pennsylvania state law

rescission

All viatical settlement contracts entered into in Pennsylvania shall provide the viator with an unconditional right to rescind the contract for 30 days from the date of contract and at least 15 calendar days from when the proceeds are received. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded and proceeds (if received) should be returned to the provider. The policy's death benefits will then be paid.

producer disclosure requriements

An insurance producer acting on behalf of a consumer must execute a written agreement with the consumer that sets forth the services to be provided and provides full disclosure of the fee to be paid.

advertising

Every insurer must maintain a file containing every advertisement it uses, and must indicate the form number on the contract advertised, along with the manner of distribution. The file must be kept for 4 years or until the next regular examination of the insurer, whichever is longer. Each insurer's authorizing officer must file annually a Certificate of Compliance stating that, to the best of their knowledge, all insurer advertisements complied with insurance advertising regulations. If an advertisement refers to a specific benefit of a particular plan, it must also contain any restrictions, exceptions, or limitations. An advertisement may not state or imply that a medical examination is not required, unless it also cites conditions which may prevent the policy from being issued. An advertisement may not imply that a policy can be continued indefinitely when the contract contains conditions of cancellation or non-renewal. An advertisement may not state a policy is an "introductory," "initial," or "special" offer, or that applicants will receive substantial advantages not available at a later date. Furthermore, it may not imply the offer is available only to a specified group of individuals. Advertisements that are seen outside Pennsylvania must indicate any geographical limitation to the availability of the products or services being offered. This might include stating the jurisdictions in which the insurer is licensed, or disclosing the fact that the product being advertised is not available in certain states. An advertisement that uses an enrollment period must prominently display its ending date. An advertisement may not directly or indirectly make unfair or incomplete comparisons of policies or benefits offered by other insurers. Further, advertisements may not disparage competitors, their policies, services or business methods.

insurance fraud regulation

It is a fraudulent offense to: Knowingly and with intent to defraud any insurer, present any claim that contains false, incomplete, or misleading information material to the claim Knowingly and with intent to defraud any insurer, file an application for insurance containing any false information, or conceal information concerning any material fact Knowingly and with intent to defraud a state or local government agency, file a document that contains false, incomplete, or misleading information concerning any fact material to the agency's determination to approve or disapprove a rate filing Engage in unlicensed agent, broker or unauthorized insurer activity Knowingly benefit from a violation of fraud regulations due to the assistance, conspiracy or urging of any person Allow the use of a health care facility to violate any of the provisions of the fraud regulations Use another person's insurance identification card with the intent of presenting a fraudulent claim to an insurer Solicit any person to manage or prosecute any claim or cause of action against any person for negligence damages

general rules

No person shall act as a viatical settlement provider or broker without an appropriate license from the Department of Insurance. This will include the submission of an audited financial statement no older than 1 year and 120 days old and an audited financial statement as of the end of the most recent quarter. The license fee for a viatical provider is $300 and for a viatical broker it is $100. A viatical settlement provider entering into a viatical settlement contract must make available prior to or at the time of execution of the viatical settlement contract, a witnessed, written document stating the following: The viator consents to the viatical settlement contract. The viator has a full and complete understanding of the viatical settlement contract and has a full and complete understanding of the benefits of the life insurance policy. The viator has entered into the viatical settlement contract freely and voluntarily. If applicable, the insured is terminally or chronically ill and said illness/condition was diagnosed after the life insurance policy was issued. The viator is of sound mind, under no constraint or undue influence. The viator must consent in writing to the release of his/her medical records to a viatical settlement provider, viatical settlement broker and the insurance company that issued the life insurance policy covering the life of the insured. All records shall remain confidential. If the policy being viaticated has been in force less than 2 years, the viator must consent in writing to let the policy's contestability period run until after the insurer has completed its good faith investigation regarding the validity of the insurance contract.

unfair discrimination

Permitting individuals of the same class and hazard to be charged different rates for the same insurance coverage, unless the rate differential is based upon sound actuarial principles or is related to actual loss experience. This definition includes discrimination by reason of race, religion, nationality or ethnic group, age, sex, family size, occupation, place of residence or marital status.

suitability of annuities act

Prior to the purchase or exchange of an annuity, the producer or insurer must make reasonable efforts to obtain information concerning all of the following: The consumer's financial status The consumer's tax status The consumer's investment objectives Insurers and producers must maintain a records of the information used in making the recommendations that were the basis for transactions for 5 years after the transaction is completed.

deadline

If the proceeds are not given to the viator within the prescribed time limits, the viator may void the contract until such proceeds are paid and accepted.

right to examine (free look)

The free look period on individual life insurance policies is 10 days. If a policy is replacing an existing policy with the same insurer, the free look period is 45 days. If a policy is replacing an existing policy and is from a different insurer, the free look period is 20 days. Policy buyers may return the policy for a premium refund within the free look period if they are dissatisfied with the policy for any reason.

prohibited provisions

payment of claims, backdating, time for legal action

disclosing policy numbers

A licensee may not disclose, other than to a consumer reporting agency, a policy number to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other marketing through electronic mail to the consumer.

Viatical Settlement Provider

A person other than a viator who enters into a viatical settlement contract.

incontestability

An individual life insurance policy is incontestable after it has been in force during the lifetime of the insured for 2 years from the date of issue, except for nonpayment of premiums. Death by suicide is contestable for 2 years.

backdating

Backdating an individual life insurance policy to conserve age is allowed up to 6 months.

examinations of books and records

Every company or person subject to examination by the Commissioner must keep all books, records, accounts, papers, documents and any or all computer or other recordings relating to its business readily available for examination or inspection. This is to verify the financial condition of the company or person and ascertain whether the company or person has complied with the laws of this state. The Department of Insurance may conduct an examination of each insurance company at least once every 5 years. The Department may investigate or examine any person or business.

illegal inducement

Giving capital stock, securities, or contracts promising returns and profits as inducements to purchase insurance.

testimonials

If the person making a testimonial, an endorsement or an appraisal has a financial interest in the company or a related entity as a stockholder, director, officer, employee or otherwise, it must be prominently disclosed in the advertisement. If a person is compensated for making a testimonial, endorsement or appraisal, it must also be disclosed in the advertisement.

disclosure of ownership transfer or beneficiary change

If the viatical settlement provider transfers ownership or changes the beneficiary of the policy, it must notify the insured within 20 days.

payment of claims

In Pennsylvania, a policy becomes a claim after the death of the insured, and settlement must be made after receiving proof of death.

misappropriation of funds

Inappropriately withholding or converting money in the course of doing business.

maintenance and duration

Insurance producer licenses are issued by the Department in the name of the applicant or business entity in either a paper or electronic form. They are nontransferable, and may be issued in one or more lines of authority. Licenses are issued for a maximum of 2 years.

