stabilized” means, with respect to an emergency medical condition, that no material deterioration of the condition is likely, within reasonable medical probability, to result from or occur during the transfer of the individual from a facility or, with respect to a pregnant woman, the woman has delivered, including the placenta.
2.30. “Urgent care request” means a request for a health care service or course of treatment with respect to which the time periods for making a non-urgent care request determination:
2.30.a. Could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function; or
2.30.b. In the opinion of an attending health care professional with knowledge of the covered person’s medical condition, would subject the covered person to severe pain that cannot be adequately managed without the health care service or treatment that is the subject of the request.;
2.30.c. Except as provided in subdivision 2.30.d, in determining whether a request is to be treated as an urgent care request, an individual acting on behalf of the issuer shall apply the judgment of a prudent layperson who possesses an average knowledge of health and medicine.
2.30.d. Any request that an attending health care professional, with knowledge of the covered person’s medical condition, determines is an urgent care request within the meaning of this subsection shall be treated as an urgent care request.
2.31. "Utilization review" means a system for the evaluation of the necessity, appropriateness and efficiency of the use of health care services, procedure and facilities.
2.32. “Utilization review organization” means an entity that conducts utilization review, other than an issuer performing utilization review for its own health benefit plans.
W. Va. Code R. § 114-95-3 Corporate Oversight of Utilization Review Program
An issuer shall be responsible for monitoring all utilization review activities carried out by, or on behalf of, the issuer and for ensuring that all requirements of this rule are met. The issuer also shall ensure that appropriate personnel have operational responsibility for the conduct of the issuer’s utilization review program.
W. Va. Code R. § 114-95-4 Contracting
Whenever an issuer contracts to have a utilization review organization or other entity perform the utilization review functions required by this rule, the Commissioner shall hold the issuer responsible for monitoring the activities of the utilization review organization or entity with which the issuer contracts and for ensuring that the requirements of this rule are met.
W. Va. Code R. § 114-95-5 Scope and Content of Utilization Review Program
5.1. An issuer shall implement a written utilization review program that describes all review activities and procedures, both delegated and non-delegated, for:
5.1.a. The filing of benefit requests;
5.1.b. The notification of utilization review and benefit determinations; and
5.1.c. The review of adverse determinations in accordance with W. Va. Code of St. R. §114- 96-1 et seq., “Health Plan Issuer Internal Grievance Procedure”.
5.2. The program document shall describe the following:
5.2.a. Procedures to evaluate the medical necessity, appropriateness, efficacy or efficiency of health care services;
5.2.b. Data sources and clinical review criteria used in decision-making;
5.2.c. Mechanisms to ensure consistent application of clinical review criteria and compatible decisions;
5.2.d. Data collection processes and analytical methods used in assessing utilization of health care services;
5.2.e. Provisions for assuring confidentiality of clinical and proprietary information;
5.2.f. The organizational structure (e.g. utilization review committee, quality assurance or other committee) that periodically assesses utilization review activities and reports to the issuer’s governing body; and
5.2.g. The staff position functionally responsible for day-to-day program management.
W. Va. Code R. § 114-95-6 Operational Requirements
6.1. A utilization review program shall use documented clinical review criteria that are based on sound clinical evidence and are evaluated periodically to assure ongoing efficacy. An issuer may develop its own clinical review criteria or it may purchase or license clinical review criteria from qualified vendors. An issuer shall make available its clinical review criteria upon request by a person authorized by the Commissioner or by statute or legislative rule to receive such information.
6.2. Qualified health care professionals shall administer the utilization review program and oversee utilization review decisions. A clinical peer shall evaluate the clinical appropriateness of adverse determinations.
6.3. Exhaustion.
6.3.a. Whenever an issuer fails to adhere to the requirements of section 7 or 8 with respect to making utilization review and benefit determinations of a benefit request or claim, the covered person shall be deemed to have exhausted the provisions of this rule and may file a request for external review in accordance with the procedures outlined in W. Va. Code of St. R. §114-97-1 et seq.
6.3.a.1. Notwithstanding subdivision 6.3.a, the provisions of sections 7 or 8 of this rule shall not be deemed exhausted based on a de minimis violation that does not cause, and is not likely to cause, prejudice or harm to the covered person as long as the issuer demonstrates that the violation was for good cause or due to matters beyond its control and that the violation occurred in the context of an ongoing, good faith exchange of information between the issuer and the covered person.
6.3.a.2. The exception described in paragraph 6.3.a.1 is inapplicable if the violation is part of a pattern or practice of violations by the issuer.
6.3.a.3. Within ten days of receiving a request from a covered person, an issuer shall provide a written explanation of why it believes that any alleged violation of sections 7 or 8 of this rule does not constitute a sufficient basis to trigger the exhaustion provisions of subdivision 6.3.a.
6.3.a.4. The Commissioner shall resolve any issues raised by an issuer as to whether a covered person may, in accordance with paragraph 6.3.a.1, be deemed to have exhausted the provisions of this rule, and the Commissioner’s written notice of a determination that such exhaustion requirements have not been met shall also inform the covered person that he or she may resubmit and, as appropriate, pursue a review of the benefit request or claim under this rule or file a grievance pursuant to W. Va. Code of St. R. §114-96-1 et seq.
6.3.a.5. For purposes of calculating the time period for refiling the benefit request or claim, the time period shall begin to run upon the covered person’s receipt of the notice of opportunity to resubmit.
6.4. An issuer shall have a process to ensure that utilization reviewers apply clinical review criteria in conducting utilization review consistently.
6.5. An issuer shall routinely assess the effectiveness and efficiency of its utilization review program.
6.6. An issuer’s data systems shall be sufficient to support utilization review program activities and to generate management reports to enable the issuer to monitor and manage health care services effectively.
6.7. If an issuer delegates any utilization review activities to a utilization review organization, the issuer shall maintain adequate oversight, which shall include:
6.7.a. A written description of the utilization review organization’s activities and responsibilities, including reporting requirements;
6.7.b. Evidence of formal approval of the utilization review organization’s program by the issuer; and
6.7.c. A process by which the issuer evaluates the performance of the utilization review organization.
6.8. The issuer shall coordinate the utilization review program with other medical management activity conducted by the issuer, such as quality assurance, credentialing, provider contracting, data reporting, grievance procedures, processes for assessing member satisfaction and risk management.
6.9. An issuer shall provide covered persons and participating providers with access to its review staff by a toll-free telephone number.
6.10. When conducting utilization review, the issuer shall collect only the information necessary, including pertinent clinical information, to make the utilization review or benefit determination.
6.11. In conducting utilization review, the issuer shall ensure that the review is conducted in a manner to ensure the independence and impartiality of the individuals involved in making the utilization review or benefit determination, including not basing decisions regarding hiring, compensation, termination, promotion or other similar matters upon the likelihood that the individual will support the denial of benefits.
W. Va. Code R. § 114-95-7 Procedures for Standard Utilization Review and Benefit Determinations
7.1. Time periods.
7.1.a. Written procedures. An issuer shall maintain written procedures pursuant to this section for making standard utilization review and benefit determinations on requests submitted to the issuer by covered persons and for notifying covered persons of its determinations with respect to these requests within the specified time frames required under this section.
7.1.b. Calculation of days. For purposes of calculating the time periods within which prospective and retrospective review determinations are required to be made, the time period within which the determination is required to be made shall begin on the date the request is received by the issuer in accordance with the issuer’s procedures established pursuant to section 5 for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing.
7.1.c. Prospective review determinations. Within a reasonable period of time appropriate to the covered person's medical condition but in no event later than fifteen days after receiving the request for a prospective review determination, an issuer shall notify the covered person of such determination.
7.1.d. Retrospective review determinations. For retrospective review determinations, an issuer shall notify the covered person of such determination within a reasonable period of time, but in no event later than thirty days after receiving the benefit request.
7.1.e. Concurrent review determinations. For a concurrent review determination, if an issuer has previously certified an ongoing course of treatment to be provided over a period of time or number of treatments:
7.1.e.1. Any reduction or termination by the issuer during the course of treatment before the end of the period or number of treatments, other than by health benefit plan amendment or termination of the health benefit plan, shall constitute an adverse determination;
7.1.e.2. The issuer shall notify the covered person of the adverse determination in accordance with subsection 7.3 at a time sufficiently in advance of the reduction or termination to allow the covered person to file a grievance to request a review of the adverse determination pursuant to W. Va. Code of St.
R. §114 -96-1 et seq. and obtain a determination with respect to that review of the adverse determination before the benefit is reduced or terminated; and
7.1.e.3. The health care service or treatment that is the subject of the adverse determination shall be continued without liability to the covered person with respect to the internal review request made pursuant to W. Va. Code of St. R. §114 -96-1 et seq.
7.1.f. Extensions.
7.1.f.1. The time period for making a prospective or retrospective review determination and notifying the covered person of such determination pursuant to subdivision 7.1.a may be extended one time by the issuer for up to fifteen days, provided the issuer determines that an extension is necessary due to matters beyond the its control and notifies the covered person, prior to the expiration of the initial fifteen-day time period for a prospective review and the expiration of the initial thirty-day time period for a retrospective review, of the circumstances requiring the extension of time and the date by which the issuer expects to make a determination.
7.1.f.2. If the extension under this subdivision is necessary due to the failure of the covered person to submit information necessary to reach a determination on the request, the notice of extension shall specifically describe the required information necessary to complete the request and give the covered person at least forty-five days from the date of receipt of the notice to provide the specified information.
7.2. Failure to meet issuer’s filing procedures.
7.2.a. Whenever the issuer receives a prospective or retrospective review request from a covered person that fails to meet the issuer’s filing procedures, the issuer shall notify the covered person within five days of this failure and provide in the notice information on the proper procedures to be followed for filing a request; such notice tolls the time periods in which the issuer must make its determination until the earlier of the date on which the covered person responds to the request for additional information or the date on which the specified information was to have been submitted, and the issuer may deny the certification of the requested benefit if the covered person fails to respond within the extended period.
7.2.b. The provisions of subdivision 7.2.a only apply in the case of a failure that is a communication by a covered person that is received by a person or organizational unit of the issuer responsible for handling benefit matters and that refers to a specific covered person, a specific medical condition or symptom, and a specific health care service, treatment or provider for which certification is being requested.
7.3. Adverse determinations.
7.3.a. A notification of an adverse determination under this section shall, in a manner calculated to be understood by the covered person, set forth:
7.3.a.1. Information sufficient to identify the benefit request or claim involved, including any applicable dates of service, health care provider and claim amount, if applicable;
7.3.a.2. A statement describing the availability, upon request, of the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning; a request for the diagnosis code and treatment information shall not, in itself, be deemed a request to file a grievance for review of an adverse determination pursuant to W. Va. Code of St. R. §114-96-1 et seq. or a request for external review;
7.3.a.3. The specific reasons or reasons for the adverse determination, including the denial code and its corresponding meaning, as well as a description of the issuer’s standard, if any, that was used in denying the benefit request or claim;
7.3.a.4. Reference to the specific plan provisions on which the determination is based;
7.3.a.5. A description of any additional material or information necessary for the covered person to perfect the benefit request and an explanation of why the material or information is necessary;
7.3.a.6. A description of the issuer’s grievance procedures established pursuant to W. Va.
Code of St. R. §114-96-1 et seq., including any time limits applicable to those procedures;
7.3.a.7. If the issuer relied upon an internal rule, guideline, protocol or other similar criterion to make the final adverse determination, either the specific rule, guideline, protocol or other similar criterion or a statement that a specific rule, guideline, protocol or other similar criterion was relied upon to make the final adverse determination and that a copy of same will be provided free of charge to the covered person upon request;
7.3.a.8. An explanation of the scientific or clinical judgment for making any determination based on a medical necessity or experimental or investigational treatment or similar exclusion or limit, applying the terms of the health benefit plan to the covered person's medical circumstances; and
7.3.a.9. A statement explaining the availability of and contact information for assistance through the Commissioner’s office.
7.3.b. An issuer shall provide the notice required under this subsection 7.3 in a culturally and linguistically appropriate manner.
7.3.b.1. To be considered to meet the requirements of this subdivision, the issuer shall:
7.3.b.1.A. Provide oral language services, such as a telephone assistance hotline, that include answering questions in any applicable non-English language and providing assistance with filing benefit requests and claims and appeals in any applicable non-English language;
7.3.b.1.B. Provide, upon request, a notice in any applicable non-English language; and
7.3.b.1.C. Include in the English version of all notices, a statement prominently displayed in any applicable non-English language clearing indicating how to access the language services provided by the issuer.
7.3.b.2. For purposes of this subdivision, with respect to any United States county to which a notice is sent, a non-English language is an applicable non-English language if ten (10) percent or more of the population residing in the county is literate only in the same non-English language, as determined in published federal guidance.
7.3.c. If the adverse determination is a rescission, the issuer shall provide at least thirty calendar days’ notice to a covered person before coverage may be rescinded, regardless of whether the rescission applies to an individual only, to an entire group, or to individuals in a group, in addition to any applicable disclosures required under subdivision 7.3.a:
7.3.c.1. Clear identification of the alleged fraudulent act, practice or omission or the intentional misrepresentation of material fact;
7.3.c.2. An explanation as to why the act, practice or omission was fraudulent or was an intentional misrepresentation of a material fact;
7.3.c.3. Notice that the covered person may, prior to the date the advance notice of the proposed rescission ends, immediately file a grievance to request a review of the adverse determination to rescind coverage pursuant to W. Va. Code of St. R. §114-96-1 et seq.;
7.3.c.4. A description of the issuer’s grievance procedures established pursuant to W. Va.
Code of St. R. §114-96-1 et seq., including any time limits applicable to those procedures; and
7.3.c.5. The date when the advance notice ends and the date back to which the coverage will be retroactively rescinded.
W. Va. Code R. § 114-95-8 Procedures for Expedited Utilization Review and Benefit Determinations
8.1. An issuer shall establish written procedures in accordance with this section for receiving benefit requests from covered persons and for making and notifying covered persons of expedited utilization review and benefit determinations with respect to urgent care requests and concurrent review urgent care requests.
8.1.a. Such procedures must include that, in the case of a failure by a covered person to provide sufficient information, the issuer shall notify the covered person either orally or, if requested by the covered person, in writing of this failure and state what specific information is needed as soon as possible, but in no event later than twenty-four hours after receipt of the request, and the issuer shall provide the covered person a reasonable period of time to submit the necessary information, taking into account the circumstances, but in no event less than forty-eight hours after notifying the covered person of the failure to submit sufficient information. The provisions of this subdivision only apply in the case of a failure that is a communication by a covered person that is received by a person or organizational unit of the issuer responsible for handling benefit matters and that refers to a specific covered person, a specific medical condition or symptom, and a specific health care service, treatment or provider for which certification is being requested.
8.1.b. For an urgent care request, unless the covered person has failed to provide sufficient information for the issuer to determine whether, or to what extent, the benefits requested are covered benefits or payable under the issuer’s health benefit plan, the issuer shall notify the covered person of the issuer’s determination with respect to the request, whether or not the determination is an adverse determination, as soon as possible, taking into account the medical condition of the covered person, but in no event later than seventy-two hours after the receipt of the request by the issuer.
8.1.b.1. If the covered person has failed to provide sufficient information for the issuer to determine whether, or to what extent, the benefits requested are covered benefits or payable under the issuer’s health benefit plan, the issuer shall notify the covered person as soon as possible, but in no event later than twenty-four (24) hours after receipt of the request, either orally or, if requested by the covered person, in writing of this failure and state what specific information is needed. The issuer shall provide the covered person a reasonable period of time to submit the necessary information, taking into account the circumstances, but in no event less than forty-eight (48) hours after notifying the covered person or the covered person's authorized representative of the failure to submit sufficient information.
8.1.b.2. The issuer shall notify the covered person of its determination with respect to the urgent care request as soon as possible, but in no event more than forty-eight hours after the earlier of: 81.b.2.A. The issuer’s receipt of the requested specified information; or
8.1.b.2.B. The end of the period provided for the covered person to submit the requested specified information.
8.1.b.3. If the covered person fails to submit the information before the end of the period of the extension, as specified in subparagraph 8.1.b.2.B, the issuer may deny the certification of the requested benefit.
8.1.c. For concurrent review urgent care requests involving a request by the covered person to extend the course of treatment beyond the initial period of time or the number of treatments, if the request is made at least twenty-four hours prior to the expiration of the prescribed period of time or number of treatments, the issuer shall make a determination with respect to the request and notify the covered person of the determination, whether it is an adverse determination or not, as soon as possible, taking into account the covered person’s medical condition, but in no event more than twenty-four hours after the issuer’s receipt of the request.
8.1.d. For purposes of calculating the time periods within which a determination is required to be made under subsection 8.2, the time period within which the determination is required to be made shall begin on the date the request is filed with the issuer in accordance with the issuer’s procedures established pursuant to section 5 for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing.
8.2. Notice Requirements.
8.2.a. A notification of an adverse determination under this section shall, in a manner calculated to be understood by the covered person, set forth;
8.2.a.1. Information sufficient to identify the benefit request or claim involved, including the date of service, if applicable, the health care provider and the claim amount, if applicable;
8.2.a.2. A statement describing the availability, upon request, of the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning. For purposes of this paragraph, an issuer:
8.2.a.2.A. Shall provide to the covered person, as soon as practicable, upon request, the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning, associated with any adverse determination; and
8.2.a.2.B. May not consider a request for the diagnosis code and treatment information, in itself, to be a request to file a grievance for review of an adverse determination pursuant to W. Va. Code of St. R. §114-96-1 et seq., or a request for external review;
8.2.a.3. The specific reasons or reasons for the adverse determination, including the denial code and its corresponding meaning, as well as a description of the issuer’s standard, if any, that was used in denying the benefit request or claim;
8.2.a.4. Reference to the specific plan provisions on which the determination is based;
8.2.a.5. A description of any additional material or information necessary for the covered person to complete the request, including an explanation of why the material or information is necessary to complete the request;
8.2.a.6. A description of the issuer’s internal review and expedited review procedures established pursuant to W. Va. Code of St. R. §114-96-1 et seq., including any time limits applicable to those procedures;
8.2.a.7. If the issuer relied upon an internal rule, guideline, protocol or other similar criterion to make the adverse determination, either the specific rule, guideline, protocol or other similar criterion or a statement that a specific rule, guideline, protocol or other similar criterion was relied upon to make the adverse determination and that a copy of the rule, guideline, protocol or other similar criterion will be provided free of charge to the covered person upon request;
8.2.a.8. If the adverse determination is based on a medical necessity or experimental or investigational treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for making the determination, applying the terms of the health benefit plan to the covered person’s medical circumstances or a statement that an explanation will be provided to the covered person free of charge upon request;
8.2.a.9. If applicable, instructions for requesting:
8.2.a.9.A. A copy of the rule, guideline, protocol or other similar criterion relied upon in making the adverse determination in accordance with paragraph 8.2.a.7; or
8.2.a.9.B. The written statement of the scientific or clinical rationale for the adverse determination in accordance with paragraph 8.2.a.8; and
8.2.a.10. A statement explaining the availability of and the right of the covered person, as appropriate, to contact the Commissioner’s office at any time for assistance or, upon completion of the issuer’s grievance procedures process as provided under W. Va. Code of St. R. §114-96-1 et seq., to file a civil suit in a court of competent jurisdiction. The statement shall include contact information for the Commissioner’s office.
8.2.b. An issuer shall provide the notice required under this section in a culturally and linguistically appropriate manner in accordance with subdivision 7.3.b.
8.2.c. If the adverse determination is a rescission, the issuer shall provide, in addition to any applicable disclosures required under subdivision 8.2.a, the disclosures set forth in subdivision 7.3.c: 8.2.d.. An issuer may provide the notice required under this section orally, in writing or electronically. If notice of the adverse determination is provided orally, the issuer shall provide written or electronic notice of the adverse determination within three days following the oral notification.
