10 - Colorado Laws & Rules Common to all Lines of Insurance

Carrier may discontinue offering particular type of individual or small group health coverage only if:

-90 days notice given -Offers option to purchase any other health coverage it currently offers in same market -Carrier acts uniformly without regard to past or anticipated claims experience

Newborn Child Coverage

-Must provide coverage for insured's newborn child at birth. -If premium is required to continue coverage, must be paid within first 31 days to continue coverage. -Includes: Injury and sickness (including medical care for diagnosed congenital defects and birth abnormalities.

Unethical Acts

-Selling prospect more life insurance than they can afford -shirking responsibilities to insurers, policyowners, public, and state. -

Compliance and Ethics Forum for Life Insurers

-Successor organization to IMSA -Works with regulators and insurers to promote sound ethical practices in the marketplace.

Prostate Screenings

All health plans must provide for annual screening in men over 50, or over 40 in high-risk categories.

Colon Cancer

All health policies must provide coverage for the early detection of colorectal cancer for adults 50 or older, or those at high risk.

Market Conduct Action (Commissioner of Insurance)

Anything the Commissioner may initiate to assess and address the market practices of insurers licensed to conduct business in this state. EG: Market analysis to targeted, on-site examinations.

Competitive Integrity

As duty to his insurer and the industry, producer must resist temptation to misrepresent or defame a competitive producer or insurer.

Provider Credentialing (Required Records)

Credentialing plan, credentialing policies and procedures, and crdentialing records.

Insurance producers are privy to a client's personal and financial info

Ethics require producer to respect sensitive nature of info and keep it confidential.

Desk Examination (Commissioner of Insurance)

Exam that is conducted by examiner in location other than insurer's premises.

Adverse Determination

If adverse determination is made during covered person's hospital stay, health care services must be continued w/o liability until covered is notified of carrier's adverse determination.

Coverage for Mammography

Insurer pays up to 100 or actual cost adjusted for CPI of each mammogram. -Single baseline mammogram for women 35-44 -Mammogram once every two years for women age 45-49 -Mammogram once every year for women age 50-65

Producer's Responsibilities to the State

Responsibility to regulate the insurance industry is shared by Federal Gov and State Governments. -State carries major burden of regulation

Prompt Pay

Unless fraud, all claims must be paid, denied, or settled within 90 calendar days after receipt by the carrier.

Minimum Maternity Benefits

any policy that provide maternity benefits must provide coverage for a minimum of 48 hours of inpatient care after a delivery and a minimum of 96 hours of inpatient care after a c-section for a mother and her newly born child.

Quality Assessment and Improvement

quality assesment and improvement plans, written procedures, and documentation of monitoring and program evaluations

Affidavit

written statement made under oath

Domestic, Foreign, and Alien Companies

-Company must obtain Certificat of Authority before transacting insurance within a state.

Fraternal Benefit Society

-Corporation, society, or order that is self-governing and organized through a lodge system. -Exist for benefit of its members and their beneficiaries.

Characteristics of Ethical Insurance Producer

-Honesty -Integrity -Loyalty -Fairness -Compassion -Respect for others -Personal responsibility -Accountability

Ethical Responsibility to breifly explain Underwriting Process

-Include description of checks and balances that apply to underwriting a risk (like the Medical Information Bureau, the Inspection Report, and the Credit Report.)

Commisioner may place insurance provider on probation; suspend, revoke, or refuse to issue, continue, or renew an insurance producer license; order restitution be paid; or assess a civil penalty if one or more of the following conditions exist:

-Incorrect, misleading, incomplete, materially untrue info in the license application -Cause for which issuance of license could have been refused had it then existed and been known to Commissioner at time of issuance -Violation of, or noncompliance with any insurance law, or violation of any lawful rule, order, or subpoena of the commissioner or of the insurance department of another state. -Obtaining or attempting to obtain license through misrepresentation or fraud -Improperly withholding, misappropriating, or converting assets from insured -Misrepresentation of the terms of any actual or proposed insurance contract / application for insurance -Conviction of a felony or misdemeanor involving a lack of morals. -Commission of any unfair trade practice/ fraud -Use of fraudulent, coercive, or dishonest practices -Demonstrating incompetence, untrustworthiness, or financial irresponsibility -Suspension, revocation, or denial of an insurance license in other states, etc. -Forgery of anothers name -Cheating on an examination -Failure to fully meet licensing requirements -Knowingly accepting insurance business from unlicensed person -Failing to comply w/ administrative or court order imposing child support obligation -Failing to pay state income tax or comply w/ any administrative or court order directing payment of state income tax -Profiting directly or indirectly from the business of a cash-bonding agent or professional cash-bail agent (unless registered as cash-bonding agent or cash-bail agent)

Carrier may make reasonable modifications to small group health plan if:

-Modification is effective only upon renewal -Plan is uniformly modified for all groups and individuals -Plan already provides state mandated basic health benefit plan or standard health benefit plan. -90 days notice given -offers opportunity to purchase new health plan in same market Carrier may modify large group health plan at renewal if it modifies the plan uniformly for all large groups covered by same plan.