Regulation of Variable Life Insurance

Insurers who want to sell variable insurance products must first submit to the Commissioner a written statement explaining their standards of suitability. Individual producers must be properly licensed for the sale of securities in order to engage in variable life insurance transactions. The standards of suitability must specify: That no recommendation can be made to an applicant to purchase a variable life insurance policy; and That no variable life insurance policy can be issued if there are no reasonable grounds to believe that purchasing the policy is in the applicant's best interest Suitability is determined by information provided by the applicant regarding: Insurance and investment objectives Financial stability and needs

sharing personal information

No financial institution may share any insurance coverage information for the purpose of selling or soliciting the purchase of insurance or annuities unless notice is given to the customer. The institution must also give the customer 30 days to opt out of receiving future solicitations based on this information. A licensee must provide a clear and conspicuous notice that accurately reflects its privacy policies and practices to the licensee's customers, no later than when the licensee establishes a customer relationship, and annually thereafter during the continuation of the customer relationship.

health status

Once a viatical/life settlement has been completed, the new policy owner may, through the life settlement provider/broker only, periodically check the health status of the viator. Such checks may be made no more than: Once every 3 months if the life expectancy is more than 1 year. No more than once a month if the life expectancy is 1 year or less.

policy forms and rates

The Commissioner has the duty to create the regulations necessary to carry out the laws governing insurance rates and policy forms. Rates may be neither excessive nor inadequate. Also, rates may not be unfairly discriminatory. However, the law does not prohibit or discourage reasonable competition. Insurers may determine insurance rates by the using factors such as the following: Past and prospective loss experience within and outside of Pennsylvania Physical hazards Safety and loss prevention factors A reasonable profit margin Unabsorbed premium deposits returned by the insurer to their policyholders (dividends) Insurers may not use such discriminatory factors as race, religion or national origin.

grace period

The grace period for individual life insurance policies is 1 month (a minimum of 30 days).

privacy of consumer financial information

The laws governing confidentiality of consumer financial information apply to individuals only, not to businesses. They are not applicable to health information, which is protected by a separate statute.

payment of premiums

This provision must state that all premiums are payable in advance.

delivery receipt requirement

When a producer hand delivers an individual life policy or annuity, a delivery receipt is required, stating the date received. The receipt must state the date received. The receipt date is the date the policyholder and producer sign the receipt; it begins the examination period. When delivered by methods other than hand delivery, a mailing certificate is adequate proof of delivery.

examinations

the commissioner may examine and investigate the affiars of any person engaged in the business of insurance in Pennsylvania, in order to detect unfair methods of competition or unfair or deceptive practices or acts

penalties

the commissioner may impose a penalty of $50 per violation, $500 if the violation is willful, after a hearing held with 10-days' notice

process & types of licenses

the commonwealth of pennsylvania issues 3 basic types of licenses: insurance producers, temporary licenses, managers and exclusive general agents

solicit

to attempt to sell insurance, or to urge someone to apply for a particular policy

negotiate

to directly discuss or offer advice to a consumer regarding the benefits, terms or conditions of a particular insurance contract, assumig one is the business of selling or placing insurance

sell

to exchange a contract of insurance for money on behalf of an insurer

life insurance basics

viatical and life settlements

rate filing

In Pennsylvania, insurers must file all rates with the Commissioner prior to use, unless specifically exempted. All rate filings are subject to a waiting period of at least 30 days. The Commissioner may extend the waiting period for an additional 30 days for a total of 60. Unless the Commissioner extends the waiting period, or specifically disapproves the filed rate during the 30-day review period, the rate is considered approved and may be applied.

defamation

Making any false statement that is maliciously critical or derogatory of any insurer's financial condition with the intention to injure someone in the business of insurance. Advertisements may not disparage competitors, their policies, services or business methods. They also may not falsely or unfairly disparage or minimize competing methods of marketing.

notice to insurer

Within 20 days after a viatical agreement has been reached, the viatical settlement provider shall give written notice to the insurer that issued the policy that the policy has or will become a viaticated policy. If the viator is terminally or chronically ill, the notice must be accompanied by a written statement from the viator as required.

change in address

a licensee or applicant for an insurance producer license must notify the department of a change of address within 30 days

state regulation

acts constituting insurance transations- no one may negotiate, sell, or solicit insurance without holding an insurance producer's license:

managers and exclusive general agents

effect reinsurance agreements and/or manage an insurance business or businesses on behalf of an insurer

standard provisions

entire contract, right to examine (free look), payment of premiums, grace period, reinstatement, incontestability

viatical settlement broker

A person that negotiates viatical settlements between a viator and one or more viatical settlement providers. The term does not include an attorney, certified public accountant or financial planner who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider or purchaser.

pennsylvania life and health insurance guaranty association

No insurer, producer, or other representative of the insurer may make, publish, circulate, or place before the public any advertisement or statement that uses the existence of the association for the purpose of solicitation or sale of any form of insurance covered by the association.