W. Va. Code R. § 114-95-9 Emergency Services
9.1. When conducting utilization review or making a benefit determination for emergency services, an issuer that provides benefits for services in an emergency department of a hospital shall follow the provisions of this section.
9.2. An issuer shall cover emergency services to screen and stabilize a covered person in the following manner:
9.2.a. Without the need for prior authorization of such services if a prudent layperson would have reasonably believed that an emergency medical condition existed even if the emergency services are provided on an out-of-network basis;
9.2.b. Shall cover emergency services whether the health care provider furnishing the services is a participating provider with respect to such services;
9.2.c. If the emergency services are provided out-of-network, without imposing any administrative requirement or limitation on coverage that is more restrictive than the requirements or limitations that apply to emergency services received from network providers;
9.2.d. If the emergency services are provided out-of-network, by complying with the cost-sharing requirements of subdivision 9.3.b; and
9.2.e. Without regard to any other term or condition of coverage, other than:
9.2.e.1. The exclusion of or coordination of benefits;
9.2.e.2. An affiliation or waiting period as permitted under section 2704 of the Public Health Service Act (PHSA); or
9.2.e.3. Applicable cost-sharing, as provided in subdivisions 9.3.a or 9.3.b.
9.3. For in-network emergency services, coverage of emergency services shall be subject to applicable co-payments, coinsurance and deductibles.
9.3.a. For out-of-network emergency services, any cost-sharing requirement expressed as a copayment amount or coinsurance rate imposed with respect to a covered person cannot exceed the costsharing requirement imposed with respect to a covered person if the services were provided in-network.
9.3.b. Notwithstanding subdivision 9.3.a, a covered person may be required to pay, in addition to the in-network cost-sharing, the excess of the amount the out-of-network provider charges over the amount the issuer is required to pay under this paragraph.
9.3.c. An issuer complies with the requirements of this subsection if it provides payment of emergency services provided by an out-of-network provider in an amount not less than the greatest of the following:
9.3.c.1. The amount negotiated with in-network providers for emergency services, excluding any in-network copayment or coinsurance imposed with respect to the covered person;
9.3.c.2. The amount of the emergency service calculated using the same method the plan uses to determine payments for out-of-network services, but using the in-network cost-sharing provisions instead of the out-of-network cost-sharing provisions; or
9.3.c.3. The amount that would be paid under Medicare for the emergency services, excluding any in-network copayment or coinsurance requirements.
9.3.d. For capitated or other health benefit plans that do not have a negotiated per-service amount for in-network providers, paragraph 9.3.c.1 does not apply. If a health benefit plan has more than one negotiated amount for in-network providers for a particular emergency service, the amount in paragraph 9.3.c.1 is the median of these negotiated amounts.
9.3.d.1. Any cost-sharing requirement other than a copayment or coinsurance requirement, such as a deductible or out-of-pocket maximum, may be imposed with respect to emergency services provided out-of-network if the cost-sharing requirement generally applies to out-of-network benefits.
9.3.d.2. A deductible may be imposed with respect to out-of-network emergency services only as part of a deductible that generally applies to out-of-network benefits.
9.3.d.3. If an out-of-pocket maximum generally applies to out-of-network benefits, that outof-network maximum must apply to out-of-network emergency services.
9.4. For immediately required post-evaluation or post-stabilization services, an issuer shall provide access to designated representative twenty-four hours a day, seven days a week, to facilitate review.
W. Va. Code R. § 114-95-10 Confidentiality Requirements
An issuer shall annually certify in writing to the Commissioner that the utilization review program of the issuer or its designee complies with all applicable state and federal laws establishing confidentiality and reporting requirements.
W. Va. Code R. § 114-95-11 Disclosure Requirements
11.1. In the certificate of coverage or member handbook provided to covered persons, an issuer shall include a clear and comprehensive description of its utilization review procedures, including the procedures for obtaining review of adverse determinations, and a statement of rights and responsibilities of covered persons with respect to those procedures.
11.2. An issuer shall include a summary of its utilization review and benefit determination procedures in materials intended for prospective covered persons.
11.3. An issuer shall print on its membership cards a toll-free telephone number to call for utilization review and benefit decisions.
W. Va. Code R. § 114-95-12 Penalties
Any issuer failing to comply with the requirements of this rule is subject to the penalties prescribed in W. Va. Code §33-3-11.
Series 96 Health Plan Issuer Internal Grievance Procedure
W. Va. Code R. § 114-96-1 General
1.1. Scope. -- The purpose of this rule is to provide standards for the establishment and maintenance of procedures by issuers to assure that covered persons have the opportunity for the appropriate resolution of grievances. This rule is based upon the National Association of Insurance Commissioners’ “Health Carrier Grievance Procedure Act” (Model #72), as amended in 2012. To the extent feasible, this rule should be construed consistently with related state and federal laws, but to the extent any provision conflicts with a provision of other related rules in this title (including, but not limited to, series 43, 46, 50, 51 and 53 of this title), the provisions of this rule shall control and take precedence.
1.2. Authority. -- W. Va. Code §33-2-10 & 33-16H-4.
1.3. Filing Date. -- June 6, 2014.
1.4. Effective Date. -- July 6, 2014.
W. Va. Code R. § 114-96-2 Definitions
2.1. “Adverse determination” means a determination by an issuer or its designee utilization review organization that an admission, availability of care, continued stay or other health care service that is a covered benefit has been reviewed and, based upon the information provided, does not meet the issuer’s requirements for medical necessity, appropriateness, health care setting, level of care or effectiveness and the requested service or payment for the service is therefore denied, reduced or terminated.
2.2. “Ambulatory review” means utilization review of health care services performed or provided in an outpatient setting.
2.3. “Authorized representative” means:
2.3.a. A person to whom a covered person has given express written consent to represent the covered person in an internal review;
2.3.b. A person authorized by law to provide substituted consent for a covered person;
2.3.c. In a situation in which a covered person is unable to provide consent, a family member of the covered person or the covered person’s treating health care professional;
2.3.d. A health care professional when the covered person’s health benefit plan requires that a request for a benefit under the plan be initiated by the health care professional; or
2.3.e. In the case of an urgent care request, a health care professional with knowledge of the covered person’s medical condition.
2.4. “Case management” means a coordinated set of activities conducted for individual patient management of serious, complicated, protracted or other health conditions.
2.5. “Certification” means a determination by an issuer or its designee utilization review organization that an admission, availability of care, continued stay or other health care service that is a covered benefit under the issuer’s health benefit plan has been reviewed and, based on the information provided, satisfies the issuer’s requirements for medical necessity, appropriateness, health care setting, level of care and effectiveness.
2.6. “Clinical peer” means a physician or other health care professional who holds a non-restricted license in a state of the United States and in the same or similar specialty that typically manages the medical condition, procedure or treatment under review.
2.7. “Clinical review criteria” means the written screening procedures, decision abstracts, clinical protocols and practice guidelines used by the issuer to determine the medical necessity and appropriateness of health care services.
2.8. “Commissioner” means the West Virginia Insurance Commissioner.
2.9. “Concurrent review” means utilization review conducted during a patient’s stay or course of treatment in a facility, the office of a health care professional or other inpatient or outpatient health care setting.
2.10. “Covered benefits” or “benefits” means those health care services to which a covered person is legally entitled under the terms of a health benefit plan.
2.11. “Covered person” means a policyholder, subscriber, enrollee or other individual participating in a health benefit plan; whenever this rule provides for action by or notice to a covered person, it shall be deemed to include action by or notice to such covered person’s authorized representative.
2.12. “Discharge planning” means the formal process for determining, prior to discharge from a facility, the coordination and management of the care that a patient receives following discharge from a facility.
2.13. “Emergency medical condition’ means a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect that the absence of immediate medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person’s health or, with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy.
2.14. “Emergency services” means with respect to an emergency medical condition:
2.14.a. A medical screening examination that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition; and
2.14.b. Such further medical examination and treatment, to the extent they are within the capability of the staff and facilities available at a hospital, to stabilize a patient.
2.15. “Facility” means an institution providing health care services or a health care setting, including but not limited to hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory and imaging centers, and rehabilitation and other therapeutic health settings.
2.16. "Final adverse determination" means an adverse determination that has been upheld by the issuer at the completion of the internal grievance procedures or an adverse determination with respect to which the internal grievance procedures have been exhausted.
2.17. "Grievance" means a written complaint or, if the complaint involves an urgent care request submitted by or on behalf of a covered person, an oral complaint, regarding:
2.17.a. Availability, delivery or quality of health care services, including a complaint regarding an adverse determination made pursuant to utilization review;
2.17.b. Claims payment, handling or reimbursement for health care services; or
2.17.c. Matters pertaining to the contractual relationship between a covered person and an issuer.
2.18. “Health benefit plan” means a policy, contract, certificate or agreement entered into, offered or issued by an issuer to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including short term and catastrophic health insurance policies and a policy that pays on a costincurred basis, but excluding the excepted benefits defined in 42 U.S.C. § 300gg-91 and as otherwise specifically excepted in this rule.
2.18.a. “Health benefit plan” does not include:
2.18.a.1. Coverage only for accident, or disability income insurance or any combination thereof;
2.18.a.2. Coverage issued as a supplement to liability insurance;
2.18.a.3. Liability insurance, including general liability insurance and automobile liability insurance;
2.18.a.4. Workers’ compensation or similar insurance;
2.18.a.5. Automobile medical payment insurance;
2.18.a.6. Credit-only insurance;
2.18.a.7. Coverage for on-site medical clinics; and
2.18.a.8. Other similar insurance coverage specified in federal regulations issued pursuant to Pub. L. No. 104-191, under which benefits for medical care are secondary or incidental to other insurance benefits.
2.18.b. “Health benefit plan” does not include the following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan:
2.18.b.1. Limited scope dental or vision benefits;
2.18.b.2. Benefits for long-term care, nursing home care, home health care, communitybased care, or any combination thereof; or
2.18.b.3. Other similar, limited benefits specified in federal regulations issued pursuant to Pub. L. No. 104-191.
2.18.c. “Health benefit plan” does not include the following benefits if the benefits are provided under a separate policy, certificate or contract of insurance, there is no coordination between the provision of the benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor, and the benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor:
2.18.c.1. Coverage only for a specified disease or illness; or
2.18.c.2. Hospital indemnity or other fixed indemnity insurance.
2.18.d. “Health benefit plan” does not include the following if offered as a separate policy, certificate or contract of insurance:
2.18.d.1. Medicare supplemental health insurance as defined under Section 1882(g)(1) of the Social Security Act;
2.18.d.2. Coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code (Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)); or
2.18.d.3. Similar supplemental coverage provided to coverage under a group health plan.
2.19. “Health care professional” means a physician or other health care practitioner licensed, accredited or certified to perform specified health care services consistent with West Virginia law.
2.20. “Health care provider” or “provider” means a health care professional or a facility.
2.21. “Health care services” means services for the diagnosis, prevention, treatment, cure or relief of a health condition, illness, injury or disease.
2.22. “Issuer” means an entity required to be licensed under the insurance laws and regulations of West Virginia that contracts, or offers to contract to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services, including an accident and sickness insurance company, a health maintenance organization, a nonprofit hospital or health service corporation, fraternal benefit society, or any other entity providing a health benefit plan.
2.23. “Managed care plan” means a health benefit plan that either requires a covered person to use, or creates incentives, including financial incentives, for a covered person to use health care providers managed, owned, under contract with or employed by the issuer.
2.24. “Network” means the group of participating providers providing services to a managed care plan.
2.25. “Participating provider’ means a provider who, under a contract with the issuer or with its contractor or subcontractor, has agreed to provide health care services to covered persons with an expectation of receiving payment, other than coinsurance, copayments or deductibles, directly or indirectly from the issuer.
2.26. “Person” means an individual, a corporation, a partnership, an association, a joint venture, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing.
2.27. “Prospective review” means utilization review conducted prior to an admission or the provision of a health care service or a course of treatment in accordance with an issuer’s requirement that the health care service or course of treatment, in whole or in part, be approved prior to its provision.
2.28. “Rescission” means a cancellation or discontinuance of coverage under a health benefit plan that has a retroactive effect. “Rescission” does not include a cancellation or discontinuance of coverage under a health benefit plan if:
2.28.a. The cancellation or discontinuance of coverage has only a prospective effect; or
2.28.b. The cancellation or discontinuance of coverage is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage.
2.29. “Retrospective review” means any review of a request for a benefit that is not a prospective review request. “Retrospective review” does not include the review of a claim that is limited to veracity of documentation or accuracy of coding.
2.30. “Second opinion” means an opportunity or requirement to obtain a clinical evaluation by a provider other than the one originally making a recommendation for a proposed health care service to assess the medical necessity and appropriateness of the initial proposed health care service.
2.31. “Stabilized” means, with respect to an emergency medical condition, that no material deterioration of the condition is likely, within reasonable medical probability, to result from or occur during the transfer of the individual from a facility or, with respect to a pregnant woman, the woman has delivered, including the placenta.
2.32. “Urgent care request” means a request for a health care service or course of treatment with respect to which the time periods for making a non-urgent care request determination:
2.32.a. Could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function; or
2.32.b. In the opinion of an attending health care professional with knowledge of the covered person’s medical condition, would subject the covered person to severe pain that cannot be adequately managed without the health care service or treatment that is the subject of the request.
2.32.c. Except as provided in subdivision 2.32.d, in determining whether a request is be treated as an urgent care request, an individual acting on behalf of the issuer shall apply the judgment of a prudent layperson who possesses an average knowledge of health and medicine.
2.32.d. Any request that an attending health care professional, with knowledge of the covered person’s medical condition, determines is an urgent care request within the meaning of this subsection shall be treated as an urgent care request.
2.33. "Utilization review" means a system for the evaluation of the necessity, appropriateness and efficiency of the use of health care services, procedure and facilities.
2.34. “Utilization review organization” means an entity that conducts utilization review, other than an issuer performing utilization review for its own health benefit plans.
W. Va. Code R. § 114-96-3 Grievance Reporting and Recordkeeping Requirements
3.1. An issuer shall maintain written records to document all grievances received, including the notices and claims associated with the grievances.
3.1.a. The records of all grievances initiated in each calendar year shall be arranged in a separate register, the contents and form of which shall be prescribed by the Commissioner.
3.1.b. The records shall be retained for the longer of five years or until the Commissioner has adopted a final report of an examination that contains a review of the register for that calendar year.
3.1.c. The issuer shall make the records available for examination by the Commissioner and such other persons designated by the Commissioner.
3.2. An issuer shall annually submit to the Commissioner, at such time and in a format prescribed by the Commissioner, a report containing a compilation and analysis of the grievances filed, their disposition and their underlying causes.
W. Va. Code R. § 114-96-4 Grievance Review Procedures
4.1. Whenever an issuer fails to adhere to the requirements of section 5 or section 7 with respect to receiving and resolving grievances involving an adverse determination, the covered person shall be deemed to have exhausted the provisions of this rule and may file a request for external review in accordance with the procedures outlined in W. Va. Code of St. R. §114-97-1 et seq.
4.1.a. Notwithstanding subsection 4.1, the provisions of section 5 shall not be deemed exhausted based on a de minimis violation that does not cause, and is not likely to cause, prejudice or harm to the covered person as long as the issuer demonstrates that the violation was for good cause or due to matters beyond the control of the issuer and that the violation occurred in the context of an ongoing, good faith exchange of information between the issuer and the covered person.
4.1.a.1. The exception provided in subdivision 4.1.a does not apply if the violation is part of a pattern or practice of violations by the issuer.
4.1.a.2. An issuer shall, within ten days of receiving a written request from a covered person, provide a written explanation of the basis, if any, for asserting that the alleged violation of section 5 or 7 does not entitle the covered person to claim exhaustion.
4.1.b. If an independent review organization rejects the grievance involving an adverse determination for immediate review on the basis that the issuer met the requirements of the exception provided in subdivision 4.1.a., the covered person has the right to resubmit and pursue a review of the grievance under this rule.
4.1.b.1. In this case, within a reasonable time but not exceeding ten days after the independent review organization rejects the grievance involving an adverse determination for immediate review, the issuer shall provide to the covered person notice of the opportunity to resubmit and, as appropriate, pursue a review of the grievance under this rule.
4.1.b.2. For purposes of calculating the time period for re-filing the benefit request or claim under this paragraph, the time period shall begin to run upon the covered person’s receipt of the notice of opportunity to resubmit.
4.2. An issuer shall file a copy of the procedures required under subsection 4.1, including all forms used to process requests made pursuant to section 5, 6 and 7, with the Commissioner. Any subsequent material modifications to the documents also shall be filed. The Commissioner may disapprove a filing received in accordance with this subsection that fails to comply with this rule.
4.3. In addition to subsection 4.2, an issuer shall file annually with the Commissioner, as part of its annual report required by section 3, a certificate of compliance stating that the issuer has established and maintains, for each of its health benefit plans, grievance procedures that fully comply with the provisions of this rule.
4.4. A description of the grievance procedures required under this section shall be set forth in or attached to the policy, certificate, membership booklet, outline of coverage or other evidence of coverage provided to covered persons.
4.5. The grievance procedure documents shall include a statement of a covered person’s right to contact the Commissioner’s office for assistance at any time. The statement shall include the telephone number and address for the Commissioner’s office.
W. Va. Code R. § 114-96-5 First Level Reviews of Grievances Involving an Adverse Determination
5.1. Within 180 days after receipt of a notice of an adverse determination sent pursuant to W. Va.
Code of St. R. §114-96-1 et seq., a covered person may file a grievance with the issuer requesting a first level review of the adverse determination.
5.2. First Level Review.
5.2.a. The issuer shall provide the covered person with the name, address and telephone number of a person or organizational unit designated to coordinate the first level review on behalf of the issuer.
5.2.b. In providing for a first level review under this section, the issuer shall ensure that the review is conducted in a manner under this section to ensure the independence and impartiality of the individuals involved in making the first level review decision.
5.2.c. In ensuring the independence and impartially of individuals involved in making the first level review decision, the issuer shall not make decisions related to such individuals regarding hiring, compensation, termination, promotion or other similar matters based upon the likelihood that the individual will support the denial of benefits.
5.3. Clinical Peers; Reviewers.
5.3.a. In the case of a review of an adverse determination involving utilization review, the issuer shall designate a review panel of health care professionals, none of whom shall have been involved in the initial adverse determination.
5.3.b. If a panel designated pursuant to subdivision 5.3.a does not include a clinical peer, then the issuer shall ensure a clinical peer is available for consultation to the panel and the panel shall consult with such clinical peer.
5.3.c. In conducting a review under this section, the reviewer or reviewers shall take into consideration all comments, documents, records and other information regarding the request for services submitted by the covered person, without regard to whether the information was submitted or considered in making the initial adverse determination.
5.4. A covered person does not have the right to attend, or have a representative in attendance, at the first level review, but the covered person is entitled to:
5.4.a. Submit written comments, documents, records and other material relating to the request for benefits for the reviewer or reviewers to consider when conducting the review; and
5.4.b. Receive from the issuer, upon request and free of charge, reasonable access to, and copies of all documents, records and other information relevant to the covered person’s request for benefits. For purposes of this subsection, a document, record or other information shall be considered “relevant” to a covered person’s request for benefits if the document, record or other information:
5.4.b.1. Was relied upon in making the benefit determination; 5.4.b.2 Was submitted, considered or generated in the course of making the adverse determination, without regard to whether the document, record or other information was relied upon in making the benefit determination; 5.4.b.3 Demonstrates that, in making the benefit determination, the issuer or its designated representatives consistently applied required administrative procedures and safeguards with respect to the covered person as other similarly situated covered persons; or 5.4.b.4 Constitutes a statement of policy or guidance with respect to the health benefit plan concerning the denied health care service or treatment for the covered person’s diagnosis, without regard to whether the advice or statement was relied upon in making the benefit determination.
