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A. Table of Contents:
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B .......
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Purpose
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C .......
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Applicability and Scope
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D .......
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Definitions
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E .......
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Replacement
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F .......
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Replace After Indication of No Replacement
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G .......
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Severability
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H .......
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Effective Date
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B. Purpose: The
purpose of this regulation is to eliminate unfair and deceptive practices in
the replacement of individual accident and health insurance policies that
insure persons who are eligible for Medicare by reason of age and to persons
who have a current medicaid eligibility card. medicaid eligibility
card.
C. Applicability and Scope:
This Regulation shall apply only to solicitations and sale of individual
accident and health insurance policies to persons who are eligible for Medicare
by reason of age or to persons who have a current medicaid eligibility card.
This Regulation shall not apply to credit health insurance. This Regulation
shall be in addition to any other applicable regulations previously
adopted.
D. Definitions: As used in
this Regulation, the following terms shall have the meanings indicated:
(1) "Agent" means any person licensed by the
South Carolina Department of Insurance as an agent to sell accident and health
insurance.
(2) "Licensee" means any
person licensed as an agent, broker, or solicitor pursuant to South Carolina
law.
(3) "Policy" means the entire
contract between the insurer and the insured, including, but not limited to,
the policy, certificate, riders, endorsements, amendments and the application
which are required to be filed pursuant to Section
38-71-310.
(4) "Replacement" means a transaction wherein
individual accident and health insurance is to be purchased and it is known or
should be known to the licensee or the insurer, in the case of a direct
response solicitation, that previously existing accident and health insurance
has been, or will be, lapsed, cancelled or otherwise terminated as a
result.
(5) "Sales materials" means
any and all promotional materials, policy applications, replacement forms,
duplication forms, outline of coverage forms, or any other forms or
informational material used in connection with the promotion, solicitation, or
sale of accident and health insurance.
E. Replacement:
(1) All applications involved in the sale of
individual accident and health insurance shall include a question designed to
elicit information regarding the existence of any accident and health insurance
on any proposed insured and inquire as to whether any such insurance will be
replaced by the insurance to be issued.
(2) Upon determining that a sale will involve
replacement, a licensee or insurer other than a direct response insurer shall
at the time of the application furnish the applicant with the notice described
in (3) below. One copy of such notice shall be delivered to the applicant and
an additional copy signed by the applicant shall be submitted with the
application and retained by the insurer.
In addition, the licensee shall furnish the applicant with a
complete comparison in writing of the benefits afforded by the new policy and
the policy to be replaced. Such comparison shall include but not be limited to
the benefits contained in the two policies, the renewability provisions of the
two policies, and the respective definitions of pre-existing illnesses or
diseases.
A direct response insurer shall, upon issuance of the policy,
deliver to the applicant the notice described in (4) below. The comparison
statement and the notice will not be required if the insurance to be replaced
is accident only or a single premium nonrenewable policy.
(3) The notice required by (2) above for a
licensee or insurer other than a direct response insurer shall be as follows:
NOTICE TO APPLICANT REGARDING REPLACEMENT
OF ACCIDENT AND HEALTH INSURANCE
According to (your application) (information you have furnished),
you intend to lapse or otherwise terminate existing accident and health
insurance and replace it with a policy 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. In particular, study the
comparison statement which your agent is required to furnish you upon taking
your application.
(1) Health
conditions which you may presently have, (pre-existing 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 interests 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
company to deny any future claims. After the application has been completed and
before you sign it, re-read 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)
(4) The notice required by (3) above for a
direct response insurer shall be as follows:
NOTICE TO APPLICANT REGARDING REPLACEMENT
OF ACCIDENT AND HEALTH INSURANCE
According to (your application) (information you have furnished)
you intend to lapse or otherwise terminate existing accident and health
insurance and replace it with the policy delivered herewith issued by (insert
Company Name) Insurance Company. Your new policy provides 10 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, (pre-existing 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 interests 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. You should carefully check the application and write the company
immediately if any information is not correct, or if any past medical history
has been left out of the application before letting your other policy lapse.
____________________________________
(Company Name)
F. Replacement After Indication of No
Replacement.
Policyholders have the right to replace existing accident and
health insurance after indicating in or as a part of applications for new
insurance that such is not their intention; however, patterns of such action by
policyholders on the same agent shall be evidence of the agent's knowledge that
replacement was intended in connection with such transactions and indicate that
the agent intended to violate the statute.
G. Severability: Each provision of this
Regulation is deemed to be severable and the determination that any provision
is invalid for any reason shall not invalidate the remaining provisions of the
Regulation.
H. Effective Date: This
Regulation shall become effective six months after adoption by the General
Assembly and final publication in the State Register.