unfair insurance practices

rebating and inducements prohibited, misrepresentation, twisting, false advertising, defamation, boycott, coercion, or intimidation, misappropriation of funds, unfair discrimination, illegal inducement, agency termination

insurance producers

sell, solicit and negotiate insurance contracts

business entities

A business entity applicant, upon designating one or more licensed individuals responsible for compliance with the insurance laws and regulations of Pennsylvania, may apply for a resident or nonresident insurance producer license provided the designated individuals submit to the Department of Insurance: A completed application indicating the lines of authority for which the business entity desires a license Proof of licenses held by the designated individuals The required license fee

duty to report administrative or criminal actions

A licensee must report to the Department: Any administrative action taken against the licensee within 30 days of the final disposition of the matter Any criminal conduct charges within 30 days of being charged

boycott, coercion, or intimidation

Entering into agreement to boycott, coerce, or intimidate resulting in an unreasonable restraint of the business of insurance, or creating a monopoly.

agency termination

No insurer may terminate its contract with an agent without first providing the agent and the Insurance Commissioner written notification at least 90 days. When an insurer notifies an agent that its contract will be terminated, the insurer must offer to continue the agent's policies for a period of 12 months from the date of termination. Any person, agent or insurer who willfully violates these provisions may be assessed a fine of up to $500, plus costs. In addition, the Insurance Commissioner may: Suspend or revoke the license of an offending person, agent or insurer Refuse to issue or renew a license for up to 1 year

opt-out notice

Where applicable, a licensee must provide the consumer with a notice of the opportunity to opt-out of any disclosure of non-public personal financial information.

temporary licenses

issued to certain individuals, for the purpose of ensuring an orderly continuation or disposition of an insurance business during a time of transition

disciplinary actions

license denial, nonrenewal, suspension, or revocation

penalties and fines for violations

As the result of a hearing, the Commissioner may impose the following penalties in addition to any other penalty which may be imposed by a court: Deny, suspend, refuse to renew, or revoke the license of any respondent Impose a civil penalty of up to $5,000 for each action in violation Issue a cease and desist order In addition to any penalties imposed under the Insurance Code, a court may impose the following civil penalties for Unfair Trade Practices: A fine of up to $1,000 for each violation, up to an aggregate of $10,000, for all violations in any 6-month period, if the person did not know the act was a violation A fine of up to $5,000 for each violation, up to an aggregate of $50,000, for all violations in any 6-month period, if the person knew or reasonably should have known that the act was a violation A fine of up to $10,000 for each violation of a Cease and Desist Order

standards for basic illustrations

Guaranteed death benefits and values must be shown and labeled "guaranteed." Any non-guaranteed elements may not be based on a scale more favorable to the policyowner than the insurer's illustrated scale and must be clearly labeled as "nonguaranteed." Guaranteed benefits must be shown before corresponding nonguaranteed elements. Illustration of non-guaranteed elements must indicate the benefits and values are not guaranteed. A basic illustration must include: A brief description of the policy being illustrated A brief description of the premium outlay for the policy A brief description of any policy features, riders or options shown and the impact they may have on the benefits and values of the policy Identification and a brief definition of column headings and key terms

non-disclosure to 3rd parties

Licensees may not disclose any personal financial information about consumers to nonaffiliated third parties unless the licensee has given the consumer: An initial notice An opt-out notice A reasonable opportunity to opt-out of the disclosure Violation of Pennsylvania privacy law is considered an unfair method of competition and an unfair and deceptive act and practice in the business of insurance.

twisting

Making a purposeful misrepresentation to induce a person to lapse, cease, or forfeit an existing policy in order to replace with another one covering the same risk. Violation is a third degree misdemeanor.

fiduciary responsibility of viatical settlement broker

Notwithstanding the manner in which the viatical settlement broker is compensated, a viatical settlement broker is deemed to represent, to act in the best interests of, and owe a fiduciary duty only to the viator.

rebating and inducements prohibited

Offering any discount of premium or other valuable consideration not specified in the policy as an inducement to buy the contract. Violation is a third degree misdemeanor.

reinstatement

The period within which to reinstate a lapsed life insurance policy is 3 years.

entire contract

The policy plus the signed application (if attached to the policy) will be the entire contract between the insurer and the policy owner.

selection criteria and unfair discrimination

Unfair discrimination between individuals of the same class in the amount of premiums or rates charged for any life or health and accident insurance policy is prohibited. Issuing an insurance policy or contract of insurance in Pennsylvania that unfairly discriminates is a misdemeanor punishable by a fine up to $500. The Insurance Commissioner may pursue one or more of the following courses of action on the offending person, corporation, insurance company, association, or exchange: Suspend or revoke the license Refuse to issue a new license for up to 1 year Impose a penalty of up to $500 per violation

renewal

A licensee may renew his/her license for an additional 2-year period by remitting a completed renewal form, verification the licensee has completed the continuing education requirement, and any required fee. A licensee who allows his/her license to lapse may, within 1 year of the license renewal date, request that the Department reinstate the license. If a person applies for reinstatement more than 1 year after the lapse date, the person must reapply for the license. The fee for renewal of a lapsed license is $165.

continuing education

A licensee must complete 24 credit hours of approved continuing education for each 2-year license period as a condition of license renewal. A licensee may carry forward excess continuing education credit hours up to a maximum of 24 credit hours from one licensing period to the next. The following are exempt from the requirements of continuing education: A licensee who was licensed prior to January 1, 1971 who has been continuously licensed since that time A licensee that is a business entity A licensee who has only a limited line of authority A licensee who has a line of authority limited to restricted fraternal A licensee who has a line of authority limited to limited line credit insurance if the insurer provided a course of instruction A nonresident licensee who has satisfied the continuing education requirements of the licensee's reciprocal home state A licensee whose line of authority is restricted to domestic mutual fire insurance and the licensee's appointment is with an insurer writing only coverage other than insurance upon automobiles

late submission

A licensee who fails to provide a written response within 30 days of receiving an inquiry, or remit valid fee payment after the Department specifies the violation, must correct the violation within 15 days of the notice. If a licensee fails to correct a "response" violation within 15 days of receiving notice, the Department may assess an administrative fine of up to $100 per day per violation.