5.5. For purposes of calculating the time periods within which a determination is required to be made and notice provided under subsection 5.6, the time period shall begin on the date the grievance requesting the review is filed with the issuer in accordance with the issuer’s procedures established pursuant to
section 4 for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing.
5.6. Notifications.
5.6.a. An issuer shall notify and issue a decision in writing or electronically to the covered person within the time frames provided in subdivisions 5.6.b and 5.6.c.
5.6.b. With respect to a grievance requesting a first level review of an adverse determination involving a prospective review request, the issuer shall notify and issue a decision within a reasonable period of time that is appropriate given the covered person’s medical condition, but no later than thirty days after the date of the issuer’s receipt of the grievance requesting the first level review pursuant to subsection 5.1.
5.6.c. With respect to a grievance requesting a first level review of an adverse determination involving a retrospective review request, the issuer shall notify and issue a decision within a reasonable period of time, but no later than sixty days after the date of the issuer’s receipt of the grievance requesting the first level review made pursuant to subsection 5.1.
5.6.d. The issuer shall make the provisions of subsection 5.4 known to the covered person within three working days after the date of receipt of the grievance.
5.7. Prior to issuing a decision in accordance with the time-frames provided in subsection 5.6, the issuer shall provide free of charge to the covered person any new or additional evidence, relied upon or generated by the issuer, or at the direction of the issuer, in connection with the grievance sufficiently in advance of the date the decision is required to be provided to permit the covered person a reasonable opportunity to respond prior to that date. Before the issuer issues or provides notice of a final adverse determination in accordance with the time-frames provided in subsection 5.6 that is based on new or additional rationale, the issuer shall provide the new or additional rationale to the covered person free of charge as soon as possible and sufficiently in advance of the date the notice of final adverse determination is to be provided to permit the covered person a reasonable opportunity to respond prior to that date.
5.8. The decision issued pursuant to subsection 5.6 shall set forth in a manner calculated to be understood by the covered person:
5.8.a. The titles and qualifying credentials of the person or persons participating in the first level review process (the reviewers);
5.8.b. Information sufficient to identify the claim involved with respect to the grievance, including the date of service, the health care provider and, if applicable, the claim amount;
5.8.c. A statement describing the availability, upon request, of the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning. For purposes of this subdivision, an issuer:
5.8.c.1. Shall provide to the covered person as soon as practicable, upon request, the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning, associated with any adverse determination; and
5.8.c.2. Shall not consider a request for the diagnosis code and treatment information, in itself, to be a request for external review pursuant to W. Va. Code of St. R. §114-97-1 et seq.;
5.8.d. A statement of the reviewers’ understanding of the covered person’s grievance;
5.8.e. The reviewers’ decision in clear terms and the contract basis or medical rationale in sufficient detail for the covered person to respond further to the issuer’s position;
5.8.f. A reference to the evidence or documentation used as the basis for the decision;
5.8.g. For a first level review decision issued pursuant to subsection 5.6 that denies the grievance:
5.8.g.1. The specific reason or reasons for the final adverse determination, including denial code and its corresponding meaning, as well as a description of the issuer’s standard, if any, that was used in reaching the denial;
5.8.g.2. The reference to the specific plan provision on which the determination is based;
5.8.g.3. A statement that the covered person is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant, as the term “relevant” is defined in subdivision 5.4.b, to the covered person’s benefit request;
5.8.g.4. If the issuer relied upon an internal rule, guideline, protocol or other similar criterion to make the final adverse determination, either the specific rule, guideline, protocol or other similar criterion or a statement that a specific rule, guideline, protocol or other similar criterion was relied upon to make the final adverse determination and that a copy of the same will be provided free of charge to the covered person upon request;
5.8.g.5. If the final adverse determination is based on a medical necessity or experimental or investigational treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgement for making the determination, applying the terms of the health benefit plan to the covered person’s medical circumstances, or a statement that an explanation will be provided to the covered person free of charge upon request; and
5.8.g.6. If applicable, instructions for requesting:
5.8.g.6.A. A copy of the rule, guideline, protocol or other similar criterion relied upon in making the final adverse determination as provided in paragraph 5.8.g.4; and
5.8.g.6.B. The written statement of the scientific or clinical rationale for the determination, as provided in paragraph 5.8.g.5;
5.8.h. If applicable, a statement indicating:
5.8.h.1. A description of the procedures for obtaining an independent external review of the final adverse determination pursuant to W. Va. Code of St. R. §114-97-1 et seq.; and
5.8.h.2. The covered person’s right to bring a civil action in a court of competent jurisdiction;
5.8.i. If applicable, the following statement: “You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your state Insurance Commissioner.”; and
5.8.j. Notice of the covered person’s right to contact the Commissioner’s office for assistance with respect to any claim, grievance or appeal at any time, including the telephone number and address of the Commissioner’s office.
5.9. An issuer shall provide the notice required under subsection 5.8 in a culturally and linguistically appropriate manner in accordance with federal regulations.
5.9.a. To be considered to meet the requirements of this subsection, the issuer shall:
5.9.a.1. Provide oral language services, such as a telephone assistance hotline, that include answering questions in any applicable non-English language and providing assistance with filing benefit requests and claims and appeals in any applicable non-English language;
5.9.a.2. Provide, upon request, a notice in any applicable non-English language; and
5.9.a.3. Include in the English version of all notices a statement prominently displayed in any applicable non-English language clearing indicating how to access the language services provided by the carrier.
5.9.b. For purposes of this subsection, with respect to any United States county to which a notice is sent, a non-English language is an applicable non-English language if ten percent or more of the population residing in the county is literate only in the same non-English language, as determined in published federal guidance.
W. Va. Code R. § 114-96-6 Standard Reviews of Grievances Not Involving an Adverse Determination
6.1. An issuer shall establish written procedures for a standard review of a grievance that does not involve an adverse determination.
6.2. The procedures shall permit a covered person to file a grievance that does not involve an adverse determination with the issuer under this section.
6.2.a. A covered person does not have the right to attend, or to have a representative in attendance at the standard review, but the covered person is entitled to submit written material for the person or persons designated by the carrier pursuant to subsection 6.3 to consider when conducting the review. 6.2.b.. The issuer shall make the provisions of subdivision 6.2.a known to the covered person within three working days after the date of receiving the grievance.
6.3. Upon receipt of the grievance, an issuer shall designate a person or persons to conduct the standard review of the grievance.
6.3.a. The issuer may not designate the same person or persons to conduct the standard review of the grievance that denied the claim or handled the matter that is the subject of the grievance.
6.3.b. The issuer shall provide the covered person with the name, address and telephone number of a person designated to coordinate the standard review on behalf of the issuer.
6.4. The issuer shall notify in writing the covered person of the decision within twenty working days after the date of receipt of the request for a standard review of a grievance filed pursuant to subsection 6.2.
6.4.a. Subject to subdivision 6.4.b, if, due to circumstances beyond the issuer’s control, the issuer cannot make a decision and notify the covered person pursuant to subsection 6.4 within twenty working days, the issuer may take up to an additional ten working days to issue a written decision.
6.4.b. An issuer may extend the time for making and notifying the covered person in accordance with subdivision 6.4.a, if, on or before the twentieth working day after the date of receiving the request for a standard review of a grievance, the issuer provides written notice to the covered person of the extension and the reasons for the delay.
6.5. The written decision issued pursuant to subsection 6.4 shall contain:
6.5.a. The titles and qualifying credentials of the person or persons participating in the standard review process (the reviewers);
6.5.b. A statement of the reviewers’ understanding of the covered person’s grievance;
6.5.c. The reviewer’s decision in clear terms and the contract basis in sufficient detail for the covered person to respond further to the issuer’s position;
6.5.d. A reference to the evidence or documentation used as the basis for the decision; and
6.5.e. Notice of the covered person’s right, at any time to contact the Commissioner’s office, including the telephone number and address of the Commissioner’s office.
W. Va. Code R. § 114-96-7 Expedited Reviews of Grievances Involving an Adverse Determination
7.1. An issuer shall establish written procedures for the expedited review of urgent care requests of grievances involving an adverse determination.
7.2. In addition to subsection 7.1, an issuer shall provide expedited review of a grievance involving an adverse determination with respect to concurrent review urgent care requests involving an admission, availability of care, continued stay or health care service for a covered person who has received emergency services, but has not been discharged from a facility.
7.3. The procedures shall allow a covered person to request an expedited review under this section orally or in writing.
7.4. An issuer shall appoint an appropriate clinical peer or peers in the same or similar specialty as would typically manage the case being reviewed to review the adverse determination. The clinical peer or peers shall not have been involved in making the initial adverse determination.
7.5. In an expedited review, all necessary information, including the issuer’s decision shall be transmitted between the issuer and the covered person by telephone, facsimile or the most expeditious method available.
7.6. An expedited review decision shall be made and the covered person shall be notified of the decision in accordance with subsection 7.8 as expeditiously as the covered person’s medical condition requires, but in no event more than seventy-two hours after the receipt of the request for the expedited review. If the expedited review of a grievance involves an adverse determination with respect to a concurrent review urgent care request, the service shall be continued without liability to the covered person until the covered person has been notified of the determination.
7.7. For purposes of calculating the time periods within which a decision is required to be made under subsection 7.6, the time period within which the decision is required to be made shall begin on the date the request is filed with the issuer in accordance with the issuer’s procedures established pursuant to
section 4 for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing.
7.8. Decision Notification.
7.8.a. A notification of a decision under this section shall, in a manner calculated to be understood by the covered person, set forth:
7.8.a.1. The titles and qualifying credentials of the person or persons participating in the expedited review process (the reviewers);
7.8.a.2. Information sufficient to identify the claim involved with respect to the grievance, including the date of service, the health care provider and, if applicable, the claim amount;
7.8.a.3. A statement describing the availability, upon request, of the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning. For purposes of this paragraph, an issuer:
7.8.a.3.A. Shall upon request provide to the covered person, as soon as practicable, the diagnosis code and its corresponding meaning and the treatment code and its corresponding meaning, associated with any adverse determination; and
7.8.a.3.B. Shall not consider a request for the diagnosis code and treatment information, in itself, to be a request for external review pursuant to W. Va. Code of St. R. §114-97-1 et seq.;
7.8.a.4. A statement of the reviewers’ understanding of the covered person’s grievance;
7.8.a.5. The reviewers’ decision in clear terms and the contract basis or medical rationale in sufficient detail for the covered person to respond further to the issuer’s position;
7.8.a.6. A reference to the evidence or documentation used as the basis for the decision; and
7.8.a.7. If the decision involves a final adverse determination, the notice shall provide:
7.8.a.7.A. The specific reasons or reasons for the final adverse determination, including the denial code and its corresponding meaning, as well as a description on the issuer’s standard, if any, that was used in reaching the denial;
7.8.a.7.B. Reference to the specific plan provisions on which the determination is based;
7.8.a.7.C. A description of any additional material or information necessary for the covered person to complete the request, including an explanation of why the material or information is necessary to complete the request;
7.8.a.7.D. If the issuer relied upon an internal rule, guideline, protocol or other similar criterion to make the adverse determination, either the specific rule, guideline, protocol or other similar criterion or a statement that a specific rule, guideline, protocol or other similar criterion was relied upon to make the adverse determination and that a copy of the rule, guideline, protocol or other similar criterion will be provided free of charge to the covered person upon request;
7.8.a.7.E. If the final adverse determination is based on a medical necessity or experimental or investigational treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for making the determination, applying the terms of the health benefit plan to the covered person’s medical circumstances, or a statement that an explanation will be provided to the covered person free of charge upon request;
7.8.a.7.F. If applicable, instructions for requesting:
7.8.a.7.F.1. A copy of the rule guideline, protocol or other similar criterion relied upon in making the adverse determination in accordance with subparagraph 7.8.a.7.D;
7.8.a.7.F.2. The written statement of the scientific or clinical rationale for the adverse determination in accordance with subparagraph 7.8.a.7.E;
7.8.a.7.F.3. A statement describing the procedures for obtaining an independent external review of the adverse determination pursuant to W. Va. Code of St. R. §114-97-1 et seq.;
7.8.a.7.F.4. A statement indicating the covered person’s right to bring a civil action in a court of competent jurisdiction;
7.8.a.7.F.5. The following statement: “You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your state Insurance Commissioner.”; and
7.8.a.7.F.6. A notice of the covered person’s right to contact the Commissioner for assistance with respect to any claim, grievance or appeal at any time, including the telephone number and address of the Commissioner’s office.
7.8.b. An issuer shall provide the notice required under this section as set forth in subsection 5.9.
7.8.b.1. To be considered to meet the requirements of this subsection, the issuer shall: 7.8.b.1.A Provide oral language services, such as a telephone assistance hotline, that include answering questions in any applicable non-English language and providing assistance with filing benefit requests and claims and appeals in any applicable non-English language;
7.8.b.1.B. Provide, upon request, a notice in any applicable non-English language; and
7.8.b.1.C. Include in the English versions of all notices a statement prominently displayed in any applicable non-English language clearly indicating how to access the language services provided by the carrier.
7.8.b.2. For purposes of this subdivision, with respect to any United States County to which a notice is sent, a non-English language is an applicable non-English language if ten percent or more of the population residing in the county is literate only in the same non-English language, as determined in published federal guidance.
7.8.c. An issuer may provide the notice required under this section orally, in writing or electronically. If notice of the adverse determination is provided orally, the issuer shall provide written or electronic notice of the adverse determination within three days following the oral notification.
W. Va. Code R. § 114-96-8 Penalties
Any issuer failing to comply with the requirements of this rule is subject to the penalties prescribed in W. Va. Code §33-3-11.
Series 97 External Review of Adverse Health Insurance Determinations
W. Va. Code R. § 114-97-1 General
1.1. Scope. -- The purpose of this rule is to provide a process under which persons covered by health insurance have the opportunity for independent reviews of adverse coverage determinations by issuers. This rule is based on the National Association of Insurance Commissioners’ “Uniform Health Carrier External Review Model Act” (Model 76), as amended in 2010. This rule should be read in conjunction with series 95 (“Utilization Review”) and 96 (“Health Plan Issuers Internal Grievance Process”) of this title. Although review of adverse determinations normally proceeds first through the issuer’s internal grievance procedure before it is assigned to an independent review organization, the rule permits the internal review process to be circumvented when the time necessary to conduct it could adversely affect the covered person’s health.
1.2. Authority. – W. Va. Code §§ 33-2-10 & 33-16H-4.
1.3. Filing Date. -- June 6, 2014.
1.4. Effective Date. -- July 6, 2014.
W. Va. Code R. § 114-97-2 Definitions
2.1. “Adverse determination” means a determination by an issuer or its designee utilization review organization that an admission, availability of care, continued stay or other healthcare service that is a covered benefit has been reviewed and, based upon the information provided, does not meet the issuer’s requirements for medical necessity, appropriateness, health care setting, level of care or effectiveness and the requested service or payment for the service is therefore denied, reduced or terminated.
2.2. “Ambulatory review” means utilization review of health care services performed or provided in an outpatient setting.
2.3. “Authorized representative” means:
2.3.a. A person to whom a covered person has given express written consent to represent the covered person in an external review;
2.3.b. A person authorized by law to provide substituted consent for a covered person;
2.3.c. In a situation in which a covered person is unable to provide consent, a family member of the covered person or the covered person’s treating health care professional;
2.3.d. A health care professional when the covered person’s health benefit plan requires that a request for a benefit under the plan be initiated by the health care professional; or
2.3.e. In the case of an urgent care request, a health care professional with knowledge of the covered person’s medical condition.
2.4. “Best evidence” means evidence based on:
2.4.a. A controlled, prospective study of patients that have been randomized into an experimental group and a control group at the beginning of the study with only the experimental group of patients receiving a specific intervention, which includes study of the groups for variables and anticipated outcomes over time (“randomized clinical trial”);
2.4.b. If randomized clinical trials are not available, a prospective evaluation of two groups of patients with only one group of patients receiving specific interventions (“cohort studies”) or a retrospective evaluation of two groups of patients with different outcomes to determine which specific interventions the patients received (“case-control studies”);
2.4.c. If subdivisions 2.4.a and 2.4.b are not available, an evaluation of a series of patients with a particular outcome, without the use of a control group (“case-series”); or
2.4.d. If subdivisions 2.4.a, 2.4.b and 2.4.c are not available, a belief or an interpretation by specialists with experience in a specific area about the scientific evidence pertaining to a particular service, intervention or therapy (“expert opinion”).
2.5. “Certification” means a determination by an issuer or its designee utilization review organization that an admission, availability of care, continued stay or other health care service that is a covered benefit under the issuer’s health benefit plan has been reviewed and, based on the information provided, satisfies the issuer’s requirements for medical necessity, appropriateness, health care setting, level of care and effectiveness.
2.6. “Clinical review criteria” means the written screening procedures, decision abstracts, clinical protocols and practice guidelines used by the issuer to determine the medical necessity and appropriateness of health care services.
2.7. “Commissioner” means the West Virginia Insurance Commissioner.
2.8. “Concurrent review” means utilization review conducted during a patient’s stay or course of treatment in a facility, the office of a health care professional or other inpatient or outpatient health care setting.
2.9. “Covered benefits” or “benefits” means those health care services to which a covered person is legally entitled under the terms of a health benefit plan.
2.10. “Covered person” means a policyholder, subscriber, enrollee or other individual participating in a health benefit plan; whenever this rule provides for action by or notice to a covered person, it shall be deemed to include action by or notice to such covered person’s authorized representative.
2.11. “Discharge planning” means the formal process for determining, prior to discharge from a facility, the coordination and management of the care that a patient receives following discharge from a facility.
2.12. “Emergency medical condition” means a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect that the absence of immediate medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person’s health or, with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy.
2.13. “Emergency services” means with respect to an emergency medical condition:
2.13.a. A medical screening examination that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition; and
2.13.b. Such further medical examination and treatment, to the extent they are within the capability of the staff and facilities available at a hospital, to stabilize a patient.
2.14. “Evidence-based standard” means the conscientious, explicit and judicious use of the current best evidence based on the overall systematic review of the research in making decisions about the care of individual patients.
2.15. “Facility” means an institution providing health care services or a health care setting, including but no limited to hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory and imaging centers, and rehabilitation and other therapeutic health settings.
2.16. "Final adverse determination" means an adverse determination that has been upheld by the issuer at the completion of the internal grievance procedures or an adverse determination with respect to which the internal grievance procedures have been exhausted.
2.17. “Health benefit plan” means a policy, contract, certificate or agreement entered into, offered or issued by an issuer to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including short term and catastrophic health insurance policies and a policy that pays on a costincurred basis, but excluding the excepted benefits defined in 42 U.S.C. § 300gg-91 and as otherwise specifically excepted in this rule.
2.17.a. “Health benefit plan” does not include:
2.17.a.1. Coverage only for accident, or disability income insurance or any combination thereof;
2.17.a.2. Coverage issued as a supplement to liability insurance;
2.17.a.3. Liability insurance, including general liability insurance and automobile liability insurance;
2.17.a.4. Workers’ compensation or similar insurance;
2.17.a.5. Automobile medical payment insurance;
2.17.a.6. Credit-only insurance;
2.17.a.7. Coverage for on-site medical clinics; and
2.17.a.8. Other similar insurance coverage specified in federal regulations issued pursuant to Pub. L. No. 104-191, under which benefits for medical care are secondary or incidental to other insurance benefits.
2.17.b. “Health benefit plan” does not include the following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan:
2.17.b.1. Limited scope dental or vision benefits;
2.17.b.2. Benefits for long-term care, nursing home care, home health care, communitybased care, or any combination thereof; or
2.17.b.3. Other similar, limited benefits specified in federal regulations issued pursuant to Pub. L. No. 104-191.
2.17.c. “Health benefit plan” does not include the following benefits if the benefits are provided under a separate policy, certificate or contract of insurance, there is no coordination between the provision of the benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor, and the benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor:
2.17.c.1. Coverage only for a specified disease or illness; or
2.17.c.2. Hospital indemnity or other fixed indemnity insurance.