Anyone who violates a cease-and-desist order from the commissioner may be subject to:

-Monetary penalty of not more than 10k for each and every act or violation of an insurer -Monetary penalty of not more than 5k for every violation of an individual -Suspension or revocation of such person's license

Policy Delivery

-Most issued as applied for, producer owes prompt delivery of policy and review of its features and benefits. -Helps solidify sale and represents a step towards making policyowner a lasting client. -At this point, service forms relationship.

Procedures for Review Decision

-Must keep written procedures for making utilization review decisions and for notifying covered persons/ providers acting on behalf of covered persons of its decisions. -Covered person includes the designated representative of a covered person. -For a prospective review determination, a health carrier must make the determinination within a reasonable period of time appropriate to the covered person's medical condition, but no later than 15 calendar days after receiving request. -Carrier may extend time period for making a determination once, up to 15 calendar days. -If extension happens bc insured fails to submit some info, it gives them 45 days to provide specified info.

Mutual Insurance Companies

-Owned and Controlled by its policyowners. -Policyowners elect board of trustees or governing body to manage firm. -Profits are returned to policyowners in form of dividends, or retained as surplus to meet future obligations. -Considered participating b/c policyowners do share in profits of company. -Objective is to provide insurance to policy owners at lowest net cost.

If commisioner determines person charged has engaged in unfair method of competition, unfair or deceptive act, practice, or has violated any other provision or rule, commissioner can order:

-Payment of monetary penalty (up to 3000 dollars) for each act (cannot exceed 30k unless insurer knew he was in violation) -If knowingly in violation, committed penalty shall not be more than 30k for each act, and cannot exceed 750k annually. -Suspension or revocation of person's license if he knew/reasonably should have known he was in violation. -Payment of contractual claim to insured or beneficiary pursuant to an insurance policy if the commissioner finds violation caused the failure to pay the claim.

Needs Selling

-Producer must sell policies that fit clients needs and proper costs. -Involves problem analysis, action planning, product recommendation, and plan implementation. 1. Commitment to obtain and maintain knowledge and skills necessary. 2. Commitment to educating prospect or client about products and plans that may be implemented.

Rules

-Provide complete and accurate response to Exam Request/Comment Form within 10 days from date on the form. -Any other inquiry from the Division should be completely and accurately responded to within 20 Calendar days from date of inquiry. -Failure to provide complete and accurate response, request extension, or provide response when extension is not granted can result in $500 civil penalty for initial violation, $5000 each subsequent violation.

"Insurance Producer" does NOT include:

-regularly salaried officer, director, or employee of insurance company -Insurance producer who is engaged in the performance of customary executive, administrative, or clerical duties which do not include negotiation of solicitation of insurance (as long as he does not receive any commission on policies written or sold to insure risks residing, located, or to be performed in this state.

Domestic Insurance Company

A company domiciled in Colorado would be a domestic company to Colorado

Complications of Pregnancy

Accident or health policy that provides coverage for disability due to accident or sickness must provide similar coverage for pregnancy/childbirth complications. Any condition that: -Is adversely affected or caused by pregnancy -Requires physician prescribed supervision -Results in a loss or expense that would, if not related to pregnancy, be covered by policy.

Early Intervention Services

All health plans that cover dependent children must provide coverage for early intervention services delivered by a qualified early intervention provider to an eligible child. -Eligible child is an infant or toddler from birth through two years of age who has significant developmental delays, or diagnosed physical or mental condition, with high probability of resulting in significant developmental delays. -Coverage available annually for each eligible child is $6,067

Preventative Health Care Services

All health policies in Colorado must offer total cost of following preventative services: -Alcohol misuse screening and counseling -Cervical cancer screening -Breast cancer mammography screening -Cholesterol screening -Colorectal cancer screening -Childhood immunizations -Flu and pneumonia vaccinations -Tobacco use screening and cessation

Diabetes

All policies must cover, including: -Equipment -Supplies -Self-management training -Education

Unauthorized Insurer

And insurance company that has not applied, or has applied and been denied a certificate of authority, meaning they are not allowed to sell insurance in this state. Any producer that sells an insurance policy for an unauthorized insurer runs the risk of being responsible for unpaid claims. Any person or entity who solicits, negotiates, or sells insurance for an unauthorized insurance company is guilty of a misdemeanor and will be liable for losses/unpaid claims.