appointment terminations

An insurer that terminates the appointment of an insurance producer must notify the Department in writing within 30 days following the effective date of the termination. If the reason for the termination was a violation of insurance laws or regulations, or if the insurer had knowledge that the licensee was found to have engaged in any activity prohibited by insurance laws or regulations, the insurer must inform the Department in the notification. Within 15 days of notification, an insurer must mail a copy of the notification to the licensee's home address. An insurer or licensee that fails to report a termination may have its Certificate of Authority or license suspended or revoked, and may have civil penalties imposed of up to $5,000 for each violation.

misrepresentation

Making misleading statements, estimates, illustrations, presentations, or fraudulent comparisons of insurance policies, which misrepresent the Naming an insurance policy in a way that misrepresents its true nature Making misleading representations for the purpose of inducing a consumer to terminate or borrow against an existing insurance policy Misrepresenting any insurance policy as being shares of stock This violation is a third-degree misdemeanor.

life insurance surrender comparison index disclosure

A surrender comparison index must be provided to a life insurance purchaser as a means for making cost comparisons of policies having the same premium payment period and pattern. The insurer is required to keep the producer's certification of delivery for 3 years or until the next regular examination by the Department, whichever is later. If a producer fails to make adequate disclosure of basic information, the Department may suspend, revoke, or refuse to renew the license of the producer, as well as impose a penalty up to $1,000 for each violation. An insurer failing to make the required disclosures may have its Certificate of Authority revoked and face a penalty of up to $1,000 for each violation. In addition to the penalties, any violation will also be considered a violation of the Unfair Insurance Trade Practices Act.

multiple viators

If there is more than one viator on a single policy and the viators are residents of different states, the settlement shall be governed by the law of the state in which the viator having the largest percentage ownership resides or, if the viators hold equal ownership, the state of residence of one viator agreed upon in writing by all viators.

federal regulation: do not call registry

The Federal Trade Commission Telemarketing Sales Rule give consumers a choice about whether they want to receive most telemarketing calls. It is illegal for most telemarketers or sellers to call a number listed on the National Do Not Call Registry. Companies must update their list at least once every 31 days. The National Do Not Call Registry does not limit calls by political organizations, charities, or telephone surveyors.

commissioner's general duties and powers

The Insurance Commissioner heads the Department of Insurance and is appointed by the Governor for a term of 4 years. As part of his or her duties, the Commissioner reports to the Governor concerning the general conduct and conditions of insurers doing business in Pennsylvania. In order to carry out this role, the Commissioner has the power to enforce the laws of Pennsylvania and to make reasonable rules and regulations relating to the transaction of the business of insurance. The Commissioner's other powers and duties include: Licensing insurance producers Approving and administering the pre-examination program, licensing examinations, and continuing education programs Securing any documents or information, including fingerprints, to verify the accuracy of information provided on an application Participating in the NAIC's centralized insurance producer registry Approving forms used to apply for an insurance producer license Approving additional limited lines of authority

fraud prevention

The Insurance Fraud Prevention Authority was established to support the public/private effort to combat fraud. Its duties and powers include: Providing financial support to various counties and district attorneys where fraud is a problem Assessing the scope of the problem of insurance fraud in the Commonwealth Developing the implementation of state-wide plans, programs and strategies to combat insurance fraud Coordinating interagency efforts to combat fraud Advising and assisting the Section of Insurance Fraud in the Attorney General's office Establishing a fund to reward persons not connected with the insurance industry who provide information leading to the conviction of persons responsible for insurance fraud

penalties and remedies

If a person is found to have violated any provision of this regulation, is subject to civil penalties of up to $5,000 for the first violation, $10,000 for the second violation, and $15,000 for each subsequent violation. The court may, in addition to any other penalty, sentence a person convicted of insurance fraud to make restitution. Any insurer and any agent, servant, or employee acting in the course and scope of their employment, are immune from civil or criminal liability for the release of information to any entity duly authorized to receive such information by federal or state law, or by Department of Insurance regulations. All applications for insurance and all claim forms must contain the following notice: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties.

false advertising

Presenting any information or advertisement which is false or misleading about any person or company in the conduct insurance business. False advertising includes: Omitting any material fact in any book, report or statement filed with any supervisory or other public official Making any false material statement about the financial condition of a person Using words or phrases that are not reasonably comprehended by the target audience Omitting exceptions, reductions, limitations or other restricting provisions when discussing the specific benefits of a policy Falsely representing that buyers become group members enjoying special advantages Misleading a consumer regarding renewability Falsely implying jurisdiction outside of Pennsylvania Falsely implying that a contract is a special, limited or introductory offer Under this law, an advertisement may be any of the following: Printed and published material Audio visual material and descriptive literature used in direct mail, newspapers, magazines, radio scripts, TV scripts, billboards and similar displays Descriptive literature and sales aids for presentation to consumers Illustrations, form letters, prepared sales talks, presentations and material for use by producers

temporary license

The Department may issue a non-transferable temporary insurance license for up to 180 days to the following persons: The surviving spouse or court-appointed personal representative of a resident individual licensee who dies or becomes mentally or physically disabled. The temporary license may be used to operate the business owned by the licensee until The business is sold or transferred The licensee recovers and returns to the business] New personnel are trained and licensed to operate the licensee's business An owner, partner, or employee of a business entity licensee upon the death or disability of the designated licensee The designee of an individual licensee who enters active service in the armed forces of the United States Any other person where the Commissioner deems that the public interest will best be served by the issuance of a temporary license

transfer of proceeds

The viatical settlement provider shall instruct the viator to send the executed documents directly to an independent escrow agent. Within 3 business days after the escrow agent receives the documents, the proceeds of the viatical settlement shall be placed into an escrow or trust account. The escrow agent will send the executed documents to the settlement provider, who will then instruct the escrow agent to pay the proceeds to the viator.