2.17.d. “Health benefit plan” does not include the following if offered as a separate policy, certificate or contract of insurance:
2.17.d.1. Medicare supplemental health insurance as defined under Section 1882(g)(1) of the Social Security Act;
2.17.d.2. Coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code (Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)); or
2.17.d.3. Similar supplemental coverage provided to coverage under a group health plan.
2.18. “Health care professional” means a physician or other health care practitioner licensed, accredited or certified to perform specified health care services consistent with state law.
2.19. “Health care provider” or “provider” means a health care professional or a facility.
2.20. “Health care services” means services for the diagnosis, prevention, treatment, cure or relief of a health condition, illness, injury or disease.
2.21. “Health information” means information or data, whether oral or recorded in any form or medium, and personal facts or information about events or relationships that relates to:
2.21.a. The past, present or future physical, mental, or behavioral health or condition of an individual or a member of the individual’s family;
2.21.b. The provision of health care services to an individual; or
2.21.c. Payment for the provision of health care services to an individual.
2.22. “Independent review organization” or “IRO” means an entity, approved by the Commissioner to conduct external reviews of adverse determinations and final adverse determinations.
2.23. “Issuer” means an entity required to be licensed under the insurance laws and regulations of West Virginia that contracts, or offers to contract to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services, including an accident and sickness insurance company, a health maintenance organization, a nonprofit hospital or health service corporation, fraternal benefit society, or any other entity providing a health benefit plan.
2.24. “Medical or scientific evidence” means evidence found in the following sources:
2.24.a. Peer reviewed scientific studies published in or accepted for publication by medical journals that meet nationally recognized requirements for scientific manuscripts and that submit most of their published articles for review by experts who are not part of the editorial staff;
2.24.b. Peer-reviewed medical literature, including literature relating to therapies reviewed and approved by a qualified institutional review board, biomedical compendia and other medical literature that meet the criteria of the National Institutes of Health’s Library of Medicine for indexing in Index Medicus (Medline) and Elsevier Science Ltd. for indexing in Excerpta Medicus (EMBASE);
2.24.c. Medical journals recognized by the Secretary of Health and Human Services under
Section 1861(t)(2) of the federal Social Security Act;
2.24.d. The following standard reference compendia:
2.24.d.1. The American Hospital Formulary Service-Drug Information;
2.24.d.2. Drug Facts and Comparisons;
2.24.d.3. The American Dental Association Accepted Dental Therapeutics; and
2.24.d.4. The United States Pharmacopeia-Drug Information;
2.24.e. Findings, studies or research conducted by or under the auspices of federal government agencies and nationally recognized federal research institutes, including:
2.24.e.1. The federal Agency for Healthcare Research and Quality;
2.24.e.2. The National Institutes of Health;
2.24.e.3. The National Cancer Institute;
2.24.e.4. The National Academy of Sciences;
2.24.e.5. The Centers for Medicare & Medicaid Services;
2.24.e.6. The federal Food and Drug Administration; and
2.24.e.7. Any national board recognized by the National Institutes of health for the purpose of evaluating the medical value of health care services; or
2.24.f. Any other medical or scientific evidence that is comparable to the sources listed in subdivisions a through e of this subsection.
2.25. “NAIC” means the National Association of Insurance Commissioners.
2.26. “Person” means an individual, a corporation, a partnership, an association, a joint venture, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing.
2.27. “Prospective review” means utilization review conducted prior to an admission or the provision of a health care service or a course of treatment in accordance with an issuer’s requirement that the health care service or course of treatment, in whole or in part, be approved prior to its provision.
2.28. “Protected health information” means health information:
2.28.a. That identifies an individual who is the subject of the information or;
2.28.b. With respect to which there is a reasonable basis to believe that the information could be used to identify an individual.
2.29. “Retrospective review” means any review of a request for a benefit that is not a prospective review request. “Retrospective review” does not include the review of a claim that is limited to veracity of documentation or accuracy of coding.
2.30. “Second opinion” means an opportunity or requirement to obtain a clinical evaluation by a provider other than that originally making a recommendation for a proposed health care service to assess the medical necessity and appropriateness of the initial proposed health care service.
2.31. "Utilization review" means a system for the evaluation of the necessity, appropriateness and efficiency of the use of health care services, procedure and facilities.
2.32. “Utilization review organization” means an entity that conducts utilization review, other than an issuer performing utilization review for its own health benefit plans.
W. Va. Code R. § 114-97-3 Notice of Right to External Review
3.1. An issuer shall notify the covered person in writing of the covered person’s right to request an external review. Such a written notice from an issuer of an adverse determination upon completion of the issuer’s utilization review process or of a final adverse determination shall include:
3.1.a. Notice of the covered person’s right to request an external review to be conducted pursuant to section 6, 7 or 8;
3.1.b. The following or substantially equivalent language: “We have denied your request for the provision of or payment for a health care service or course of treatment. You may have the right to have our decision reviewed by health care professionals who have no association with us if our decision involved making a judgment as to the medical necessity, appropriateness, health care setting, level of care or effectiveness of the health care service or treatment you requested by submitting a request for external review to the WV Offices of the Insurance Commissioner, P.O. Box 50540, Charleston, WV 25305.”
3.1.c. The description provided pursuant to section 14 of both the standard and expedited external review procedures, highlighting the provisions in the external review procedures that give the covered person the opportunity to submit additional information and including any forms used to process an external review request.
3.1.d. A form approved by the Commissioner by which the covered person authorizes the issuer and the covered person’s treating health care provider to disclose protected health information, including medical records, concerning the covered person that are pertinent to the external review.
3.1.e. For a notice related to an adverse determination, a statement informing the covered person that:
3.1.e.1. If he or she has a medical condition where the time-frame for expedited review of a grievance under the issuer’s internal grievance process would seriously jeopardize his or her life, health or ability to regain maximum function, he or she may file with the Commissioner, simultaneously with a request for expedited review under the issuer’s internal grievance process, a request for expedited external review to be conducted pursuant to section 7 or, in cases involving denials based on the issuer’s determination that the treatment or service is experimental or investigational where the covered person’s treating physician certifies in writing that the recommended or requested service or treatment would be significantly less effective if not promptly initiated, pursuant to section 8; and
3.1.e.2. The covered person may file a grievance under the issuer’s internal grievance process, but if the issuer has not issued a written decision to the covered person within thirty days, he or she shall, except to the extent he or she requested or agreed to a delay, be considered to have exhausted the issuer’s internal grievance process for the purposes of filing a request for external review pursuant to
section 5.
3.1.f. For a notice related to a final adverse determination, a statement informing the covered person that:
3.1.f.1. If the covered person has a medical condition where the time-frame for completion of a standard external review pursuant to section 6 would seriously jeopardize the covered person’s life or health or ability to regain maximum function, the covered person may file a request for an expedited external review pursuant to section 7; or
3.1.f.2. If the final adverse determination concerns:
3.1.f.2.A. An admission, availability of care, continued stay or health care service for which the covered person received emergency services, but has not been discharged from a facility, the covered person may request an expedited external review pursuant to section 7; or
3.1.f.2.B. A denial of coverage based on a determination that the recommended or requested health care service or treatment is experimental or investigational, the covered person may file a request for a standard external review to be conducted pursuant to section 8 or, if the covered person’s treating physician certifies in writing that the recommended or requested health care service or treatment that is the subject of the request would be significantly less effective if not promptly initiated, the covered person may request an expedited external review to be conducted under subsection 8.2.
W. Va. Code R. § 114-97-4 Request For External Review
4.1. Except for a request for an expedited external review as set forth in section 7, all requests for external review shall be made in writing to the Commissioner in a form and manner approved by the Commissioner.
4.2. A covered person may make a request for an external review of an adverse determination or final adverse determination.
W. Va. Code R. § 114-97-5 Exhaustion of Internal Grievance Process
5.1. Except as provided in subsection 5.3 or if the exhaustion requirement is waived by the issuer, a request for external review pursuant to section 6, 7 or 8 may not be made until the covered person has exhausted the issuer’s internal grievance process.
5.2. Except to the extent the covered person requested or agreed to a delay, he or she shall be deemed to have exhausted the issuer’s internal grievance process for purposes of this section if he or she has not received a written decision from the issuer within thirty days after filing a grievance involving an adverse determination pursuant to the issuer’s internal grievance process.
5.3. At the same time a covered person files a request for an expedited internal review of a grievance involving an adverse determination pursuant to W. Va. Code of St. R. §114-96, the covered person may file a request for an expedited external review of the adverse determination pursuant to either section 7 or 8, as appropriate.
5.3.a. Upon receipt of an assignment to conduct an expedited external review pursuant to section 7, the IRO shall determine whether the covered person will be required to complete the expedited review process set forth in W. Va. Code of St. R. §114-96.7 before it conducts the expedited external review.
5.3.b. Upon a determination made pursuant to subdivision 5.3.a that the covered person must first complete the expedited grievance review process set forth in W. Va. Code St. R. §114-96.7, the IRO shall immediately notify the covered person of this determination and that it will not proceed with the expedited external review set forth in section 7 until completion of the expedited grievance review process and the covered person’s grievance at the completion of the expedited grievance review process remains unresolved.
W. Va. Code R. § 114-97-6 Standard External Review
6.1. Within four months of receipt of a notice of an adverse determination or final adverse determination, a covered person may file a request for an external review with the Commissioner and, within two business of receipt of such a request, the Commissioner shall forward a copy to the issuer.
6.2. Within five business days following receipt of a copy of a covered person’s external review request from the Commissioner, the issuer shall send the Commissioner and the covered person its determination whether the request is complete and if it is eligible for external review; such determinations shall be based on consideration of the following:
6.2.a. The individual is or was a covered person at the time the health care service was requested or, in the case of retrospective review, was a covered person in the health benefit plan at the time the health care service was provided;
6.2.b. The health care service that is the subject of the adverse determination or the final adverse determination is a covered service under the health benefit plan, but for a determination by the issuer that the health care service is not covered because it does not meet the issuer’s requirements for medical necessity, appropriateness, health care setting, level of care or effectiveness;
6.2.c. The covered person is deemed to have exhausted the issuer’s internal grievance process; and
6.2.d. The covered person has provided all the information and forms required to process an external review.
6.3. If the request: 6.3.a Is not complete, the issuer shall inform the covered person and the Commissioner in writing and include in the notice what information or materials are needed to make the request complete; or
6.3.b. Is not eligible for external review, the issuer shall inform the covered person and the Commissioner in writing of the reasons for its ineligibility; such notice shall also include a statement that such determination is made in accordance with the terms of the covered person’s plan, subject to the provisions of this rule, and that it may be appealed to the Commissioner.
6.4. Notwithstanding a issuer’s initial determination to the contrary, the Commissioner may determine that a request is eligible for external review and require that it be referred for external review; such decision is not reviewable.
6.5. Within two business days after the Commissioner receives a notice that the issuer has determined that the request is eligible for external review or after the Commissioner determines pursuant to subsection 6.4 that a request is eligible for external review, he or she shall assign an IRO and notify the covered person and issuer in writing of such assignment. The assignment shall be done on a random basis among those approved IROs qualified to conduct the particular external review, based on the nature of the health care service that is the subject of the adverse determination or final adverse determination and on other circumstances, including conflict of interest concerns.
6.5.a. The Commissioner shall include in the notice of IRO assignment a statement that the covered person may submit in writing to the assigned IRO, within five business days following receipt of such notice, additional information that the IRO shall consider when conducting the external review and that, in its sole discretion, the IRO may accept and consider additional information submitted after five business days. Within one business day of receipt of any information submitted pursuant to this subdivision, the IRO shall forward a copy to the issuer.
6.5.b. Within five business days after receipt of the notice provided pursuant to subsection 6.5, the issuer or its designee utilization review organization shall provide to the assigned IRO the documents and any information considered in making the adverse determination or final adverse determination; failure to provide the documents and information within the time specified may be grounds for the IRO to terminate the external review and make a decision to reverse the adverse determination or final adverse determination.
6.6. In addition to the documents and information provided pursuant to subsection 6.5, the assigned IRO, to the extent the information or documents are available and the IRO considers them appropriate, shall consider the following in reaching a decision:
6.6.a. The covered person’s medical records;
6.6.b. The attending health care professional’s recommendation;
6.6.c. Consulting reports from appropriate health care professionals and other documents submitted by the issuer, covered person, the covered person’s authorized representative, or the covered person’s treating provider;
6.6.d. The terms of coverage under the covered person’s health benefit plan to ensure that the independent review organization’s decision is not contrary to the terms of coverage under the covered person’s health benefit plan with the issuer;
6.6.e. The most appropriate practice guidelines, which shall include applicable evidence-based standards and may include any other practice guidelines developed by the federal government, national or professional medical societies, boards and associations;
6.6.f. Any applicable clinical review criteria developed and used by the issuer or its designee utilization review organization; and
6.6.g. The opinion of the IRO’s clinical review or reviewers after considering subdivisions 6.6.a through 6.6.f to the extent the clinical reviewers consider appropriate.
6.7. In reaching a decision, the assigned IRO is not bound by any decisions or conclusions reached during the issuer’s utilization review process or the issuer’s internal grievance process.
6.8. IRO decision. Within forty-five days after receipt of the request for an external review and no later than one business day after making the decision, the assigned IRO shall provide written notice of its decision to uphold or reverse the adverse determination or the final adverse determination to the covered person, the issuer and the Commissioner. The decision shall include a general description of the reason for the request for external review; the dates on which the IRO received the assignment from the Commissioner to conduct the external review and when external review was conducted; the principal reason or reasons for its decision, including what applicable, if any, evidence-based standards were a basis for its decision; the rationale for its decision; and references to the evidence or documentation, including the evidence-based standards, considered in reaching its decision.
6.9. Termination of external review.
6.9.a. Upon receipt of a notice of a decision pursuant to subsection 6.8 reversing the adverse determination or final adverse determination, the issuer shall immediately approve the coverage that was the subject of the adverse determination or final adverse determination.
6.9.b. The IRO shall terminate external review proceedings upon receipt of notice from the issuer that it has reversed its adverse determination or final adverse determination and will provide coverage or payment for the health care service that is the subject of the adverse determination or final adverse determination.
W. Va. Code R. § 114-97-7 Expedited External Review
7.1. Except for retrospective adverse or final adverse determinations, a covered person may make a written request for an expedited external review with the Commissioner at the time the covered person receives an adverse determination that meets the conditions described in the notice required by subdivision 3.1.e or a notice of a final adverse determination that meets any of the conditions described in the notice required by subdivision 3.1.f.
7.2. The Commissioner shall immediately send a copy of a request for an expedited external review to the issuer, who shall immediately make an initial determination whether the request meets the reviewability requirements set forth in subsection 6.2 and immediately notify the Commissioner and the covered person of its initial determination.
7.2.a. If the issuer’s initial determination is that an external review request is ineligible for review, the notice required under subsection 7.2 shall include a statement informing the covered person that the initial determination may be appealed to the Commissioner.
7.2.b. Notwithstanding an issuer’s initial determination to the contrary, the Commissioner may determine that a request is eligible for external review and require that it be referred for external review; such decision is not reviewable and must be made in accordance with the terms of the covered person’s plan, subject to the provisions of this rule.
7.3. Within one business day after the Commissioner receives a notice that a request is eligible for external review (following the preliminary review conducted by the IRO pursuant to subsection 7.2) or after the Commissioner determines pursuant to subdivision 7.2.b that a request is eligible for external review, he or she shall immediately assign an IRO in accordance with subsection 6.5 and notify the covered person and issuer of such assignment.
7.4. Upon receipt of notice of the IRO assignment, the issuer or its designee utilization review organization shall transmit to the assigned IRO all documents and information considered in making the adverse determination or final adverse determination; such transmission shall be made electronically, by telephone or facsimile, or by any other available expeditious method.
7.5. In addition to the documents and information provided or transmitted pursuant to subsection 7.4, the assigned IRO, to the extent the information or documents are available and the IRO considers them appropriate, shall consider the information listed in subsection 6.6.
7.6. As expeditiously as the covered person’s medical condition or circumstances require, but in no event more than seventy-two hours after receipt of the request for an expedited external review that the assigned IRO determined has met the reviewability requirements set forth in subsection 6.2 or of a decision by the Commissioner pursuant to subdivision 7.2.b that the request is eligible for external review, the assigned IRO shall notify the covered person, the issuer, and the Commissioner of its decision to either uphold or reverse the adverse determination or final adverse determination electronically, by telephone or facsimile, or by any other available expeditious method.
7.7. Within forty-eight hours after providing notice of the IRO’s decision provided pursuant to subsection 7.6, the IRO shall provide written confirmation of the decision to the covered person, the issuer, and the Commissioner and include in such notice the information set forth in subsection 6.8.
7.8. Upon receipt of the notice a decision pursuant to subsection 7.6 to reverse the adverse determination or final adverse determination, the issuer immediately shall approve the coverage that was the subject of the adverse determination or final adverse determination.
W. Va. Code R. § 114-97-8 External Review of Experimental or Investigational Treatment Adverse Determinations
8.1. Within four months after the date of receipt of a notice of an adverse determination or final adverse determination that involves a denial of coverage based on a determination that the health care service or treatment recommended or requested is experimental or investigational, a covered person may file a request for external review with the Commissioner.
8.2. A covered person may make an oral request for an expedited external review of the adverse determination or final adverse determination pursuant to subsection 8.1 if the covered person’s treating physician certifies, in writing, that the recommended or requested health care service or treatment that is the subject of the request would be significantly less effective if not promptly initiated. Such a request shall be handled in accordance with the procedure set forth in subsections 7.2 through and including 7.8.
8.3. Except for a request for expedited external review made pursuant to subsection 8.2, the Commissioner shall notify the issuer of any request made pursuant subsection 8.1 within one business day after the date of receipt of such request.
8.4. Within six business days following receipt of a copy of a covered person’s external review request from the Commissioner pursuant to subsection 8.3, the issuer shall send the Commissioner and the covered person its determination whether the request is complete and if it is eligible for external review; such determination shall be based on consideration on the following:
8.4.a. The individual is or was a covered person in the health benefit plan at the time the health care service or treatment was recommended or requested or, in the case of a retrospective review, was a covered person in the health benefit plan at the time the health care service or treatment was provided;
8.4.b. The recommended or requested health care service or treatment that is the subject of the adverse determination or final adverse determination:
8.4.b.1. Is a covered benefit under the covered person’s health benefit plan except for the issuer’s determination that the service or treatment is experimental or investigational for a particular medical condition; and
8.4.b.2. Is not explicitly listed as an excluded benefit under the covered person’s health benefit plan with the issuer;
8.4.c. The covered person’s treating physician has certified that one of the following situations is applicable:
8.4.c.1. Standard health care services or treatments have not been effective in improving the condition of the covered person;
8.4.c.2. Standard health care services or treatments are not medically appropriate for the covered person; or
8.4.c.3. There is no available standard health care service or treatment covered by the issuer that is more beneficial than the recommended or requested health care service or treatment described in subdivision 8.4.d;
8.4.d. The covered person’s treating physician:
8.4.d.1. Has recommended a health care service or treatment that the physician certifies, in writing, is likely to be more beneficial to the covered person, in the physician’s opinion, than any available standard health care services or treatments; or
8.4.d.2. Who is licensed, board certified or board eligible physician qualified to practice in the area of medicine appropriate to treat the covered person’s condition, has certified in writing that scientifically valid studies using accepted protocols demonstrate that the health care service or treatment requested by the covered person that is the subject of the adverse determination or final adverse determination is likely to be more beneficial to the covered person than any available standard health care services or treatments;
8.4.e. The covered person is deemed to have exhausted the issuer’s internal grievance process as set forth in W. Va. Code of St. R. §114-95; and
8.4.f. The covered person has provided all the information and forms required by the Commissioner that are necessary to process an external review.