Underwriting and rating (Required Records)

Annual rate filing, rating plans and rates, disclosures, producer payments, credits, deviations, schedule rating, IRPM (Individual Risk Premium Modification) plans, expense/loss cost multipliers, statistical coding/reporting, premium audits, loss reporting, policy forms and filings, underwriting policies, procedures and manuals, declinations/ rejections, cancellations/ nonrenewals, recessions, policyholder records (applications, policy riders, correspondence, policy form(s), guarunteed issue, preexisting conditions, privacy of protected personal info.

Defamation

Any false, maliciously critical, or derogotory communication - written or oral - that injures anothers reputation, fame, or character.

Certification of extended stay

Cerrier must notify covered person asap, no later than 24 hours after receiving request.

Alien Insurance Company

Chartered and organized outside of United States. A company chartered in Japan would be an alien company in Colorado.

Trust is Earned

Client trust must be earned, nurtured, and constantly reinforced.

Market Conduct

Combo of ethics and compliance. Refers to how companies/ producers should go about conducting themselves.

Ethical Conduct Definition

Conduct that a reasonable person is expected to do under any circumstances.

Unfair Trade Practices Act (NAIC made in 1940's)

Deals with the innappropriate use of advertising -Has expanded since to deal with all major deceptive or unfair trade practices.

Application

Educate insured about process: -Why info is required -How it will be evaluated -Need for accuracy and honesty in answering all questions -Meaning of important terms (Waiver of Premium, Automatic Premium Loan, Nonforfeiture Options, Policy Loans, Conditional Receipt)

Targeted Examination (Commissioner of Insurance)

Exam, including, but not limited to, limited review and analysis conducted through a desk examination or on-site examination in accordance with market conduct uniform exam procedures. -Of a specific insurer's conduct, practices or risks identified through market analysis that have not been remedied by the insurer. -Underwriting and rating, marketing and sales, complaint handling, operations and management, advertising materials, licensing, policyholder services, nonforfeitures, claims handling, or policy forms and filings. -Exams every 5 years.

On-Site Examination (Commissioner of Insurance)

Examination conducted at the insurer's home, insurer's office or the location where the records under review are stored.

Ethics Overview

GOOD ETHICS IS GOOD BUSINESS. Ethical behavior helps insurance producers gain professional satisfaction, as well as respect and loyalty of clients. -Standards of conduct and moral judgment, about what we should do.

Agency Contract

Gives producer power to act on behalf of principal. -Describes actions producer can and cannot take. -Producer's authority can be very broad.

Urgent Care Requests

Health carrier must make determination asap, no later than 72 hours after receiving request.

Operations and Management (Required Records)

History and profile w/ current operations, entity oversight, internal audits, antifraud plan, certificates of authority, disaster recovery plan, computer systems (if applicable)

Hospice/Home Health Care

Home health care benefits must include coverage for at least 60 home health visits per calendar year. Hospice care services provided for terminally ill (life expectancy of 6 months or less) Hospice benefits must be at least $150 a day for 91 days.

Code of Ethics

Identify and encourage desirable activities by formally establishing a high standard against which each individual may measure behavior

License Suspension/Termination

In most states, a producer's license can be suspended or terminated for violating marketing ethics.

The Producer as a Fiduciary

Individual whose position and responsibilities involve a high degree of trust and confidence (Trustees, guardians, executors, and insurance producers).

Authorized Insurer (Admitted Insurance Company)

Insurance company that has qualified and received a Certificate of Authority from the Insurance Department to sell insurance in this state (Colorado).

Stock Insurance Company

Insurance company that is owned and controlled by stockholders (shareholders). Stockholders provide the capital and share in profits or losses. -Considered nonparticipating b/c policyowners do not share in profits of company. Objective is to produce profits for owners (stockholders). -if they issue both participating and nonparticipating policies, referred to as company doing business on a mixed plan.

Guarunteed Renewability

Insurer may only alter or discontinue health coverage if: -Nonpayment of the required premium -Fraud or intentional misrepresentation of material fact on the part of the plan's sponsor -Carrier is discontinuing coverage of all similar benefit plans in state (must notify policyholders at least 180 days in advance) -Policyholder of a group health benefit plan fails to comply w/ participation or contribution rules. -Group carrier uses managed care plan and there is no longer an enrollee in connection -Policyholder ceases to be a student at a college or university (student health coverage) -Employer ceases to be a member of a bona fide association through which their coverage was made available.