illustrations

A producer may only use a life insurance or annuity illustration provided by an insurer. Illustrations must contain the: Insurer's name, and date the illustration was prepared for the proposed insured Name and business address of the producer Underwriting or rating classification which the illustration is based upon Generic name of policy (and company product name, if different), and form number Initial death benefit Dividend option election, or application, of any applicable non-guaranteed elements Insurers or producers must not: Represent the policy as anything but a life insurance policy Indicate that the payment or amount of non-guaranteed elements is guaranteed Use an illustration that at any point projects policy performance to be better than actual performance Use the term "vanish" or "vanishing premium" (or a similar term) to imply that the policy becomes paid up using non-guaranteed elements as a portion of future premiums Use interest rates that are greater than the company's current earned interest rate in determining illustrated non-guaranteed elements

requirements: resident/nonresident license required

A person may not sell, solicit, or negotiate a contract of insurance in Pennsylvania without being licensed as an insurance producer for the lines of authority under which the contract is issued. Violation is a 3rd degree felony. The following are not considered insurance producers for purposes of this act: An insurer An employee who supervises the training of insurance producer, inspects, rates, or classifies risks An officer, director, or employee who does not receive a commission and whose activities are Executive, administrative, managerial, and clerical and only indirectly related to the sale, solicitation, or negotiation of insurance Related to underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a contract of insurance Limited to providing technical advice and assistance to licensed insurance producers A person who Furnishes written information for group property and casualty insurance, Performs administrative services related to mass marketed property and casualty insurance Issues certificates under plans or otherwise assists in administering plans Provides risk management services to a business entity Performs administrative functions, provides clerical support, or enrolls renters on behalf of a rental company that offers insurance coverages in connection with and incidental to the rental of motor vehicles An employer, an association, or the trustees of an employee trust plan and their officers, directors, and employees, engaged in the administration of an employee benefits program if they are not compensated, directly or indirectly, by the insurer issuing the policy of insurance A person engaged in the advertising of insurance who does not sell, solicit, or negotiate insurance A salaried full-time employee who counsels or advises the employee's employer on the employer's insurance issues and neither sells nor solicits insurance nor receives a commission

managers and exclusive agents

An exclusive general agent is a licensee granted sole authority to act as a producer for a domestic insurer who produces business equal to or more than 25% of the surplus. A manager is anyone who negotiates and binds ceding reinsurance contracts on behalf of an insurer or manages all or part of the insurance business of an insurer and acts as an agent for the insurer. A person may not engage in any activities requiring a manager or exclusive general agent unless the person is licensed. Violation of this requirement is a misdemeanor of the third degree and may be sentenced to pay a fine of up to $1,000 for each day of operation without a license.

producer regulation: fiduciary responsibility

An insurance producer is responsible in a fiduciary capacity for all funds received or collected as a producer and may not mingle those funds with the producer's own funds or with funds held by the producer in any other capacity, without the express consent of the insurance entity on whose behalf the funds were received. Unless given explicit permission to the contrary by the insurers, a producer must hold premium funds separate from other funds in a separate premium trust account, from which disbursement may only be made for the following: Payment of premiums to insurers The return of premiums to the insured The transfer of commissions The withdrawal of voluntary deposits Voluntary deposits are deposits made for the purpose of: Maintaining a minimum balance Guarantying the adequacy of the account Paying premiums to insurers in advance of their collection (premium financing)

appointments procedures: procedure appointment

An insurance producer may not act on behalf of an insurer unless the producer is appointed by the insurer. An insurer that appoints an insurance producer must file a Notice of Appointment with the Department, stating the name for which companies within the insurer's holding, company system, or group the appointment is made. Once appointed, an insurance producer will remain appointed until the insurer terminates the appointment in writing or until the producer's license is suspended, revoked, or otherwise terminated. An appointment fee of $12.50 per producer will be billed annually to the insurer for each producer the insurer appoints during the preceding calendar year, regardless of the length of time the producer held the appointment with the insurer. An insurer must, upon request, certify to the Department the names of all licensees appointed by the insurer.

nonresident licenses (reciprocity)

Any individuals currently licensed as a producer in another state may apply for a nonresident insurance producer license in Pennsylvania. The Department will issue licenses for those lines of authority that are equivalent to the lines of authority for which nonresident applicants are licensed in their home state. The Department may deny nonresident licenses to any applicant whose home state does not give reciprocal treatment to Pennsylvania residents seeking nonresident licenses there. The Department may waive the requirements for a person applying for a nonresident producer license, if the person's home state awards nonresident insurance producer licenses to resident licensees on the same basis.

conversion to individual policy

Any insured individual who becomes eligible for conversion to an individual policy without evidence of insurability has a specified amount of time to convert stated in the policy. Even if the conversion period for group life insurance is 31 days, notice must be given at least 15 days prior to the expiration date of that period. If notice is not given in a timely manner, the scheduled expiration date of the conversion privilege is waived, and the individual is given at least 15 days to exercise the option, but no more than 60 days beyond the original expiration date. Written notice presented to the individual or mailed by the policyholder to the last known address must meet the notice requirements.

cease and desist order

If the Commissioner has good reason to believe that any person is violating the law, the person will be given 30 days' notice of a hearing, where the person will have an opportunity to show cause why the Commissioner should not issue a Cease and Desist Order for the acts constituting a violation, and why administrative penalties should not be assessed. After the hearing, the Commissioner will issue a written order summarizing the facts presented at the hearing and stating what remedial action, if any, is required of the person charged. If the Commissioner determines that a violation has occurred, the Commissioner may issue a Cease and Desist Order requiring the person to stop from engaging in the violation, or the Commissioner may suspend or revoke the person's license. If a person fails to comply with a Cease and Desist Order issued by the Commissioner, an injunction may be filed in the county in which the violation occurred.

hearings

Upon violation of an insurance law or regulation, the Department will fix a time and place, at least 10 days thereafter, when a hearing will be held. If a violation is found after the hearing or upon the person's failure to appear at the hearing, the Commissioner may impose any combination of penalties as seems appropriate. No person will be excused from testifying on the basis of possible self-incrimination.