8.5. After the issuer has completed its review pursuant to subsection 8.4, the request for external review shall thereafter proceed according to the provisions of subsections 6.3 through and including 6.9.
8.5.a. Within one business day after the receipt of the notice of assignment to conduct the external review pursuant to subsection 8.5, the assigned IRO shall:
8.5.a.1. Select one or more clinical reviewers, as it determines is appropriate, pursuant to subdivision 8.5.b to conduct the external review; and
8.5.a.2. Based on the opinion of the clinical review, or opinions if more than one clinical reviewer has been selected to conduct the external review, make decision to uphold or reverse the adverse determination or final adverse determination.
8.5.b. In selecting clinical reviewers pursuant to subdivision 8.5.a, the assigned IRO shall select physicians or other health care professionals who meet the minimum qualifications described in section 11 and, through clinical experience in the past three years, are experts in the treatment of the covered person’s condition and knowledgeable about the recommended or requested health care service or treatment. Neither the covered person, the covered person’s authorized representative, if applicable, nor the issuer shall choose or control the choice of the physicians or other health care professionals to be selected to conduct the external review.
8.5.c. In accordance with subsection 8.9, each clinical reviewer shall provide a written opinion to the assigned IRO on whether the recommended or requested health care service or treatment should be covered.
8.5.d. In reaching an opinion, clinical reviewers are not bound by any decisions or conclusions reached during the issuer’s utilization review process as set forth in W. Va. Code of St. R. §114-95 or the issuer’s internal grievance process as set forth W. Va. Code of St. R. §114-96.
8.6. Within five business days after the date of receipt of the notice provided pursuant to subdivision 8.5.a., the issuer or its designee utilization review organization shall provide to the assigned IRO the documents and any information considered in making the adverse determination or the final adverse determination.
8.6.a. Except as provided in subdivision 8.6.b, failure by the issuer or its designee utilization review organization to provide the documents and information within the time specified in subsection 8.6 may not delay the conduct of the external review.
8.6.b. If the issuer or its designee utilization review organization has failed to provide the documents and information within the time specified in subsection 8.6, the assigned IRO may terminate the external review and make a decision to reverse the adverse determination or final adverse determination. Immediately upon making the decision, the IRO shall notify the covered person, the issuer and the Commissioner.
8.7. Each clinical reviewer selected pursuant to subsection 8.5 shall review all of the information and documents received pursuant to subsection 8.6 and any other information submitted in writing by the covered person. Upon receipt of any information submitted by the covered person pursuant to subdivision 6.5.a and subsection 8.5, within one business day after the receipt of the information, the assigned IRO shall forward the information to the issuer.
8.8. Upon receipt of the information required to be forwarded pursuant to subsection 8.6, the issuer may reconsider its adverse determination or final adverse determination that is the subject of the external review. Reconsideration by the issuer of its adverse determination or final adverse determination of this subsection may not delay or terminate the external review.
8.8.a. The external review may be terminated only if the issuer decides, upon completion of its reconsideration, to reverse its adverse determination or final adverse determination and provide coverage or payment for the recommended or requested health care service or treatment that is the subject of the adverse determination or final adverse determination.
8.8.b. Immediately upon making the decision to reverse its adverse determination or final adverse determination, as provided in subdivision 8.8.a, the issuer shall notify the covered person, the assigned IRO, and the Commissioner in writing of its decision. The assigned IRO shall terminate the external review upon receipt of the notice from the issuer.
8.9. Except as provided in subdivision 8.9.b, within twenty days after being selected in accordance with subsection 8.5 to conduct the external review, each clinical reviewer shall provide an opinion to the assigned IRO pursuant to subsection 8.10 on whether the recommended or requested health care service or treatment should be covered.
8.9.a. Except for an opinion provided pursuant to subdivision 8.9.b, each clinical reviewer’s opinion shall be in writing and include the following information:
8.9.a.1. A description of the covered person’s medical condition;
8.9.a.2. A description of the indicators relevant to determining whether there is sufficient evidence to demonstrate that the recommended or requested health care service or treatment is more likely than not to be beneficial to the covered person than any available standard health care service or treatments and the adverse risks of the recommended or requested health care services or treatments would not be substantially increased over those of available standard health care services or treatments;
8.9.a.3. A description and analysis of any medical or scientific evidence, as that term is defined in subsection 2.24.
8.9.a.4. A description and analysis of any evidence-based standard, as that term is defined in subsection 2.14.
8.9.a.5. Information on whether the reviewer’s rational for the opinion is based on paragraphs 8.10.e.1 or 8.10.e.2.
8.9.b. For an expedited external review, each clinical reviewer shall provide an opinion orally or in writing to the assigned IRO as expeditiously as the covered person’s medical condition or circumstances requires, but in no event more than five calendar days after being selected in accordance with subsection 8.5. If the opinion provided was not in writing, within forty-eight hours following the date the opinion was provided, the clinical reviewer shall provide written confirmation of the opinion to the assigned IRO and include the information required under subdivision 8.9.a.
8.10. In addition to the documents and information provided pursuant to subsection 8.2 or subsection 8.6, each clinical reviewer selected pursuant to subsection 8.5, to the extent the information or documents are available and the reviewer considers appropriate, shall consider the following in reaching an opinion pursuant to subsection 8.9:
8.10.a. The covered person’s pertinent medical records;
8.10.b. The attending physician or health care professional’s recommendation;
8.10.c. Consulting reports from appropriate health care professionals and other documents submitted by the issuer, covered person, the covered person’s authorized representative, or the covered person’s treating physician or health care professional;
8.10.d. The terms of coverage under the covered person’s health benefit plan with the issuer to ensure that, but for the issuer’s determination that the recommended or requested health care service or treatment that is subject of the opinion is experimental or investigational, the reviewer’s opinion is not contrary to the terms of coverage under the covered person’s health benefit plan with the issuer; and
8.10.e. Whether:
8.10.e.1. The recommended or requested health care service or treatment has been approved by the federal Food and Drug Administration, if applicable, for the condition; or
8.10.e.2. Medical or scientific evidence or evidence-based standards demonstrate that the expected benefits of the recommended or requested health care service or treatment is more likely than not to be beneficial to the covered person that any available standard health care service or treatment and the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of available standard health care services or treatments.
8.11. Decisions.
8.11.a. Except as provided in 8.11.b, within twenty days after the date it receives the opinion of each clinical reviewer pursuant to subsection 8.9, the assigned IRO, in accordance with subdivision 8.11.d, shall make a decision and provide written notice of the decision to:
8.11.a.1. The covered person;
8.11.a.2. If applicable, the covered person’s authorized representative;
8.11.a.3. The issuer; and
8.11.a.4. The Commissioner.
8.11.b. For an expedited external review, within forty-eight hours after the date it receives the opinion of each clinical reviewer pursuant to subsection 8.9, the assigned IRO, in accordance with subdivision 8.11.d, shall make a decision and provide notice of the decision orally or in writing to the persons listed in subdivision 8.11.a.
8.11.c. If the notice provided under subdivision 8.11.b was not in writing, within forty-eight hours after the date of providing that notice, the assigned IRO shall provide written confirmation of the decision to the persons listed in subdivision 8.11.a and include the information set forth in subdivision 8.11.e.
8.11.d. If a majority of the clinical reviewers recommend that the recommended or requested health care service or treatment should be covered, the IRO shall make a decision to reverse the issuer’s adverse determination or final adverse determination. If a majority of the clinical reviewers recommend that the recommended or requested health care service should not be covered , the IRO shall make a decision to uphold the issuer’s adverse determination or final adverse determination.
8.11.d.1. If the clinical reviewers are evenly split as to whether the recommended or requested healthcare service or treatment should be covered, the IRO shall obtain the opinion of an additional clinical reviewer in order for the IRO to make a decision based on the opinions of a majority of the clinical reviewers pursuant to this subdivision.
8.11.d.2. The additional clinical reviewer selected under paragraph 8.11.d.1 shall use the same information to reach an opinion as the clinical reviewers who have already submitted their opinions pursuant to subsection 8.9.
8.11.d.3. The selection of the additional clinical reviewer under this paragraph shall not extend the time within which the assigned IRO is required to make a decision based on the opinions of the clinical reviewers selected under subsection 8.5.
8.11.e. The IRO shall include in the notice provided pursuant to subdivision 8.11.a:
8.11.e.1. A general description of the reason for the request for external review;
8.11.e.2. The written opinion of each clinical reviewer, including the recommendation of each clinical reviewer as to whether the recommended or requested health care service or treatment should be covered and the rationale for the reviewer’s recommendation;
8.11.e.3. The date the IRO was assigned by the Commissioner to conduct the external review;
8.11.e.4. The date the external review was conducted;
8.11.e.5. The date of its decision;
8.11.e.6. The principal reason or reasons for its decision; and
8.11.e.7. The rationale for its decision.
8.11.f. Upon receipt of a notice of a decision pursuant to subdivision 8.11.a reversing the adverse determination or final adverse determination, the issuer immediately shall approve coverage of the recommended or requested health care service or treatment that was the subject of the adverse determination or final adverse determination.
8.12. The assignment by the Commissioner of an approved IRO to conduct an external review in accordance with this section shall be done on a random basis among those approved IROs qualified to conduct the particular external review based on the nature of the health care service that is the subject of the adverse determination or final adverse determination and other circumstances, including conflict of interest concerns pursuant to subsection 11.4.
W. Va. Code R. § 114-97-9 Binding Nature of External Review Decision; Judicial Review of IRO Decisions
9.1. An issuer or covered person adversely affected by a final decision rendered by an IRO in accordance with this rule is entitled to judicial review thereof, but nothing in this rule shall be deemed to prevent other means of redress or relief provided by law. The Commissioner may enforce a final decision of an IRO in the same manner and to the same extent as an order issued by him or her.
9.2. Judicial Proceedings.
9.2.a. Proceedings for review of a final decision of an IRO shall be instituted by filing a petition in the circuit court of the county in West Virginia:
9.2.a.1. In which covered person resides;
9.2.a.2. If the covered person is a non-resident of West Virginia, in which he or she works;
9.2.a.3. If the covered person neither lives nor works in West Virginia, in which the employer is primarily located; or
9.2.a.4. If none of the preceding paragraphs applies, Kanawha County.
9.2.b. The determination of venue shall be based on the covered person’s or employer’s circumstances at the time of the filing. 9.2.c A petition filed pursuant to this section must be filed within sixty days after the date upon which the petitioner received notice of the final decision of the IRO, and the petitioner shall send a copy of the petition by registered or certified mail to the IRO and to all other parties of record to the IRO proceedings.
9.2.d. No appeal bond shall be required to effect any such appeal.
9.2.e. The filing of the petition by an issuer shall not stay the Commissioner’s enforcement of the IRO decision, but the issuer may, at any time after the filing of the petition, apply to the circuit court for a stay of such IRO decision and the court may grant a stay upon such terms as it deems proper.
9.2.f. Within fifteen days after receipt of a copy of the petition by the IRO, the IRO shall transmit to such circuit court the original or a certified copy of the entire record of the proceeding under review, including a transcript of all testimony and all papers, motions, documents, evidence and records as were before the IRO: Provided, That the record may be shortened by stipulation of all parties. 9.2.f.1 The expense of preparing and filing such record shall be deemed to be a cost of the underlying proceeding before the IRO. 9.2.f.2 Upon demand by any party, the IRO shall furnish, at the cost of the requesting party, a copy of such record.
9.3. The review conducted by the court shall be upon the record made before the IRO, except that in cases of alleged irregularities in procedure before the IRO, not shown in the record, testimony thereon may be taken before the court.
9.4. The court may affirm the decision of the IRO or remand the case to the IRO for further proceedings; it shall reverse, vacate or modify the order or decision of the IRO if the substantial rights of the petitioner has been prejudiced because the findings, inferences, conclusions, decision or order are:
9.4.a. In violation of constitutional or statutory provisions;
9.4.b. In excess of the statutory authority of the IRO;
9.4.c. Made upon unlawful procedures;
9.4.d. Affected by other error of law;
9.4.e. Clearly wrong in view of the reliable, probative and substantial evidence on the whole record; or
9.4.f. Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.
9.5. A covered person may not file a subsequent request for external review involving the same adverse determination or final adverse determination for which the covered person has already received an external review decision pursuant to this rule.
W. Va. Code R. § 114-97-10 Approval of IROs
10.1. The Commissioner shall approve IROs eligible to be assigned to conduct external reviews under this rule.
10.2. In order to be eligible for approval by the Commissioner under this section to conduct external reviews under this rule, an IRO:
10.2.a. Except as otherwise provided in this section, shall be accredited by a nationally recognized private accrediting entity that the Commissioner has determined has IRO accreditation standards that are equivalent to or exceed the minimum qualifications for IROs established under section 11; and
10.2.b. Shall submit an application for approval in accordance with subsection 10.4.
10.3. The Commissioner shall develop an application form for initially approving and for reapproving IROs to conduct external reviews.
10.4. Any IRO wishing to be approved to conduct external reviews under this rule shall submit the application and include with the form all documentation and information necessary for the Commissioner to determine if the IRO satisfies the minimum qualifications established under section 11. 10.4.a Subject to subdivision 10.4.b, an IRO is eligible for approval under this section only if it is accredited by a nationally recognized private accrediting entity that Commissioner has determined has IRO accreditation standards that are equivalent to or exceed the minimum qualifications for IROs under
section 11.
10.4.b. The Commissioner may approve IROs that are not accredited by a nationally recognized private accrediting entity if there are no acceptable nationally recognized private accrediting entities providing IRO accreditation.
10.5. An approval is effective for two years, unless the Commissioner determines before its expiration that the IRO is not satisfying the minimum qualifications established under section 11.
Whenever the Commissioner determines that an IRO has lost its accreditation or no longer satisfies the minimum requirements established under section 11, the Commissioner shall terminate the approval of the IRO and remove it from the list maintained pursuant to subsection 10.6.
10.6. The Commissioner shall maintain and periodically update a list of approved IROs.
W. Va. Code R. § 114-97-11 Minimum Qualifications for IROs
11.1. To be approved under section 10 to conduct external reviews, an IRO shall have and maintain written policies and procedures that govern all aspects of both the standard external review process and the expedited external review process set forth in this rule that include, at a minimum:
11.1.a. A quality assurance mechanism in place that:
11.1.a.1. Ensures that external reviews are conducted within the specified time frames and required notices are provided in a timely manner;
11.1.a.2. Ensures the selection of qualified and impartial clinical reviewers to conduct external reviews on behalf of the IRO and suitable matching of reviewers to specific cases that the IRO employs or contracts with an adequate number of clinical reviewers to meet this objective;
11.1.a.3. Ensures the confidentiality of medical and treatment records and clinical review criteria; and
11.1.a.4. Ensures that any person employed by or under contract with the IRO adheres to the requirements of this rule;
11.1.b. A toll-free telephone service to receive information on a 24-hour-day, 7-day-a-week basis related to external reviews that is capable of accepting, recording or providing appropriate instruction to incoming telephone callers during other than normal business hours; and
11.1.c. Agree to maintain and provide to the Commissioner the information set out in section 13.
11.2. All clinical reviewers assigned by an IRO to conduct external reviews shall be physicians or other appropriate health care providers who meet the following minimum qualifications:
11.2.a. Be an expert in the treatment of the covered person’s medical condition that is the subject of the external review;
11.2.b. Be knowledgeable about the recommended health care service or treatment through recent or current actual clinical experience treating patients with the same or similar medical condition of the covered person;
11.2.c. Hold a non-restricted license in a State of the United States and, for physicians, a current certification by a recognized American medical specialty board in the area or areas appropriate to the subject of the external review; and
11.2.d. Have no history of disciplinary actions or sanctions, including loss of staff privileges or participation restrictions, that have been taken or are pending by any hospital, governmental agency or unit, or regulatory body that raise a substantial question as to the clinical reviewer’s physical, mental or professional competence or moral character.
11.3. In addition to the requirements set forth in subsection 11.1, an IRO may not own or control, be a subsidiary of or in anyway be owned or controlled by, or exercise control with a health benefit plan, a national, state or local trade association of health benefit plans, or a national State or local trade association of health care providers.
11.4. Conflicts.
11.4.a. In addition to the requirements set forth in subsections 11.1, 11.2 and 11.3, to be approved pursuant to section 10 to conduct an external review of a specified case, neither the IRO selected to conduct the external review nor any clinical reviewer assigned by the independent organization to conduct the external review may have a material professional, familial or financial conflict with any of the following:
11.4.a.1. The issuer that is the subject of the external review;
11.4.a.2. The covered person whose treatment is the subject of the external review, any known close relative of the covered person or the covered person’s representative;
11.4.a.3. Any officer, director or management employee of the issuer that is the subject of the external review;
11.4.a.4. Any administrator, fiduciary, employee or sponsor of an employee welfare benefit plan as defined in 29 U.S.C. 1002(1), if any, under which the covered person's request for external review arises;
11.4.a.5. A trade association of group health plans or issuers, or a trade association of health care providers;
11.4.a.6. The health care provider, the health care provider’s medical group or independent practice association recommending the health care service or treatment that is the subject of the external review;
11.4.a.7. The facility at which the recommended health care service or treatment would be provided; or
11.4.a.8. The developer or manufacturer of the principal drug, device, procedure or other therapy being recommended for the covered person whose treatment is the subject of the external review.
11.4.b. In determining whether an IRO or a clinical reviewer of the IRO has a material professional, familial or financial conflict of interest for purposes of subdivision 11.4.a, the Commissioner may disregard the mere appearance of a conflict of interest.
11.5. An IRO that is accredited by a nationally recognized private accrediting entity that has independent review accreditation standards that the Commissioner has determined are equivalent to or exceed the minimum qualifications of this section shall be presumed in compliance with this section to be eligible for approval under section 10.
11.5.a. The Commissioner shall initially review and periodically review the IRO accreditation standards of a nationally recognized private accrediting entity to determine whether the entity's standards are, and continue to be, equivalent to or exceed the minimum qualifications established under this section.
The Commissioner may accept a review conducted by the NAIC for the purpose of the determination under this paragraph.
11.5.b. Upon request, a nationally recognized private accrediting entity shall make its current IRO accreditation standards available to the Commissioner or the NAIC in order for the Commissioner to determine if the entity's standards are equivalent to or exceed the minimum qualifications established under this section. The Commissioner may exclude any private accrediting entity that is not reviewed by the NAIC.
11.6. An IRO shall be unbiased. An IRO shall establish and maintain written procedures to ensure that it is unbiased in addition to any other procedures required under this section.
W. Va. Code R. § 114-97-12 External Review Reporting Requirements
12.1. An IRO assigned pursuant to section 6, 7 or 8 to conduct an external review shall maintain written records in the aggregate by state and by issuer on all requests for external review for which it conducted an external review during a calendar year and, upon request, submit a report to the Commissioner, as required under subdivision 12.1.a.
12.1.a. Each IRO required to maintain written records on all requests for external review pursuant to this subsection for which it was assigned to conduct an external review shall submit to the Commissioner, upon request, a report in the format specified by the Commissioner.
12.1.b. The report shall include in the aggregate by state, and for each issuer:
12.1.b.1. The total number of requests for external review;
12.1.b.2. The number of requests for external review resolved and, of those resolved, the number resolved upholding the adverse determination or final adverse determination and the number resolved reversing the adverse determination or final adverse determination;
12.1.b.3. The average length of time for resolution;
12.1.b.4. A summary of the types of coverages or cases for which an external review was sought, as provided in the format required by the Commissioner;
12.1.b.5. The number of external reviews pursuant to subsection 8.8 that were terminated as the result of a reconsideration by the issuer of its adverse determination or final adverse determination after the receipt of additional information from the covered person or the covered person’s authorized representative; and
12.1.b.6. Any other information the Commissioner may request or require.
12.1.c. The IRO shall retain the written records required pursuant to this subsection for at least three years.