Code of Ethics Obligations

Insurer must freely accept following obligations: -Help maintain client's confidences -protect client's right to privacy -work diligently to satisfy needs of clients -Present, accurately and honestly, all essential facts for clients' financial decisions. -Render timely and proper service to my clients and ultimately their beneficiaries. -Continually enhance professionalism by developing skills and increasing knowledge through education. -Obey the letter and spirit (intent) of all laws and regulations which govern my profession -To conduct all business dealings in a manner which would reflect favorably on NAIFA and my profession -To cooperate with others whose services best promote the interests of my clients -To protect the financial interests of my clients, their financial products, and my professionalism, through political advocacy

Producer Licensing (Required Records)

License, contract or letter of agreement, appointment/ termination where applicable, accounts current.

Risk of unethical behavior

Losing both clients and prospects.

Hearing Aids for Children

Mandatory in all health care plans, must include: -Initial and replacement hearing aids (every 5 years) -New hearing aid when alterations to existing hearing aid cannot adequately meet needs -Services and supplies (initial assessment, fitting, adjustments, and auditory training)

One Unethical Act can Tarnish a Sterling Reputation

May win producer sale in short run, but will create loss in long run, with both prospects and clients.

Market Conduct Surveillance Personnel (Commissioner of Insurance)

Means those individuals are employed by or under contract with the commissioner to collect, analyze, review, or act on info about the insurance marketplace that identifies patterns or practices of insurers.

Loyalty to the Insurer

Must act w/ insurer's best interest in every matter. Must stay within guidelines of agency contract

Service

Must maintain during and after sale! clients can leave you! -Educate client before, during, and after sale, giving full understanding. -Treat all info with confidentiality -Disclose all info so policyowner or applicant can make an informed decision -Keep prospect/ client informed of any rejection, exclusion, or canellation of coverage. -Show loyalty to prospects and clients.

Conditional Receipt

Normally given when applicant pays initial premium at time of application for a policy to be signed. -Provides applicant is covered immediately (as long as he passes underwriting requirements)

Foreign Insurance Company

Northwestern Mutual, which is domiciled in Wisconsin, is a foreign company in Colorado

Full Disclosure

Obligated to fully disclose all info that may affect insurer / ability to conduct business. (biggest during application and claims handling)

Rebating

Occurs if the buyer of an insurance policy receives any part of the agent's commission or anything of significant value as an inducement to purchase a policy.

Handling Premiums

Payment of premiums to a producer is payment to insurer. Producer has fiduciary duty to account for all funds and turn them over promptly. Unethical to delay or withhold premium payments. -Illegal in many states to combine premium monies w/ person funds

Qualified Contract Examiner

Person who is under contract by the Commisioner and qualified to perform market conduct actions

Definition of Producer

Person who solicits, negotiates, effects, procures, delivers, renews, continues, or binds: -Policies of insurance for risks residing, located, or to be preformed in this state -Membership in a prepayment plan -Membership enrollment in a health care plan

Required Records

Persons shall maintain the following records: Operations and Management, Policyholder Service, Marketing, Producer Licensing, Underwriting and Rating, Claims, Network Adequacy, Quality Assesment, Improvement, Utilization Review, and Provider Credentialing.

Claims (Required Records)

Policies and procedures, claims paid, claims w/o payment (denied, rejected, incomplete, closed w/o payment), total loss settlements (salvage), subrogation, litigation, claim forms, reserves, statistical coding.

Provide Informed Options

Policyowner must rely on producer to provide informed options that are in policyowners best interest.

Policyholder Service (Required Records)

Premium/billing notices and payments, policy issuance, cancellations, correspondence, reinstatements, policy transactions (cash surrenders, policy loans, extended term, reduced paid up, additional paid up, automatic premium loan, bank drafts, and policy changes), late enrollment guidelines, annual policy reports, unearned premium assumptions, accelerated benefits, and consumer complaints (complaint log, complaint policies and procedures, complaint records, complaint disposition)

Complete and Honest Representation

Present each policy with honesty and objectivity. -Point out any limitations or drawbacks a product may have -Also point out positives.

Selling to Fit Needs

Prime violation of producer's ethical duty is selling to fit needs of producer rather than of prospect. Typical result is insurance w/ highest premium instead of proper coverage.

Duties of Principal to the Producer

Principal (company) must select honest, loyal, and hardworking producers to protect from potential liability. In return, principal componsates producer for business and reimburses for damages/expenses incurred in defending against claims that he would be held liable for in the course of fulfilling agency obligations.