company regulation: certificate of authority

No organization may transact insurance without a Certificate of Authority issued by the Insurance Commissioner. In order to qualify for a certificate the organization must demonstrate to the Commissioner it conforms to the insurance code. Certificates renew annually on April 1. Anyone acting as an insurer without a Certificate of Authority will be required to pay a civil penalty of $1,000-$10,000 for each offense. The Insurance Commissioner may issue a cease and desist order if he/she has evidence that someone is engaged in the insurance business without a certificate of authority. Whenever an insurer acts in violation of any laws, regulation or Departmental orders, the Commissioner may revoke or refuse to renew the insurer's Certificate of Authority. An insurer found to exceed the powers granted by the certificate of authority Certificate of Authority may be fined $500 per policy issued in violation. The Commissioner will not authorize a government-owned company to do business until it demonstrates the following: It gets no subsidy or other unfair, competitive advantage due to government control or status It is not entitled to claim sovereign or similar governmental immunity It cedes no more than 50% of its annual premiums to entities not regulated by this state It maintains a required policyholders' surplus It is domiciled in a jurisdiction with fair and reasonable insolvency laws for insurers Its operation is not detrimental to the public interests of the Commonwealth If a government owned entity violates the rules for getting a Certificate of Authority, the Commissioner may take any of the following actions: Suspend or revoke the Certificate of Authority Refuse to renew the Certificate of Authority for a period of up to 1 year Impose a financial penalty of between $5,000-$25,000 per violation Solvency Every stock and mutual insurance company must file an annual statement of its financial condition with the Insurance Commissioner. The failure to file a statement on a timely basis may result in a fine for each day it hasn't been filed, possible suspension of the authority to do new business, and suspension, revocation, or refusal to renew the insurer's Certificate of Authority. For an insurer to be solvent, assets must exceed liabilities plus the greater of the capital and surplus required for its organization or its authorized and issued capital stock.

unfair claim settlement practices

The following acts are considered unfair or improper claim settlement practices in Pennsylvania: Misrepresenting pertinent facts or insurance policy provisions relating to coverage at issue Failure to disclose pertinent benefits or coverages to first-party claimants Applying time limits to the filing of claims that are not specified in the policy Requesting a first-party claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment Making partial payments using language that implies that this is the limit of the insurer's liability Failing to acknowledge and act promptly upon receipt of a claim under an insurance policy Not acknowledging claims within 10 working days Not answering claims-related inquiries from the Department within 15 working days Not responding to client communications, generally, within 10 working days Not providing claims forms within 10 working days Failing to adopt and implement reasonable standards for the prompt investigation of claims Not completing claims investigations within 30 days after notification, if possible (if a claim cannot be completed investigated within 30 days, the insurer must notify the claimant by the end of the 30 days, and then every 45 days thereafter) Refusing to pay claims without conducting an investigation based upon all information Failing to affirm or deny coverage of claims within a reasonable time after a proof of loss has been submitted to the insurer Not attempting, in good faith, to effectuate a prompt, fair, and equitable settlement of a claim in which liability has become reasonably clear (in such cases the insured should be made aware of acceptance or denial within 15 working days) Failing to settle first-party claims on the basis that ultimately collection will be made from a 3rd party Denying a claim on the grounds of a specific policy provision, condition, or exclusion without referring to the provision, condition, or exclusion in the denial Prolonging negotiations for claim settlement with a claimant Compelling insureds to institute litigation to recover amounts due by offering substantially less than the amounts recovered in actions brought by legal process Attempting to settle a claim for less than that a reasonable person would believe they are entitled Attempting to settle claims on the basis of an altered application Making known to insureds or claimants a policy of appealing arbitration awards Making claim payments to insureds not accompanied by a statement indicating the coverage under which payment was made Delaying investigation or payment of a claim by requiring submission of a preliminary claim report Failing to promptly settle a claim where liability has become reasonably clear under one portion of the policy in order to influence settlements under other portions of the policy Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim Ascribing a percentage of fault to a person seeking to recover from an insured party, in spite of an obvious absence of fault on the part of that person The following are not considered unfair claim practices: Failing to pay a claim prior to the receipt of a proof of loss Failing to pay a claim for services received prior to the effective date of the coverage Failing to pay a claim when a policy is in a lapsed status Settling a claim by arbitration

disclosure to consumers

With each viatical settlement application, a provider or broker must provide the viator with at least these disclosures: Alternatives to viatical settlement contracts include accelerated death benefits or policy loans. Some or all of the viatical settlement proceeds may be taxable. Obtain a professional tax advisor's assistance. Proceeds of the viatical settlement could be subject to creditor claims. Proceed receipts may adversely affect the viator's eligibility for Medicaid or other government benefits. Obtain advice from the appropriate agency. The viator has the right to rescind the viatical settlement contract for 15 days after receipt to the proceeds. If the viator dies in that period, the contract is deemed rescinded. Proceeds will be paid within 3 business days of when the viatical settlement provider has received notice that the policy has been transferred and beneficiary designated. Entering into a viatical settlement contract may cause various rights under the insurance contract to be forfeited. Advice should be sought from a financial advisor. All medical, financial, or personal information obtained by a provider or broker may be disclosed as necessary. The viator must consent to the disclosure. All information provided by the viator will be shared with the insurer that issued the policy. A provider or broker must provide a brochure describing the viatical settlement process. Viatical settlement providers must conspicuously disclose in the contract or separate document signed by the viator and provider: The affiliation between the provider and the issuer of the viaticated policy The provider's name, address, and telephone number If a joint policy, coverage on other lives may be lost. Consult with the insurance producer or the insurer issuing the policy The current death benefit dollar amount payable to the provider The name, business address, and telephone number of the independent third party escrow agent The viator or owner may inspect relevant documents A viatical settlement broker must disclose the compensation amount and calculation method.

record retention

A copy of an illustration used in the sale of life insurance must be signed and submitted to the insurer at the time of application. A copy must also be provided to the applicant. If a policy is issued other than as applied for, a revised basic illustration relating to the policy as issued must be sent with the policy. A copy of the basic illustration and any revised basic illustration, along with any certification must be retained by the insurer until 3 years after the policy is no longer in force.

replacement requirements

Application forms for health coverage must contain a question to determine if the policy being applied for is to replace an existing health policy. A supplementary application or other form containing the question and signed by the applicant may be used. If replacement is determined, the insurer (other than a direct response insurer) or its agent must furnish the applicant with a Notice Regarding the Replacement of Accident and Sickness Insurance. The applicant must sign a copy of the form for the insurer's retention. This procedure does not apply to single-premium, nonrenewable policies or accident-only policies.