12.2. Each issuer shall maintain written records in the aggregate, by state and for each type of health benefit plan offered by the issuer on all requests for external review that the issuer receives notice of from the Commissioner pursuant to this rule.
12.2.a. Each issuer required to maintain written records on all requests for external review pursuant to this subsection shall submit to the Commissioner, upon request, a report in the format specified by the Commissioner.
12.2.b. The report shall include in the aggregate, by state, and by type of health benefit plan:
12.2.b.1. The total number of requests for external review;
12.2.b.2. From the total number of requests for external review reported under paragraph 12.2.b.1, the number of requests determined eligible for a full external review; and
12.2.b.3. Any other information the Commissioner may request or write.
12.2.c. The issuer shall retain the written records required pursuant to this subsection for the lesser of the current calendar year plus five calendar years or five years from the closing date of the period of review for the most recent examination by the Commissioner.
W. Va. Code R. § 114-97-13 Funding of External Review
The issuer against which a request for a standard external review or an expedited external review is filed shall pay the cost of the IRO for conducting the external review.
W. Va. Code R. § 114-97-14 Disclosure Requirements
14.1. Each issuer shall include a description of the external review procedures in or attached to the policy, certificate, membership booklet, outline of coverage or other evidence of coverage it provides to covered persons.
14.2. The description required under subsection 14.1 shall be in a format prescribed by the Commissioner that informs the covered person of his or her right to file a request for an external review of an adverse determination or final adverse determination with the Commissioner; explains that external review is available when the adverse determination or final adverse determination involves an issue of medical necessity, appropriateness, health care setting, level of care or effectiveness; and that includes the telephone number and address of the Commissioner.
14.3. In addition to subsection 14.2, the statement shall inform the covered person that, when filing a request for an external review, the covered person will be required to authorize the release of any medical records of the covered person that may be required to be reviewed for the purpose of reaching a decision on the external review.
W. Va. Code R. § 114-97-15 Penalties
Any issuer failing to comply with the requirements of this rule is subject to the penalties prescribed in W. Va. Code §33-3-11.
Series 98 Adoption of Valuation Manual
W. Va. Code R. § 114-98-1 General
W. Va. Code R. § 114-98-2 Definitions
W. Va. Code R. § 114-98-3 Determination of Operative Date of Valuation Manual
W. Va. Code R. § 114-98-4 Adoption of Valuation Manual TITLE 114 LEGISLATIVE RULE INSURANCE COMMISSIONER SERIES 98 ADOPTION OF VALUATION MANUAL
W. Va. Code R. § 114-98-1 General
1.1. Scope. -- The purpose of this rule is to formally adopt the most recent changes to the Valuation Manual adopted by the National Association of Insurance Commissioners (“NAIC”) as specified in W.Va. Code §33-7-9(n).
1.2. Authority. -- W. Va. Code §§33-7-9(n) and 33-2-10.
1.3. Filing date. – June 6, 2022.
1.4. Effective date. – July 1, 2022.
1.5. Sunset date. – This rule shall terminate and have no further force or effect on August 1, 2027.
W. Va. Code R. § 114-98-2 Definitions
2.1. For purposes of this section, “Valuation Manual” shall have the meaning ascribed in W. Va. Code §33-7-9(a)(11).
W. Va. Code R. § 114-98-3 Determination of Operative Date of Valuation Manual
3.1. The Insurance Commissioner has made the following determinations:
3.1.a. The Valuation Manual was adopted by the NAIC on December 2, 2012 by an affirmative vote of 43 members, representing over three-fourths of the members voting.
3.1.b. The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and conditions, has been enacted by states representing over 77% of the direct premiums written as reported in the following annual statements submitted in 2008: Life, accident and health annual statements; health annual statements; or fraternal annual statements.
3.1.c. The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and conditions, has been enacted by 44 states.
3.2. On June 10, 2016, the NAIC, after conducting an extensive analysis of state laws, voted unanimously to recognize that all three triggers defining the operative date of the Valuation Manual have been satisfied.
3.3. In accordance with W. Va. Code §33-7-9(n)(2), the operative date of the Valuation Manual for this state shall be January 1, 2017.
W. Va. Code R. § 114-98-4 Adoption of Valuation Manual
4.1. In accordance with W. Va. Code §33-7-9, the Valuation Manual (and any amendments to such manual as may be subsequently approved by the NAIC) is hereby adopted by this state to become effective January 1, 2017.
Series 99 Pharmacy Auditing Entities and Pharmacy Benefit Managers
W. Va. Code R. § 114-99-1 General
1.1. Scope. -- The purpose of this rule is to provide for the regulation of pharmacy auditing entities and pharmacy benefit managers and to provide licensing, reporting and activity standards for pharmacy benefit managers. The rule also provides registration requirements for pharmacy auditing entities.
1.2. Authority. -- W. Va. Code §§33-51-8, 33-51-9, 33-51-10, 33-51-12 and 33-2-10.
1.3. Filing Date. – March 29, 2023
1.4. Effective Date. – April 1, 2023.
1.5. Sunset provision. -- This rule shall terminate and have no further force or effect upon August 1, 2028.
1.6. Applicability. -- This rule applies to pharmacy benefit managers (PBMs) and persons or companies that perform pharmacy audits, as provided in Article 51, Chapter 33 of the West Virginia Code. Certain regulatory sections of this rule may not apply to Medicare Part D plans or Medicare Advantage plans that offer prescription drug coverage because 42 U.S.C. §1395w–26(b)(3) and 42 U.S.C. §1395w–112(g) provide that standards established under 42 U.S.C. §1395w-101 et seq. and 42 U.S.C. §1395w-21 et seq. shall supersede any state law or regulation, other than state licensing laws or state laws relating to plan solvency. PBMs that perform pharmacy benefits management for Medicare Part D plans and Medicare Advantage plans in this state must be appropriately licensed. Additionally, certain sections of this rule may not be applicable to health benefit plans that are subject to the Employee Retirement Income Security Act of 1974 (“ERISA”) if the subject provision of the rule is preempted by ERISA because it regulates a key facet or essential part of plan administration or design. However, certain sections of this rule that only affect costs, pricing or alter incentives for ERISA plans are not preempted by ERISA and may be applicable to PBMs providing pharmacy benefits management for ERISA plans. This section does not limit the applicability of other sections to PBMs providing pharmacy benefits management for ERISA plans should federal statutory or common law afford the state authority to regulate. PBMs that perform pharmacy benefits management for ERISA plans in this state must be appropriately licensed. This rule applies to PBMs that manage prescription drug coverage for workers’ compensation insurers and employers who are self-insured for workers’ compensation in this state because workers’ compensation insurers and self-insured employers are “healthcare payors.”
W. Va. Code R. § 114-99-2 Definitions
2.1. “340B entity” means an entity participating in the federal 340B drug discount program, as described in 42 U.S.C. §256b, including its pharmacy or pharmacies, or any pharmacy or pharmacies, contracted with the participating entity to dispense drugs purchased through such program.
2.2. “Affiliate” means a pharmacy, pharmacist or pharmacy technician which, either directly or indirectly through one or more intermediaries:
2.2.1. Has an investment or ownership interest in a PBM;
2.2.2. Shares common ownership with a PBM; or
2.2.3. Has an investor or ownership interest holder which is a PBM.
2.3. “Auditing entity” means a person or company that performs a pharmacy audit, including a PBM, managed care organization, or third-party administrator.
2.4. “Covered individual” means a member, participant, enrollee, or beneficiary of a health benefit plan who is provided health care service coverage by a health benefit plan, including a dependent or other person provided health coverage through the policy or contract of a covered individual.
2.5. “Defined cost sharing” means a deductible payment or coinsurance amount imposed on an enrollee for a covered prescription drug under the enrollee’s health benefit plan but does not include copayments.
2.6. “Health benefit plan” means a policy, contract, certificate or agreement entered into, offered, or issued by a health care payor to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services.
2.7. “Health care payor” or “payor” means a health insurance company; a health maintenance organization; a hospital, medical, or dental corporation; a health care corporation; an entity that provides, administers, or manages a self-funded health benefit plan, including a governmental plan; or any other payor that provides prescription drug coverages, including a workers’ compensation insurer. Health care payor does not include an insurer that provides coverage under a policy of casualty or property insurance.
2.8. “Health insurance policy” means a policy, subscriber contract, certificate, or plan that provides prescription drug coverage. The term includes both comprehensive and limited benefit health insurance policies.
2.9. “Insurance Commissioner” or “Commissioner” means the Insurance Commissioner of West Virginia.
2.10. “National average drug acquisition cost” or “NADAC price” means the monthly survey of retail pharmacies conducted by the federal Centers for Medicare and Medicaid Services (“CMS”) to determine average acquisition cost for Medicaid covered outpatient drugs.
2.11. “Network” means a pharmacy or group of pharmacies that agree to provide prescription services to covered individuals on behalf of a health benefit plan in exchange for payment for its services by a PBM or pharmacy services administration organization. The term includes a pharmacy that generally dispenses outpatient prescriptions to covered individuals or dispenses particular types of prescriptions, provides pharmacy services to particular types of covered individuals or dispenses prescriptions in particular health care settings, including networks of specialty, institutional or long-term care facilities.
2.12. “Nonproprietary drug” means a drug containing any quantity of any controlled substance or any drug which is required by any applicable federal or state law to be dispensed only by prescription.
2.13. “Pass-through pricing” means the model of prescription drug pricing wherein a PBM charges the health benefit plan the same price for a prescription drug that it pays the pharmacy for the same prescription drug.
2.14. “Pharmacist” means an individual licensed by the West Virginia Board of Pharmacy to engage in the practice of pharmacy.
2.15. “Pharmacy” means any place within this state where drugs are dispensed and pharmacist care is provided.
2.16. “Pharmacy audit” means an audit, conducted by or on behalf of an auditing entity of any records of a pharmacy for prescription or nonproprietary drugs dispensed by a pharmacy to a covered individual.
2.17. “Pharmacy benefits management” means the performance of any of the following:
2.17.1. The procurement of prescription drugs at a negotiated contracted rate for dispensation within the State of West Virginia to covered individuals;
2.17.2. The administration or management of prescription drug benefits provided by health benefit plan for the benefit of covered individuals; or
2.17.3. The administration of pharmacy benefits, including:
2.17.3.a. Operating a mail-service pharmacy;
2.17.3.b. Claims processing;
2.17.3.c. Managing a retail pharmacy network;
2.17.3.d. Paying claims to a pharmacy for prescription drugs dispensed to covered individuals via retail or mail-order pharmacy;
2.17.3.e. Developing and managing a clinical formulary including utilization management and quality assurance programs;
2.17.3.f. Rebate contracting administration; and
2.17.3.g. Managing a patient compliance, therapeutic intervention, and generic substitution program.
2.18. “Pharmacy benefits manager” or “PBM” means a person, business, or other entity that performs pharmacy benefits management for health benefit plans.
2.19. “Pharmacy record” means any record stored electronically or as a hard copy by a pharmacy that relates to the provision of prescription or nonproprietary drugs or pharmacy services or other component of pharmacist care that is included in the practice of pharmacy.
2.20. “Pharmacy services administration organization” means any entity that contracts with a pharmacy to assist with payor interactions and that may provide a variety of other administrative services, including contracting with PBMs on behalf of pharmacies and managing pharmacies’ claims payments from payors.
2.21. “Point-of-sale fee” means all or a portion of a drug reimbursement to a pharmacy or other dispenser withheld at the time of adjudication of a claim for any reason.
2.22. “Rebate” means any and all payments that accrue to a PBM or its health benefit plan client, directly or indirectly, from a pharmaceutical manufacturer, including, but not limited to, discounts, administration fees, credits, incentives, or penalties associated directly or indirectly in any way with claims administered on behalf of a health benefit plan client. The term “rebate” does not include any discount or payment that may be provided to or made to any 340B entity through such program.
2.23. “Retroactive fee” means all or a portion of a drug reimbursement to a pharmacy or other dispenser recouped or reduced following adjudication of a claim for any reason.
2.24. “Specialty drug” means a drug used to treat rare or chronic and complex medical conditions and requiring special handling or administration, provider care coordination, or patient education that cannot be provided by a non-specialty pharmacy or pharmacist.
2.25. “Spread pricing” means the model of prescription drug pricing in which the PBM charges a health benefit plan a contracted price for prescription drugs although the contracted price may differ with the amount the PBM pays the pharmacist or pharmacy.
W. Va. Code R. § 114-99-3 Registration of Auditing Entities
3.1. Prior to conducting business in this state, an auditing entity shall make an application on a form and in a manner prescribed by the Commissioner.
3.2. An initial registration application shall include the following:
3.2.1. The identity, address and telephone number of the applicant;
3.2.2. The name, business address and telephone number of the contact person for the applicant;
3.2.3. When applicable, the federal employer identification number for the applicant; and
3.2.4. A nonrefundable filing fee sufficient to fund the Commissioner’s regulatory duties in relation to Article 51, Chapter 33 of the West Virginia Code and this rule, not to exceed $1,000, which shall be set annually by the Commissioner via Bulletin or Notice on or before July 1.
3.3. A licensed insurer or other entity licensed by the Commissioner who conducts pharmacy audits shall comply with the standards and procedures of Article 51, Chapter 33 of the West Virginia Code and this rule, but is not required to separately register as an auditing entity.
3.4. The term of registration shall be two years. However, the Commissioner may, in his or her discretion, fix the date of expiration regarding the initial registration of an auditing entity in any manner as is considered by him or her to be advisable for an efficient distribution of the workload of his or her office, including fixing the date of expiration for the initial registration of an auditing entity for a period less than or more than two years.
3.5. An auditing entity’s registration shall be renewed every two years on October 1 upon the submission of a renewal application and the payment of a renewal filing fee sufficient to fund the Commissioner’s regulatory duties in relation to Article 51, Chapter 33 of the West Virginia Code and this rule, not to exceed $1,000, which shall be set annually by the Commissioner via Bulletin or Notice on or before July 1. The renewal application fee will be returned to the auditing entity if the renewal of the registration is not granted.
3.6. An auditing entity’s renewal application shall be on the same form as the initial application and shall include the same information as required under section 3.2 of this rule.
W. Va. Code R. § 114-99-4 Licensure of Pharmacy Benefit Managers
4.1. A person or organization may not establish or operate as a PBM in this state without first obtaining a license from the Commissioner.
4.1.1. A PBM shall apply for a license on a form and in a manner prescribed by the Commissioner.
4.1.2. The term of licensure shall be two years. However, the Commissioner may, in his or her discretion, fix the date of expiration regarding the initial license of a PBM in any manner as is considered by him or her to be advisable for an efficient distribution of the workload of his or her office, including fixing the date of expiration for the initial license of a PBM for a period less than or more than two years.
4.2. An initial licensure application shall be verified by an officer or authorized representative of the applicant and shall include the following:
4.2.1. The identity, address, and telephone number of the applicant;
4.2.2. The name, business address, and telephone number of the contact person for the applicant;
4.2.3. When applicable, the federal employer identification number for the applicant;
4.2.4. A nonrefundable filing fee sufficient to fund the Commissioner’s regulatory duties in relation to Article 51, Chapter 33 of the West Virginia Code and this rule, not to exceed $10,000, which shall be set annually by the Commissioner via Bulletin or Notice on or before July 1;
4.2.5. Financial responsibility in an amount of $1 million evidenced by one of the following:
4.2.5.a. A cash or surety bond issued by a corporate surety authorized to issue surety bonds in the State of West Virginia;
4.2.5.b. An irrevocable letter of credit;
4.2.5.c. Securities with a minimum value of $1 million;
4.2.5.d. A written parental guarantee; or
4.2.5.e. One million dollars in working capital and/or surplus as reflected in audited financial statements submitted to the Commissioner;
4.2.6. Proof of registration with the West Virginia Secretary of State;
4.2.7. A list of the names, addresses and official positions of the persons who are to be responsible for the conduct of the affairs of the PBM applicant, including all members of the board of the directors, board of trustees, executive committee, or other governing board or committee, the principal officers in the case of a corporation, and the partners or members in the case of a partnership or association;
4.2.8. A copy of the basic organizational document of the PBM, such as the articles of incorporation, articles of association, partnership agreement, trust agreement or other applicable documents, and all amendments thereto;
4.2.9. A copy of the bylaws, rules and regulations or similar document, if any, regulating the conduct of the internal affairs of the applicant;
4.2.10. A copy of the PBM’s standard, generic contract template, provider manual or other appropriate items incorporated by reference which it uses for contracts entered into by the PBM with pharmacists, pharmacies or pharmacy services administrative organizations in this state in administration of pharmacy benefits for health benefit plans, for the purpose of ensuring that such contracts comply with W. Va. Code §33-51-9. If a PBM leases or otherwise uses, or anticipates using, a network from another PBM or health benefit plan, the PBM seeking licensure must submit a copy of the contract that it has, or anticipates having, with the other licensed PBM or health benefit plan;
4.2.11. A copy of the most recent year-end audited financial statement of the PBM, which may be a consolidated audited financial statement if applicable;
4.2.12. A description of the projected population or numbers of covered individuals to be administered by the PBM in this state on an annual basis for all health benefit plans with whom the PBM has contracted, and, if applicable, the population or numbers of covered individuals administered by the PBM in the previous year for each health benefit plan;
4.2.13. A network report describing the PBM’s network service areas by county in this state for a health benefit plan and the PBM’s pharmacy provider directory list for a health benefit plan, including a detailed description of any separate, sub-networks for specialty drugs. The detailed description should include a statement as to whether the PBM has restricted distribution of specialty drugs to mail-order specialty pharmacies or affiliate pharmacies, and further provide the names and addresses of any specialty pharmacies in the PBM’s network that are not solely mail-order pharmacies or affiliate pharmacies and are located in West Virginia, or in an out-of-state county that is adjacent to West Virginia;
4.2.14. If the PBM is engaged in spread pricing for a health benefit plan, an explanation regarding whether or not the PBM is assuming risk for the covered benefit;
4.2.15. A statement of whether the applicant has been refused a registration, license or certification to act as (or provide the services of) a PBM or third-party administrator, has any registration, license or certification to act as such been denied, suspended, revoked or non-renewed for any reason by any state or federal entity, or has been sanctioned, fined, penalized or entered into a monetary settlement for any reason by or with any state or federal entity, including but not limited to another state’s department of insurance, department of health and human services or Medicaid program, attorney general’s office, board of pharmacy or other similar regulatory agency;
4.2.16. A description of whether the applicant had a business relationship with an insurance company terminated for any legal finding or judgment of fraudulent or illegal activities in connection with the administration of a pharmacy benefits plan;
4.2.17. Any and all methodologies utilized by a PBM in connection with reimbursement shall be filed at initial licensure and all reimbursement methodologies must comply with the requirements set forth in Article 51, Chapter 33 of the West Virginia Code. If a PBM was initially licensed prior to the time methodologies were required to be filed, a PBM shall file any and all methodologies utilized by a PBM in connection with reimbursement at its first renewal after January 1, 2022. All filed methodologies shall comply with the provisions of W. Va. Code §33-51-9(e) and a PBM shall not enter into a contract with a pharmacy that provides for reimbursement methodology not permissible under the provisions of W. Va. Code §33-51-9(e). The methodologies are confidential and exempt from disclosure under the West Virginia Freedom of Information Act, W. Va. Code §29B-1-4(a)(1);
4.2.18. An attestation that the PBM has offered all health benefit plans for which the PBM provides pharmacy benefits management the option of pass-through pricing as required by W. Va. Code §33-51-9(k) and, if applicable, an attestation that the PBM is charging a health benefit plan administered by or on behalf of the state or a political subdivision of the state, the same price for a prescription drug as it pays a pharmacy for the prescription drug, i.e. pass-through pricing. With the attestation, the PBM shall provide the Commissioner with a copy of the PBM’s standard, generic template or form for correspondence making the mandatory offer of pass-through pricing to a health benefit plan; and
4.2.19. Any other information which is deemed necessary by the Commissioner in evaluating the application to comply with Article 51, Chapter 33 of the West Virginia Code or requirements of this rule or deemed necessary or appropriate by the Commissioner to establish the qualifications of the PBM to hold a license.
