RELATES TO:
KRS
304.14-120
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
304.2-110 provides that the Executive
Director of Insurance may make reasonable rules and regulations necessary for
or as an aid to the effectuation of any provision of the Kentucky Insurance
Code. This administrative regulation safeguards the interests of persons
covered under health insurance including indemnity insurance who consider
replacing their insurance by making available to them information regarding
replacement and thereby reducing the opportunity for misrepresentation and
other unfair practices and methods of competition in the insurance
business.
Section 1. This
administrative regulation shall apply to the solicitation of health insurance
covering residents of this state issued by insurance corporations, fraternal
benefit societies or nonprofit service plans in accordance with
KRS
304.14-120.
Section 2. This administrative regulation
shall not apply to the solicitation of the following accident and sickness
insurance:
(1) Group or blanket;
(2) Accident only;
(3) Single premium nonrenewable;
(4) Nonprofit dental care;
(5) Nonprofit prepaid optometric
service;
(6) Under which dental
expenses only, prescription expenses only, vision care expenses only or blood
service expenses only are covered;
(7) Conversion to another individual or
family policy in the same insurer with continuous coverage;
(8) Conversion to an individual or family
policy to replace group, blanket coverage in the same insurer;
(9) Change to a Medicare supplement policy
which covers preexisting conditions, without any limitation, to replace a basic
hospital expense, basic medical expense, basic surgical expense, or major
medical expense policy.
Section
3. Definitions.
(1) Replacement
is any transaction wherein new health insurance is to be purchased, and it is
known to the agent or company at the time of application that as part of the
transaction, existing health insurance has been or is to be lapsed or the
benefits thereof substantially reduced.
(2) Continuous coverage means that the
benefits are not less than the benefits under the previous policy, and the
policy also covers loss resulting from injury sustained or sickness contracted
while coverage was in force under the previous policy to the extent such loss
is not covered under any extended benefit or similar provision of the previous
policy.
(3) Group type coverage is
as defined in
KRS
304.18-020.
(4) Direct response insurance is insurance
issued to an applicant who has himself completed the application and forwarded
it directly to the insurer in response to a solicitation coming into his
possession by any means of mass communication.
Section 4. An application form for insurance
subject to this administrative regulation shall contain a question to elicit
information as to whether the insurance to be issued is to replace any
insurance presently in force. A supplementary application or other form to be
signed by the applicant containing such a question may be used.
Section 5.
(1) An agent soliciting the sale of insurance
shall, upon determining that the sale would involve replacement, furnish to the
applicant, at the time of taking the application, the notice described in
Section 6 of this administrative regulation to be signed by the
applicant.
(2) An insurer
soliciting direct response insurance shall, upon determining that the sale
would involve replacement, furnish to the applicant, before the policy is
issued, the notice described in Section 6 of this administrative regulation to
be signed by the applicant.
(3) A
copy of such notice shall be left with or retained by the applicant and a
signed copy shall be retained by the insurer.
Section 6. The form for notice required by
Section 5 of this administrative regulation is filed by reference as Appendix
A. Copies may be obtained from the Office of Insurance, 215 W. Main Street,
Frankfort, Kentucky 40601.
Section
7. A violation of this administrative regulation shall be
considered to be a misrepresentation for the purpose of inducing a person to
purchase insurance. A person guilty of such violation shall be subject to
KRS
304.9-440(1).