PA mandated benefits: childhood immunizations

Coverage for childhood immunizations is required under all health insurance plans.

employer group health: preexisting conditions

Preexisting conditions under a group contract may not be defined more restrictively than a disease or physical condition caused by illness or injury for which medical advice or treatment has been received within 90 days immediately prior to becoming covered under the group contract. Pre-existing conditions must be covered after the individual has been covered under the group contract for more than 12 months. When a group contract replaces another group contract, only preexisting conditions already excluded in the original policy may be excluded by the new policy. A preexisting condition exclusion is prohibited in blanket, group student accident, sickness insurance and group mortgage disability insurance.

riders affecting death benefit amount: accelerated living benefit provision rider-effect on death benefit

The policy must contain a clear statement that the death benefit and any accumulation values and cash values will be reduced if an accelerated benefit is paid. If the benefit paid is equal to 100% of the policy death benefit, the policy terminates upon payment of the settlement option.

suitabililty

The standards used to determine suitability must include the following considerations: The consumer's ability to pay for the proposed coverage, as well as other pertinent financial information The applicant's goals or needs in relation and the ability of the proposed insurance to meet these goals or needs A fair comparison of existing and proposed insurance in cases where a replacement is proposed

PA mandated benefits: routine pap smears

Policies must cover routine pap smears when obtained in accordance with the recommendations of the American College of Obstetricians and Gynecologists.

medicare supplements: minimum benefit standards

A preexisting condition may not be defined as anything which occurred more than 6 months prior to the effective date of the Medicare Supplement. Coverage against losses from sickness must be indemnified in the same way as losses resulting from accidents.

verification of coverage

A viatical settlement provider or viatical settlement broker requests a verification of coverage from the insurer who issued the policy being viaticated. This request must be accompanied by a copy of the required medical release, a copy of the viator's application for the settlement contract, and a copy of the notice required. The insurer must complete and transmit the verification of coverage form no later than 30 days after it's received. The completed verification of coverage form shall indicate whether the insurer intends in good faith to pursue an investigation at that time regarding the validity of the insurance contract because of an actual or potential fraudulent viatical settlement act or other fraud. Nothing in this section shall prohibit an insurer from exercising its right to contest the validity of any policy on the grounds of fraud.

uniform required provisions: time limit on certain defenses

After the policy has been in force for a period of 3 years, it becomes incontestable, except for fraudulent statements made by the applicant. Furthermore, once a policy has been in force for 3 years, no claim for a loss or disability may be reduced or denied on the grounds of a preexisting condition.

unintentional lapse

An LTC policy or certificate must provide reinstatement for up to 5 months after termination in the event of lapse, if the insurer is provided proof of the insured's cognitive impairment or the loss of functional capacity during the grace period.

PA mandated benefits: mentally/physically handicapped children

An unmarried dependent child of an insured may retain coverage after a limiting age if, prior to age 19, the child is incapable of self-sustaining employment due to mental or physical handicap.

uniform optional provisions: conformity with state statutes

Any provision of a policy that on its effective date is in conflict with the statutes of Pennsylvania is amended to conform to the minimum requirements of such statutes.

standards for marketing

Anyone marketing LTC insurance in Pennsylvania must: Establish marketing procedures and producer training requirements to assure that marketing activities will be fair, accurate, and result in suitable purchases Prominently display a "Notice to Buyer" on the first page of the both Outline of Coverage and policy that the policy may not cover all associated LTC costs. Provide copies of the required disclosure forms Make a reasonable effort to determine both whether coverage already exists, and if it will be replaced At the time of solicitation, inform consumers regarding Pennsylvania's approved senior insurance counseling program Provide an explanation of the contingent (nonforfeiture) benefit that may be available upon policy lapse

PA mandated benefits: cancer therapy

Chemotherapy and hormone treatment benefits will be paid whether performed in a physician's office, in an outpatient department of a hospital, in a hospital as a hospital inpatient, or in any other medically approved treatment setting.

PA mandated benefits: postpartum coverage

Every health insurance policy that provides maternity benefits must provide coverage for a minimum of 48 hours of inpatient care following a normal vaginal delivery and 96 hours following Caesarean delivery. The policy must provide coverage for at least one home health care visit within 48 hours after discharge when discharged earlier than the specified inpatient requirement. The health insurance policy may not include any copayment, coinsurance or deductible amount for any postpartum home health care visits.

third-party notice

Every insured is allowed to designate at least one additional person to receive notice of lapse or termination for nonpayment of premium, if the premium is not paid on or before its due date. Notice is sent 30 days after the premium due date.

PA mandated benefits: annual gynecological examinations

Policies must provide coverage for an annual gynecological exam, including a pelvic exam, and a clinical breast examination.

continuation and conversion

Group LTC insurance issued in Pennsylvania must provide covered individuals with a basis for continuation or conversion of coverage. Continuation of Coverage is a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate, subject only to the continued payment premiums. Conversion means the ability to obtain an individual LTC policy without evidence of insurability upon termination of group coverage. Converted policy benefits must be identical or substantially equivalent to or in excess of those provided under the insured's group policy. A conversion policy must be offered if the insured has been continuously covered for at least 6 months immediately prior to the termination.