4.3. Review and Approval Process. -- For initial licensure applications, upon receipt of a complete application for items required under section 4.2 of this rule, the Commissioner shall review the application and within 90 days:
4.3.1. Approve the application and issue the applicant a PBM license;
4.3.2. Notify the applicant in writing that the application is incomplete and that additional information is needed to complete the review of the application. If the missing or necessary information is not received within 30 days from the date of the notification, the Commissioner shall deny the application unless good cause is shown; or
4.3.3. Deny the application. -- If the Commissioner determines that the PBM applicant does not meet the requirements for licensure, the Commissioner shall:
4.3.3.a. Provide written notice to the PBM applicant that the application has been denied stating or explaining the basis of the denial; and
4.3.3.b. Advise the PBM applicant that a request for a hearing may be filed with the Commissioner in accordance with W. Va. Code §33-2-13.
4.4. Renewal. -- A PBM license shall be renewed every two years on October 1. A renewal application shall be deemed approved by the Commissioner after 45 days from the date of the receipt of the renewal application by the Commissioner, unless approved or denied by the Commissioner during that time period.
4.4.1. A renewal application shall be accompanied by the following:
4.4.1.a. A renewal filing fee sufficient to fund the Commissioner’s regulatory duties in relation to Article 51, Chapter 33 of the West Virginia Code and this rule, not to exceed $10,000, which shall be set annually by the Commissioner via Bulletin or Notice on or before July 1;
4.4.1.b. A copy of the most recent year-end audited financial statement of the PBM, which may be a consolidated financial statement, if applicable;
4.4.1.c. Evidence of financial responsibility in the amount of $1 million as stated in subsection 4.2.5 of this rule;
4.4.1.d. An updated attestation that the PBM has offered all health benefit plans for which the PBM provides pharmacy benefits management the option of pass-through pricing as required by W. Va. Code §33-51-9(k) and, if applicable, an attestation that the PBM is charging a health benefit plan administered by or on behalf of the state or a political subdivision of the state, the same price for a prescription drug as it pays a pharmacy for the prescription drug, i.e. pass-through pricing. With the attestation, the PBM shall provide the Commissioner with a copy of the PBM’s standard, generic template or form for correspondence making the mandatory offer of pass-through pricing to a health benefit plan;
4.4.1.e. Any changes made to the items in section 4.2 of this rule from the date of its most recent licensure, including but not limited to any changes in methodologies utilized in connection with reimbursement made at any time since initial licensure, updated information regarding the projected number of covered individuals in this state who have pharmacy benefit management services administered by the PBM on an annual basis for all health benefit plans with whom the PBM has contracted, and an updated network report as described in subsection 4.2.13. of this rule; and
4.4.1.f. Any other information which is deemed necessary by the Commissioner in evaluating the renewal application to establish the continuing qualifications of the PBM to hold a license.
4.4.2. The Commissioner may require additional information or submissions from an applicant and may obtain any documents or information reasonably necessary to verify the information in the renewal application.
4.4.3. For disapprovals or denials of a renewal licensure by the Commissioner, the Commissioner shall:
4.4.3.a. Provide written notice to the renewal applicant that the licensure renewal was denied stating or explaining the basis of the denial; and
4.4.3.b. Advise the renewal applicant that a request for a hearing may be filed with the Commissioner in accordance with W. Va. Code §33-2-13.
4.5. Denial of Initial or Renewal Application.
4.5.1. The Commissioner shall deny an initial application for licensure or deny license renewal of a PBM for the following reasons:
4.5.1.a. The PBM operates, or proposes to operate, in a financially hazardous condition by failing to provide or maintain evidence of financial responsibility as noted under subsection 4.2.5 of this rule;
4.5.1.b. The PBM has been determined by the Commissioner to be in violation or noncompliance with the requirements of this rule or West Virginia law;
4.5.1.c. The PBM has failed to timely submit information under section 4.2 of this rule to complete a review of the initial application or has failed to submit a renewal application and information under section 4.4 of this rule; or
4.5.1.d. The PBM fails to provide the Commissioner with its network report as required by W. Va. Code §33-51-8(d)(2) and (3).
4.5.2. In lieu of a denial of an initial licensure or renewal application, the Commissioner may permit the PBM to submit to the Commissioner an acceptable corrective action plan to cure or correct deficiencies.
4.6. Evidence of financial responsibility as noted under subsection 4.2.5 of this rule shall be maintained at all times by the PBM during its licensure with the Commissioner, and the Commissioner shall have the right to confirm or verify the PBM’s qualifications to hold a license and its financial responsibility at any time. The Commissioner may, however, reduce the amount of the financial responsibility requirement in subsection 4.2.5 of this rule if the amount required is unreasonable relative to the size of the PBM’s business operations in this state and would cause a significant financial hardship.
4.7. The information and data submitted by a PBM under this section shall be considered proprietary and confidential by law and privileged, and exempt from disclosure pursuant to Chapter 29B of the West Virginia Code as a “trade secret”, is not open to public inspection, is not subject to subpoena, is not subject to discovery or admissible in evidence in any criminal, private civil or administrative action and is not subject to production pursuant to court order. The Commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the Commissioner’s official duties.
W. Va. Code R. § 114-99-5 Responsibilities and Prohibited Acts
5.1. A PBM shall not cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal or offer that is untrue, deceptive or misleading.
5.2. An auditing entity conducting a pharmacy audit or person acting on behalf of the auditing entity may not seek any fee, charge-back, recoupment or other adjustment for a dispensed product, or any portion of a dispensed product, unless one of the following has occurred:
5.2.1. Fraud or other intentional and willful misrepresentation as evidenced by a review of the claims data, statements, physical review or other investigative methods;
5.2.2. Dispensing in excess of the benefit design, as established by the plan sponsor;
5.2.3. Prescriptions not filled in accordance with the prescriber’s order; or
5.2.4. Actual overpayment to the pharmacy.
5.3. Any fee, charge-back, recoupment, or other adjustment is limited to the actual financial harm associated with the dispensed product, or portion of the dispensed product, or the actual underpayment or overpayment as set forth in the criteria in section 5.2 of this rule.
5.4. To assist healthcare consumers in making informed decisions, so called “gag clauses” in contracts between pharmacies and PBMs are prohibited. A pharmacy, pharmacist or pharmacy technician shall have the right to provide a consumer information relating to lower cost alternatives, and a pharmacy, pharmacist or pharmacy technician shall not be penalized by a PBM for discussing information in W. Va. Code §33-51-9 or the regulation of PBMs thereunder, or for selling a lower cost alternative, if one is available, without using a health insurance policy.
5.5. To prevent overcharges to consumers or insureds purchasing prescription drugs, so called “claw-back” provisions in contracts between pharmacies and PBMs are prohibited and a PBM shall not collect from a pharmacy, a pharmacist or a pharmacy technician a cost share or co-pay charged to a covered individual that exceeds the total submitted charges by the pharmacy or pharmacist to the PBM.
5.6. A PBM that reimburses a 340B entity for drugs that are subject to an agreement under 42 U.S.C. §256b shall not reimburse the 340B entity for pharmacy-dispensed drugs at a rate lower than that paid for the same drug to pharmacies similar in prescription volume that are not 340B entities, and shall not assess any fee, charge-back, or other adjustment upon the 340B entity on the basis that the 340B entity participates in the program set forth in 42 U.S.C. §256b. For purposes of this section, the term “other adjustment” includes placing any additional requirements, restrictions or unnecessary burdens upon the 340B entity that results in administrative costs or fees to the 340B entity that are not placed upon other pharmacies that do not participate in the 340B program, including affiliate pharmacies of the PBM, and further includes but is not limited to requiring a claim for a drug to include a modifier or be reprocessed or resubmitted to indicate that the drug is a 340B drug. Nothing in section 5.6 of this rule shall be construed to prohibit the Medicaid program or a Medicaid managed care organization (“MCO”) as described in 42 U.S.C. §1396b(m) from preventing duplicate discounts as described in 42 U.S.C. §256b(a)(5)(A)(i). The provisions of section 5.6 of this rule are applicable to the West Virginia Public Employees Insurance Agency (“PEIA”).
5.7. With respect to a patient eligible to receive drugs subject to an agreement under 42 U.S.C. §256b, a PBM shall not discriminate against a 340B entity in a manner that prevents or interferes with the patient’s choice to receive such drugs from the 340B entity. This section does not apply to the state Medicaid program when Medicaid is providing reimbursement for covered outpatient drugs, as that term is defined in 42 U.S.C. §1396r-8(k), on a fee-for-service basis. This section does apply to a Medicaid-managed care organization as described in 42 U.S.C. §1396b(m). For purposes of this section, it shall be considered a discriminatory practice that prevents or interferes with a patient’s choice to receive drugs at a 340B entity if a PBM places additional requirements, restrictions or unnecessary burdens upon a 340B entity that results in administrative costs or fees to the 340B entity that are not placed upon other pharmacies that do not participate in the 340B program, including affiliate pharmacies of the PBM, and further includes but is not limited to requiring a claim for a drug to include a modifier or be reprocessed or resubmitted to indicate that the drug is a 340B drug. Nothing in section 5.7 of this rule shall be construed to prohibit the Medicaid program or a Medicaid MCO as described in 42 U.S.C. §1396b(m) from preventing duplicate discounts as described in 42 U.S.C. §256b(a)(5)(A)(i). The provisions of section 5.7 of this rule are applicable to PEIA.
5.8. A PBM may not reimburse a pharmacy or pharmacist for a prescription drug or pharmacy service in an amount less than the NADAC price for the prescription drug or pharmacy service at the time the drug is administered or dispensed plus a dispensing fee of $10.49. If the NADAC price is not available at the time a drug is administered or dispensed, a PBM may not reimburse in an amount that is less than the wholesale acquisition cost of the drug as defined in 42 U.S.C. §1395w-3a(c)(6)(B) plus a dispensing fee of $10.49.
5.9. Payment Parity. -- A PBM may not reimburse a pharmacy or pharmacist for a prescription drug or pharmacy service in an amount less than the amount the PBM reimburses itself or one of its affiliates for the same prescription drug or pharmacy service.
5.10. A PBM shall utilize the most recently published NADAC price as a point of reference for the ingredient drug product component of a pharmacy’s reimbursement for drugs appearing on the national average drug acquisition cost list.
5.11. A PBM shall not discriminate in reimbursement, assess any fees or adjustments, or exclude a pharmacy from the PBM’s network on the basis that the pharmacy dispenses drugs subject to an agreement under 42 U.S.C. §256b.
5.12. A PBM shall not engage in any practice that:
5.12.1. Bases reimbursement for a drug on patient outcomes, scores, or metrics. This prohibition does not apply to reimbursement for pharmacy care, including dispensing fees, from being based on patient outcomes, scores or metrics so long as the terms are disclosed and agreed to by the pharmacy in advance;
5.12.2. Imposes a point-of-sale fee or retroactive fee; or
5.12.3. Derives any revenue from a pharmacy or insured in connection with performing pharmacy benefits management services. This prohibition shall not prohibit a PBM from processing coinsurance, deductibles or co-payments that have been approved by a covered individual’s health benefit plan.
5.13. A PBM shall offer a health benefit plan the option of pass-through pricing and file with the Commissioner an attestation that such offer has been made to each health benefit plan that the PBM provides pharmacy benefit management services for as described in subsection 4.2.18 of this rule. However, pass-through pricing is required in regard to a PBM that contracts with a health benefit plan administered by or on behalf of the state or a political subdivision of the state.
5.14. A covered individual’s defined cost sharing for each prescription drug shall be calculated at the point-of-sale based on a price that is reduced by an amount equal to at least 100% of all applicable rebates received, or to be received, in connection with the dispensing or administration of the prescription drug up to the amount of a covered individual’s defined cost sharing.
5.14.1. All rebates should be calculated by the PBM or third-party based upon the actual rebate amount negotiated between the PBM or health benefit plan and the manufacturer and provided, or to be provided, by the manufacturer to the PBM or health benefit plan.
5.14.2. Any price reduction based upon a rebate received, or to be received, must be completely reflected in the price of the prescription drug at the time the pharmacy dispenses it to the patient.
5.14.3. Any rebate that is calculated by the PBM or third-party to be over and above, or in excess of, a covered individual’s defined cost sharing may not be retained by the PBM but must be passed on to the health benefit plan and must be used by the health benefit plan to reduce the cost of premiums.
5.14.4. The Commissioner may request information deemed necessary by the Commissioner from the pharmacy, PBM, third-party or health benefit plan to determine compliance with these point-of-sale rebating requirements as needed to investigate complaints and as set forth in the annual reporting requirements in section 6 of this rule.
5.14.5. Nothing precludes an insurer from decreasing a covered individual’s defined cost sharing by an amount greater than that set forth in section 5.14. of this rule.
5.14.6. A PBM shall be responsible for calculating a covered individual’s defined cost sharing for each prescription drug. No PBM shall charge or deduct from a pharmacist or pharmacy any fee, recoupment, charge back, or other monetary penalty, amount or adjustment due to the PBM’s miscalculation of a rebate or defined cost sharing amount.
5.15. A PBM’s contract with a participating pharmacist or pharmacy shall not prohibit, restrict or limit disclosure of information to the Commissioner, law enforcement, or state and federal governmental officials investigating or examining a complaint or conducting a review of a PBM’s compliance with the requirements under this rule or Article 51, Chapter 33 of the West Virginia Code.
5.16. Termination of a pharmacy or pharmacist from a PBM network shall not release the PBM from the obligation to make any payment due to the pharmacy or pharmacist for pharmacist services that are authorized for payment under the terms and conditions of the contract and rendered prior to the termination of the pharmacy or pharmacist from the PBM network.
W. Va. Code R. § 114-99-6 Network Adequacy and Reporting Requirements
6.1. Network adequacy and prohibition against required use of mail-order pharmacy.
6.1.1. A PBM shall maintain a reasonably adequate and accessible network for the provision of prescription drugs for a health benefit plan. The network shall provide for convenient patient access to pharmacies within a reasonable distance from a patient’s residence. A network shall not be comprised only of mail-order benefits but must have a mix of mail-order benefits and physical stores in this state.
6.1.1.a. Pursuant to W. Va. Code §§33-16-3q, 33-24-7h, 33-25-8f and 33-25A-8g, an insurer issuing a group accident and sickness policy, a hospital, medical, dental or health service corporation, a health care corporation, or a health maintenance organization may not require any covered individual to obtain prescription drugs from a mail-order pharmacy in order to obtain prescription drug benefits, and may not violate this prohibition by using an agent, contractor or administrator that requires the covered person to obtain prescription drugs from a mail-order pharmacy. An insurer, hospital, medical, dental or health service corporation, a health care corporation, or a health maintenance organization that violates W. Va. Code §§33-16-3q, 33-24-7h, 33-25-8f and 33-25A-8g through the use of a PBM may be subject to regulatory action as permitted under Chapter 33 of the West Virginia Code.
6.1.2. A PBM shall, upon licensure and upon further request by the Commissioner, provide a network report describing the PBM’s network and the mix of mail-order to physical stores in this state and shall include a detailed description of any separate, sub-networks for specialty drugs. The detailed description should include a statement as to whether the PBM has restricted distribution of specialty drugs to mail-order specialty pharmacies or affiliate pharmacies, and if so, the reasons therefore, and further provide the names and addresses of any specialty pharmacies in the PBM’s network that are not solely mail-order pharmacies or affiliate pharmacies and are located in West Virginia, or in an out-of-state county that is adjacent to West Virginia. This statement shall also include a list of all specialty drugs currently on restricted distribution to specialty pharmacies or affiliate pharmacies. Failure to provide a report may result in the suspension or revocation of a PBM’s license by the Commissioner.
6.1.3. Health benefit plans using PBMs for administration of pharmacy management benefits shall, upon request, provide the Commissioner with the number of pharmacists, pharmacies and pharmacy services administration organizations that have either terminated their network participation with the health benefit plan or have had their network participation terminated by the health benefit plan.
6.1.4. A PBM using a leased network must ensure that the leased network is reasonably adequate and accessible as provided in subsection 6.1.1 of this rule and the PBM using the leased network must be able to provide the reports described in subsections 6.1.2 and 6.1.3 of this rule upon request by the Commissioner.
6.2. Annual Reports.
6.2.1. A PBM shall report to the Commissioner on or before March 1 of each year, or more often as the Commissioner deems necessary, for each health benefit plan the following information:
6.2.1.a. The aggregate amount of rebates received by the PBM;
6.2.1.b. The aggregate amount of rebates distributed to the health benefit plan;
6.2.1.c. The aggregate amount of rebates used at the point-of-sale to reduce a covered individual’s defined cost sharing in accordance with section 5.14. of this rule;
6.2.1.d. The individual and aggregate amount paid by the health benefit plan to the PBM for pharmacist services itemized by pharmacy, by product, and by goods and services; and
6.2.1.e. The individual and aggregate amount a PBM paid for pharmacist services itemized by pharmacy, by product, and by goods and services.
6.2.2. In regard to a PBM that contracts with a health benefit plan, the PBM shall annually report in the aggregate to the Commissioner and to the health benefit plan the difference between the amount the PBM reimbursed a pharmacy and the amount the PBM charged the health benefit plan. The annual report required by this subsection may be referred to as the “spread pricing report” and shall be due on or before March 1 of each year.
6.2.3. A health benefit plan shall annually report to the Commissioner the aggregate amount of credits, rebates, discounts, or other such payments received by the health benefit plan from a PBM or drug manufacturer and disclose whether or not those credits, rebates, discounts or other such payments were passed on to reduce insurance premiums or rates. The Commissioner will use the information obtained in these reports when reviewing premium rates charged for individual and group accident and health insurance as set forth in W. Va. Code §§33-6-9(e), 33-24-6(c) and 33-25A-8. The annual report required by this subsection shall be due on or before March 1 of each year.
6.3. Quarterly Report.
6.3.1. A PBM shall produce a quarterly report to the Commissioner of:
6.3.1.a. All drugs appearing on the national average drug acquisition cost list reimbursed 10% and below the national average drug acquisition cost; and
6.3.1.b. All drugs appearing on the national average drug acquisition cost list reimbursed 10% and above the national average drug acquisition cost.
6.3.2. For each drug listed in the quarterly report, a PBM shall include:
6.3.2.a. The month the drug was dispensed;
6.3.2.b. The quantity of the drug dispensed;
6.3.2.c. The amount the pharmacy was reimbursed;
6.3.2.d. Whether the dispensing pharmacy was an affiliate of the PBM;
6.3.2.e. Whether the drug was dispensed pursuant to a government health benefit plan; and
6.3.2.f. The average national drug acquisition cost for the month the drug was dispensed.
6.3.3. The quarterly report shall exclude drugs dispensed pursuant to 42 U.S.C. §256b.
6.3.4. A copy of the quarterly report shall be published on the PBM’s publicly available website for a period of at least 24 months.
6.3.5. The quarterly report is exempt from the confidentiality provisions of section 6.5 of this rule.
6.3.6. The quarterly report required by this section shall be filed on or before May 15, August 15, November 15 and March 1 of each year; the final quarterly report being submitted with the annual report(s) required in section 6.2 of this rule.
6.4. The reports required by this section shall be filed electronically by the PBM or health benefit plan via the portal made available on the Commissioner’s website.
6.5. With the exception of the quarterly report noted in section 6.3 of this rule, the information and data submitted by a PBM, health benefit plan under this section shall be considered proprietary and confidential by law and privileged, exempt from disclosure pursuant to Chapter 29B of the West Virginia Code as a “trade secret”, is not open to public inspection, is not subject to subpoena, is not subject to discovery or admissible in evidence in any criminal, private civil or administrative action and is not subject to production pursuant to court order. The Commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the Commissioner’s official duties.
W. Va. Code R. § 114-99-7 Examinations
7.1. The Commissioner may examine the affairs of a PBM for compliance with Article 51, Chapter 33 of the West Virginia Code or the requirements of this rule.
7.2. Any examination permitted under this section shall follow the examination procedures and requirements applicable to covered entities under W. Va. Code §33-2-9, and the Commissioner may assess the costs of the examination or audit to the PBM.
7.3. A PBM shall not be regularly examined under the same time periods of insurers as required under W. Va. Code §33-2-9; however, the Commissioner may examine the PBM, pursuant to this section, at any time in which he or she believes it reasonably necessary to ensure compliance with Article 51, Chapter 33 of the West Virginia Code or the provisions of this rule.
7.4. The information and data obtained by the Commissioner from a PBM under this section shall be considered proprietary and confidential by law and privileged, exempt from disclosure pursuant to Chapter 29B of the West Virginia Code as a “trade secret”, is not open to public inspection, is not subject to subpoena, is not subject to discovery or admissible in evidence in any criminal, private civil or administrative action and is not subject to production pursuant to court order. The Commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the Commissioner’s official duties.
W. Va. Code R. § 114-99-8 Penalties and Reimbursement
8.1. If the Commissioner finds that a licensed PBM has violated any provisions of this rule or Article 51, Chapter 33 of the West Virginia Code that are applicable to the PBM, the Commissioner may, in addition to or in lieu of a licensure suspension or revocation, order the PBM to pay a penalty in a sum not to exceed $10,000 per violation. If the PBM fails to pay the penalty within 30 days after notice of the penalty, the Commissioner may revoke or suspend the license of the PBM. This section shall not affect the right of a PBM to make a written demand for a hearing before the Commissioner pursuant to the provisions of W. Va. Code §33-2-13 or the right of any party to request judicial review of an order of the Commissioner.
8.2. If the Commissioner finds that a registered auditing entity has violated any provisions of this rule or any provisions of Article 51, Chapter 33 of the West Virginia Code, the Commissioner may, in addition to or in lieu of a registration suspension or revocation, order the auditing entity pay a penalty in a sum not to exceed $2,500 per violation. If the auditing entity fails to pay the penalty within 30 days after notice of the penalty, the Commissioner may revoke or suspend the registration of the auditing entity. This section shall not affect the right of an auditing entity to make a written demand for a hearing before the Commissioner pursuant to the provisions of W. Va. Code §33-2-13 or the right of any party to request judicial review of an order of the Commissioner.
8.3. With respect to any person or entity operating in this state as a PBM without a license, the Commissioner may do one or both of the following:
8.3.1. File a complaint in the Circuit Court of Kanawha County, or in any county in which a PBM has operated without a license, to enjoin the PBM from operating;
8.3.2. After notice and hearing in accordance with W. Va. Code §33-2-13, assess restitution in an amount sufficient to reimburse any person adversely affected by the operation of the unlicensed PBM and, in addition to or in lieu of restitution, impose a fine in a sum not to exceed $20,000 for each unauthorized act; and
8.3.3. This section shall not affect the right of a PBM to make a written demand for a hearing before the Commissioner pursuant to the provisions of W. Va. Code §33-2-13 or the right of any party to request judicial review of an order of the Commissioner.
8.4. With respect to any person or entity operating in this state as an auditing entity without being registered or exempted from registration, the Commissioner may do one or both of the following:
8.4.1. File a complaint in the Circuit Court of Kanawha County, or in any county in which an auditing entity has operated without a license, to enjoin the auditing entity from operating;
8.4.2. After notice and hearing in accordance with W. Va. Code §33-2-13, assess restitution in an amount sufficient to reimburse any person adversely affected by the operation of the unregistered auditing entity and, in addition to or in lieu of restitution, impose a fine in a sum not to exceed $5,000 for each unauthorized act; and
8.4.3. This section shall not affect the right of an auditing entity to make a written demand for a hearing before the Commissioner pursuant to the provisions of W. Va. Code §33-2-13 or the right of any party to request judicial review of an order of the Commissioner.
8.5. The Commissioner may order reimbursement to an insured, pharmacy, or dispenser who has incurred a monetary loss as a result of a violation of Article 51, Chapter 33 of the West Virginia Code or the provisions of this rule by a PBM.
8.5.1. To seek reimbursement, an insured, pharmacy or dispenser should file a complaint with the Commissioner within one year following the actual or implied discovery of the violation.
8.5.2. The complaint should be filed on a form provided by the Commissioner and state with specificity the following:
8.5.2.a. The statutory provision, if known, which was allegedly violated;
8.5.2.b. The facts and circumstances giving rise to the alleged violation;
8.5.2.c. The name of any individual or other entity involved in the alleged violation;
8.5.2.d. Reference to specific contract language that is relevant to the alleged violation, if known; and
8.5.2.e. Any other information the commissioner may require.
8.5.3. Upon receipt of a sufficiently complete complaint, the Commissioner shall provide a copy to the PBM.
8.5.4. Within 15 working days after receiving a complaint, the PBM must advise the Commissioner in writing of the status of negotiations with the insured, pharmacy or dispenser to resolve the complaint for reimbursement unless the complaint has already been resolved. If the PBM intends to take no action to resolve the complaint, the PBM shall advise the Commissioner accordingly, in writing, and provide the Commissioner with a substantive response to the allegations in the complaint.
8.5.5. After receiving a written response to the complaint from a PBM, the Commissioner shall determine whether to:
8.5.5.a. Close the complaint and take no further action;
8.5.5.b. Order reimbursement be made from the PBM to the insured, pharmacy or dispenser; or
8.5.5.c. Set the matter for administrative hearing and further determination as to whether the allegations in the complaint are meritorious and reimbursement should be ordered.
8.5.6. An insured, pharmacy or dispenser has the right to contest the Commissioner’s decision to close a complaint, without hearing, and take no further action thereon to award reimbursement. A PBM has the right to contest the Commissioner’s decision to award reimbursement from the PBM to the insured, pharmacy, or dispenser without hearing thereon. This subsection shall not affect the right of a PBM, insured, pharmacy or dispenser to make a written demand for a hearing pursuant to the provisions of W. Va. Code §33-2-13 or the right of any party to request judicial review of an order of the Commissioner.
8.5.7. A hearing on a complaint shall be scheduled to be held within 90 days from the date of filing the complaint by the insured, pharmacy or dispenser unless continued by agreement of all parties or by the Commissioner for good cause. Good cause includes but is not limited to a determination by the Commissioner that additional investigation is necessary.
8.5.8. The Commissioner shall assign a time and place for a hearing and shall mail written notice of the hearing to the parties at least 10 days in advance thereof.
8.5.9. To the extent such provisions are not in conflict with this rule, hearings shall be conducted in accordance with the procedures set forth in 114CSR13.
8.5.10. The Commissioner may add interest to an award of reimbursement to an insured, pharmacy or dispenser who has incurred a monetary loss as a result of a violation of Article 51, Chapter 33 of the West Virginia Code or the provisions of this rule by a PBM. If an award of interest is made, it shall be calculated from the date the payment to the insured, pharmacy or dispenser was initially due or should have been made and shall be calculated using the U.S. Prime Rate.
W. Va. Code R. § 114-99-9 Consumer Choice for Pharmacy Benefits
9.1. Applicability.
9.1.1. Section 9 of this rule applies to all PBMs and health benefit plans providing pharmaceutical services or pharmacy benefits, including but not limited to prescription drugs, to any resident of West Virginia.
9.1.2. Section 9 of this rule does not apply to any entity that has its own facility, employs or contracts with physicians, pharmacists, nurses and other health care personnel, and that dispenses prescription drugs from its own pharmacy to its employees and dependents enrolled in its health benefit plan.
9.1.3. Section 9 of this rule applies to an entity otherwise excluded under subsection 9.1.2 of this rule that contracts with an outside pharmacy or group of pharmacies to provide prescription drugs and services.
9.2. Prohibitions.
9.2.1. A PBM or health benefit plan may not:
9.2.1.a. Prohibit or limit any covered individual from selecting a pharmacy or pharmacist of his or her choice who has agreed to participate in the health benefit plan’s network according to the terms offered by the health benefit plan;
9.2.1.b. Deny a pharmacy or pharmacist the right to participate as a contract provider under the health insurance policy or health benefit plan’s network if the pharmacy or pharmacist agrees to provide pharmacy services or benefits, including but not limited to prescription drugs, that meet the terms and requirements set forth by the insurer or health benefit plan under the health insurance policy or health benefit plan’s network and agrees to the terms of reimbursement set forth by the insurer or health benefit plan;
9.2.1.c. Impose upon a pharmacy or pharmacist, as a condition of participation in a health benefit plan’s network, any course of study, accreditation, certification, or credentialing that is inconsistent with, more stringent than, or in addition to state requirements for licensure or certification as provided for in W. Va. Code §30-5-1 et seq. and legislative rules of the Board of Pharmacy.
9.2.1.d. Impose upon a beneficiary of pharmacy services under a health benefit plan any co-payment, fee or condition that is not equally imposed upon all beneficiaries in the same benefit category, class or co-payment level under the health benefit plan’s network when receiving services from a contract provider;
9.2.1.e. Impose a monetary advantage or penalty under a health benefit plan that would affect a beneficiary’s choice among those pharmacies or pharmacists who have agreed to participate in the health benefit plan’s network according to the terms offered by the insurer or health benefit plan. For purposes of this subdivision, “monetary advantage or penalty” includes higher co-payment, a reduction in reimbursement for services or the promotion of one participating pharmacy over another by these methods;
9.2.1.f. Reduce allowable reimbursement for pharmacy services to a beneficiary under a health benefit plan because the beneficiary selects a pharmacy of his or her choice, so long as that pharmacy has enrolled as a network provider with the health benefit plan under the terms offered to all pharmacies in the plan coverage area;
9.2.1.g. Prohibit or otherwise limit a beneficiary’s access to prescription drugs from a pharmacy or pharmacist enrolled with the health benefit plan under the terms offered to all pharmacies in the plan coverage area by unreasonably designating the covered prescription drug as a specialty drug. Any beneficiary or pharmacy impacted by an alleged violation of this subsection may file a complaint with the Commissioner, who shall, in consultation with the West Virginia Board of Pharmacy, make a determination as to whether the covered prescription drug meets the definition of a specialty drug;
9.2.1.h. Limit a beneficiary’s access to specialty drugs;
9.2.1.i. Require a beneficiary, as a condition of payment or reimbursement, to purchase pharmacy services, including but not limited to prescription drugs, exclusively through a mail-order pharmacy; or
9.2.1.j. Impose upon a beneficiary any co-payment, amount of reimbursement, restriction upon the number of days of a drug supply for which reimbursement will be allowed, or any other payment or condition relating to purchasing pharmacy services from any pharmacy, including but not limited to prescription drugs, that is more costly or more restrictive to the beneficiary than that which would be imposed upon the beneficiary if such services were purchased from a mail-order pharmacy or any other pharmacy that is willing to provide the same services or products for the same cost and copayment as any mail-order service.
9.3. Notification.
9.3.1. If a health benefit plan restricts pharmacy participation through a network, the health benefit plan shall notify, in writing, all pharmacies within the geographic coverage area of the health benefit plan and offer those pharmacies the opportunity to participate in the health benefit plan’s network. Notification shall be provided at least 60 days prior to the effective date of the health benefit plan, or, if the plan is in effect at the time this rule becomes effective, at least 60 days prior to the plan’s renewal.
9.3.2. All pharmacies in the coverage area shall be eligible to participate in the network under identical reimbursement terms for providing pharmacy services, including prescription drugs.
9.3.3. Participating pharmacies shall be entitled to 30 business days effective date notice for any subsequent contract amendment or provider manual change by a health benefit plan or a PBM.
9.3.4. A health benefit plan shall inform the beneficiaries of the plan of the names and locations of pharmacies that are participating in the health benefit plan’s network. Notification to beneficiaries should be provided through reasonable means, on a timely basis and at regular intervals. For purposes of this subsection, “reasonable means” may include written or electronic communications to beneficiaries by a health benefit plan, as well as publication on the health benefit plan’s publicly available website. For purposes of this subsection, “regular intervals” should include notification to beneficiaries during a health benefit plan’s open enrollment period and at least on a quarterly basis.
9.3.5. Participating pharmacies shall be entitled to announce their participation in a health benefit plan’s network to their customers through a means acceptable to the pharmacy and the health benefit plan.
9.3.6. The notification provisions of this section shall not apply when an individual or group is enrolled in a health benefit plan, but when the health benefit plan enters a new county of the state.
9.4. Injunctive relief.
9.4.1. Any covered individual or pharmacy injured by a violation of section 9 of this rule may maintain a cause of action against a PBM or health benefit plan to enjoin the continuance of any such violation by filing a complaint in the Circuit Court of Kanawha County, or in any county in which the PBM or health benefit plan has committed the violation.
9.4.2. The Commissioner does not need to be made party to any complaint for injunctive relief filed against a PBM or health benefit plan, but may intervene in the lawsuit if he or she deems intervention necessary to enforce the provisions of this rule or of Article 51, Chapter 33 of the West Virginia Code.
9.4.3. The covered individual or pharmacy filing for injunctive relief shall provide a courtesy copy of the lawsuit to the Commissioner in order for the Commissioner to make a decision on intervention and to ensure administrative enforcement of this rule or of Article 51, Chapter 33 of the West Virginia Code.
9.4.4. The filing of an injunction against a health benefit plan for alleged violations of Article 51, Chapter 33 of the West Virginia Code or this rule does not alone affect any license or Certificate of Authority held by an insurer otherwise duly licensed in this state without separate regulatory action undertaken by the Commissioner.
W. Va. Code R. § 114-99-10 Specialty Drug Complaints
10.1. A covered individual, beneficiary, pharmacy or pharmacist may file a specialty drug complaint with the Commissioner alleging that a PBM or health benefit plan has prohibited or otherwise limited access to a covered prescription drug from a pharmacy or pharmacist enrolled with the health benefit plan by unreasonably designating the drug as a “specialty drug,” as that term is defined in W. Va. Code §33-51-3 and section 2.24 of this rule.
10.2. The specialty drug complaint should be filed on a form provided by the Commissioner and state with specificity the following:
10.2.1. The name and dosage of the prescription drug that has been designated as a specialty drug;
10.2.2. The name of the PBM;
10.2.3. The name of the health benefit plan or insurer, if known;
10.2.4. The name and group number of the health benefit plan, specifically including any separate group number for the health benefit plan’s pharmacy plan;
10.2.5. The name of the covered individual or beneficiary of the health benefit plan, and the covered individual’s or beneficiary’s plan identification number;
10.2.6. The RxBIN for the health benefit plan or pharmacy plan;
10.2.7. The name of any individual or other entity involved in the alleged unreasonable designation of the drug as a specialty drug; and
10.2.8. Any other information the Commissioner may require.
10.3. Upon receipt of a sufficiently complete specialty drug complaint, the Commissioner shall provide a copy to the PBM and health benefit plan. The PBM shall have 15 working days to respond. A separate response may also be required of the health benefit plan. The Commissioner will advise a health benefit plan if it is required to respond separately from the PBM. A health benefit plan required to respond shall also have 15 working days to respond.
10.4. If the specialty drug complaint is resolved before the time period for a response expires, the PBM and/or health benefit plan must advise the Commissioner in writing that the specialty drug complaint has been resolved and specifically advise the Commissioner of what steps or actions were taken to resolve the complaint. If the PBM and/or health benefit plan intends to take no action to resolve the complaint, the PBM and/or health benefit plan shall advise the Commissioner accordingly, in writing, and provide the Commissioner with a substantive response to the allegations in the specialty drug complaint. Nothing in this section in any way limits the authority of the Commissioner to investigate and take action against a PBM which the Commissioner has reason to believe has unreasonably designated a covered prescription drug as a specialty drug or limited a beneficiary’s access to a specialty drug in violation of the provisions of W.Va. Code §33-51-11(a)(7) or (8) or subdivisions 9.2.1.g or 9.2.1.h of this rule, but thereafter has consistently resolved each specialty drug complaint prior to the final resolution thereof by the Commissioner in accordance with section 10.8 of this rule.
10.5. If the specialty drug complaint remains unresolved, the Commissioner shall send a copy of the specialty drug complaint, and the response(s) thereto, to the Board of Pharmacy to make a determination as to whether the covered prescription drug meets the definition of specialty drug, as that term is defined in W. Va. Code §33-51-3 and section 2.24 of this rule.
10.6. The West Virginia Board of Pharmacy will review the complaint, and the response(s) thereto, and may refer the matter to a committee for determination as to whether there are valid clinical and/or therapeutical reasons for the covered prescription drug to be designated as a specialty drug. The Board of Pharmacy will consider whether the covered prescription drug is used to treat rare or chronic and complex medical conditions, and whether it requires special handling, administration, provider care coordination, or patient education that cannot be provided otherwise by a non-specialty pharmacy.
10.7. The Commissioner may also obtain additional information from the PBM and/or health benefit plan regarding the circumstances surrounding the designation of the covered prescription drug as a specialty drug and whether access to a covered prescription drug is being limited in violation of W. Va. Code §33-51-11(7) and (8). Additional information may include, but is not limited to, an assessment of network adequacy and the availability or conveniency of access for West Virginia residents to obtain the covered prescription drug, the number of mail-order pharmacies and physical pharmacies located in West Virginia that are permitted to dispense the covered prescription drug, the special handling, administration and/or provider care options or necessities that the PBM’s specialty pharmacies offer that is not otherwise available at non-specialty pharmacies, and the circumstances surrounding the designation of the covered prescription drug as a specialty drug.
10.8. Upon completion of the review by the Commissioner and the Board of Pharmacy, the Commissioner will, in consultation with the Board of Pharmacy, make a determination as to whether the covered prescription drug meets the definition of specialty drug and whether a beneficiary’s access is being prohibited or limited in violation of W. Va. Code §33-51-11(7) and (8). The Commissioner may then undertake the following actions:
10.8.1. Close the specialty drug complaint and take no further action by finding that the covered prescription drug meets the definition of specialty drug and that a beneficiary’s access is not being prohibited or limited in violation of W. Va. Code §33-51-11(7) and (8);
10.8.2. Find that the subject prescription drug does not meet the definition of specialty drug and that a beneficiary’s access is being prohibited or limited in violation of W. Va. Code §33-51-11(7) and (8), and further order that the covered prescription drug be removed from the PBM and/or health benefit plan’s specialty drug list; or
10.8.3. Set the matter for administrative hearing and further determination as to whether the covered prescription drug meets the definition of specialty drug and whether a beneficiary’s access is being prohibited or limited in violation of W. Va. Code §33-51-11(7) and (8).
10.9. Any party to an administrative proceeding regarding a specialty drug complaint has the right to contest the decision made pursuant to section 10.8 of this rule. If a decision is made pursuant to subsection 10.8.1 or 10.8.2 of this rule without hearing, any party may make a written demand for a hearing pursuant to the provisions of W. Va. Code §33-2-13. A hearing on a specialty drug complaint shall be scheduled to be held within 45 days from the date of the hearing request, unless continued by agreement of all parties or by the Commissioner and Board of Pharmacy for good cause. Good cause includes, but is not limited to, a determination by the Commissioner and Board of Pharmacy that additional investigation is necessary.
10.10. The Commissioner shall assign a time and place for a hearing and shall mail written notice of the hearing to the parties at least 10 days in advance thereof.
10.11. To the extent such provisions are not in conflict with this rule, hearings shall be conducted in accordance with the procedures set forth in 114CSR13.
10.12. An order entered by the Commissioner and Board of Pharmacy after a hearing conducted pursuant to subsection 10.8.3 or section 10.9 of this rule, or an order entered denying a party’s request for a hearing, is subject to judicial review.
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