PA mandated benefits: serious mental illness

Group health insurance policies issued to groups of 50 or more employees must provide coverage for serious mental illness that meet the following standards: 30 days inpatient and 60 days outpatient, annually The right to convert coverage of inpatient days to outpatient days on a 1-for-2 basis No difference in the annual or lifetime dollar limits in coverage for serious mental illness and any other illnesses

employer group health: conversion coverage

Group policies that provide hospital, surgical, or medical expense benefits must include an option for conversion of coverage when insurance under the group plan has been terminated for any reason, including discontinuance of the group policy, for an insured who has been continuously insured by the group plan for 3 months or more. The insured must submit an application and pay a premium within 31 days. An insured is not entitled to a converted policy if coverage terminated because of failure to pay a required contribution under the group plan. Continuation is not available for anyone eligible for Medicare or similar government benefits, anyone eligible under another group policy, or when combined benefits would result in overinsurance. Dependent coverage may be offered for the spouse and dependent children, under 19 years of age, of terminated group members.

PA mandated benefits: coverage of adopted children

Health insurance policies must provide coverage for adopted children of the insured on the same terms and conditions as other covered dependent children.

individual disability income insurance: relation of earnings to insurance

If the total monthly amount of disability income benefits exceeds the insured's monthly earnings, the insurer may reduce the disability earnings to match the insured's actual monthly or average monthly earnings. However, the disability income cannot be reduced to less than $200 per month.

effects of divorce on designation of beneficiaries

In case of divorce, the court may order the continued beneficiary designations of existing policies originally purchased during the marriage and owned by or within the effective control of either party.

PA mandated benefits: treatment for alcohol abuse and dependency

Inpatient detoxification may be subject to a lifetime limit of 4 admissions. Reimbursement per admission may be limited to 7 days of treatment. Residential care may be covered for a minimum of 30 days per year and may be subject to a lifetime limit of 90 days. Outpatient services may cover 30 full-session visits. Treatment may be subject to a lifetime limit of 120 outpatient full-session visits. Additionally, treatment may be covered for a minimum of 30 separate sessions of outpatient or partial hospitalization services per year which may be exchanged on a 2-to-1 basis for up to 15 additional, non-hospital, residential alcohol treatment days.

medicare supplements: standards for marketing

Insurers must establish marketing procedures to assure the following: Policy comparisons are fair and accurate Excessive insurance is not sold A notice is prominently displayed on the first page of the Outline of Coverage and policy stating "Notice to Buyer: This policy may not cover all of your medical expenses." Coercive marketing practices, including twisting, high pressure tactics, and cold lead advertising, are not used

outline coverage

No policy may be issued or delivered in Pennsylvania unless an outline of coverage is provided at the time of application. In the case of agent solicitation, the outline of coverage must be delivered prior to the presentation of an application or enrollment form; in the case of direct response solicitations, the outline of coverage must be presented with the application or enrollment form. The outline of coverage must include: Description of the benefits and coverage Statement of exclusions, reductions, and limitations Statement of terms of policy continuation, right to change premium, and conversion rights Statement that the outline of coverage is a summary only, not a contract of insurance, and the actual policy governs Terms for returning the policy and getting a refund Brief description of the relationship of the cost of care and benefits

time for legal action

No provision can limit the time in which any legal action may be taken to less than 2 years after the act (or lack of an act) occurs. No policy may be forfeited for failure to repay a policy loan or loan interest while the total indebtedness on the policy is less than its cash value. No policy may be settled at maturity for less value than the policy's face amount plus any dividend additions. This gross amount may be reduced by any indebtedness to the company on the policy.

assets in a separate account

No sale, exchange, or other transfer of assets may be made between separate accounts except when: Establishing a separate account Conducting separate account business for a variable annuity or variable accumulation annuity contract Making changes for mortality experience or expense costs Transferring any amounts in excess of the reserve liability held in the separate account

life insurance disclosure statement

Producers and insurers must provide a prospective purchaser with a clearly labeled, written disclosure statement, describing its purpose and importance, and the significant elements of the policy and riders being offered. This statement must be provided no later than the time the application is signed. The disclosure statement must make clear: The amount of coverage and benefits offered That the disclosure is for the insured's protection, provides basic information about the cost and coverage of the insurance and should be read carefully That the disclosure may not be considered as an offer to contract or to modify any policy or rider that might be issued Information about the basic policy, rider or supplemental benefit built into the policy, such as descriptive titles like "Whole Life," "20 Year Decreasing Term," and "Endowment at Age 65" The separate premiums for each basic policy and rider If dividends are payable That a surrender comparison index will be provided upon delivery of the policy

critical illness/dread disease

Specified Disease Coverage provides coverage for each person insured under the policy for specifically named diseases with a deductible of no more than $250, an overall aggregate benefit limit of not less than $5,000, and a benefit period of no less than 2 years. Specified disease coverage must provide: Hospital confinement in an amount of at least $100 per day for at least 500 days Surgical expenses equal to reasonable and customary charges not to exceed an overall lifetime maximum of $3,500 Radiation, chemotherapy or X-ray therapy expenses while not hospitalized to at least $1,000

regulation of variable annuities

The Insurance Commissioner has the authority to conduct periodic reviews to measure compliance with the receiving and investment requirements by any insurer issuing variable annuity or variable accumulation annuity contracts with guaranteed benefits. A liability will be established by the Commissioner if the review shows that reserves are improperly computed or maintained and separate account assets are improperly invested.

uniform optional provisions: cancellation

The insurer may cancel a policy at any time by written notice delivered to the insured, or mailed to the last address as shown by the records of the insurer. The insured must receive the notice at least 5 days before the cancellation date. If the policy has been continued beyond its original term, the insured may cancel it at any time by written notice delivered or mailed to the insurer. The cancellation may be effective upon receipt or on a later date as may be specified in the notice. If the insurer cancels the policy, it will return, the unearned portion of any premium paid. If the insured cancels, the earned premium will be computed by the use of the current short-rate table.

uniform optional provisions: illegal occupation

The insurer will not be liable for any loss that occurred while the insured was committing or attempting to commit a felony or engaging in an illegal occupation.

free look

replacement annuity contracts have a free look period 45 days if entered into with the same insurer, 20 days if entered into with a new insurer