Market Analysis (Commissioner of Insurance)

Process where market conduct surveillance personnel collect and analyze info from: filed schedules, surveys, required reports, other sources. -to develop baseline understanding of marketplace. -Identify patterns or practices of insurers that deviate significantly from the norm.

Ethical Concern

Producer feels like they are caught between two parties w/ conflicting interests. -By acting in best interests of insurer, producer best serves consumer.

Authority through Appointment

Producer given power and authority to act for insurer by: -Soliciting applications for coverage. -Describing coverage /policies to prospects & applicants. -Explaining how policies can be purchased. -Collecting premiums -Providing service to prospects and the insurer's policyholders

Careful Solicitation

Producer has ethical duty to protect insurer's interest by soliciting business that appears to be good and profitable for the insurer.

Care and Skill

Producer's duty to act w/ utmost care and skill (can mean you must refer business to more qualified others)

Prompt Action and Follow-Up

Producer's obligation to act promptly in all matters regarding insurer's business. -Transmit completed applications and notice of premium receipts asap.

Solicitation and Disclosure

Producers must provide certain disclosure documents when they solicit any insurance sale. Documents are intended to help consumer make an informed decision about which to buy.

Network Adequacy (Required Records)

Provider manual, provider contracting policies and procedures, provider directories, availability and accessibility standards, and monitoring reports related to these standards, management agreements, intermediary contracts, intermediary certifications, and provider agreements.

Agency

Relationship between insurance producer and insurance company. -Principal party (insurance company) authorized the producer party (me) to perform legally binding acts on Insurance company's behalf. Key principles: -Acts of the producer (within producer's authority) are acts of principal. -A contract completed by producer on half of principal is a contract of the principal. -Payments made to producer on behalf of principal are payments to principal. -Knowledge producer has about business of principal is presumed to be knowledge of principal.

Insurance Marketplace Standards Association (IMSA)

Renewed commitment to ethical sales and marketing practices in the insurance industry formed the International Marketplace Standards Association (IMSA) in 1996. -Acted as watchdog group whose member companies agreed to adhere to and enforce ethical principles.

Producer's Ethical Responsibility to the Public

Represents his insurance company to the general public. -Provide accurate info in a fair and unbiased manner when asked about it. -Info should be complete in every way (deductibles, waiting periods, benefit limitations, exclusions, or qualification requirements for the policy.

Marketing (Required Records)

Sales and advertising materials, producer training materials, producer communications, policy replacements, policy illustrations, accelerated benefit disclosures, outline of coverage, mass marketing policies and procedures, and agency management.

Standard Data Request

Set of field names and descriptions developed and adopted by the NAIC for use by market conduct surveillance personnel in an examination.

Utilization Review

Set of formal techniques designed to evaluate clinical necessity, appropriateness, or efficiency of health care services, procedures, or settings -Techniques: Ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning, or restrospective review. -Determines whether or not procedure is experimental or investigational -Reviews covered's medical circumstances to determine if a treatment should be excluded from pay.

Utilization Review (Required Records)

Utilization review plan, policies and procedures, all documentation concerning utilization review decision, utilization review monthly telephone reports, precertification records, nurse's notes, medical director reviews, documentation of peer-to-peer conversations about adverse determinations, appeals of adverse determinations, and any other documentation concerning internal appeals and external reviews.

Misrepresentation

a written or oral statement that does not accurately describe a policy's features, benefits, or coverage. -Unlawful

Insurance Commissioner

enforces state laws relating to insurance on state governing insurance companies. -Makes their rules and regulations -Appointed by, and serves at will of Governor. Powers and duties: -Issue insurance related licenses or a certificate of authority to an insurer (after extensive examination) -Before issuing certificate of authority, commisioner requires insurer to file an affidavit. -Affidavit states amount of expenses incurred -Affidavit states fact that company has no outstanding liabilities (except organization expenses) -Commissioner receives license fees. -Suspend license or certificate of authority if insurer breaks State laws. -Refer insurer to Attorney General for committing a felony. -Approve insurance policy forms and premium rates -Examine books and records of insurers in State -Hold public hearings to review illegal acts by licensees or insurers. -Require an affidavit of domestic insurers (to verify financial condition) -Examine and audit insurers/ delegate examining duties to others. -Encourage widespread public Info about insurance. -Evaluate insurance policies for long-term care to determine compliance w/ provisions of Article 19 of this title. -Considers whether rates are excessive, inadequate, or unfairly discriminatory. -Determine most effective method of establishing the value of deductibles. -Establish and ammend rules (within reason) that allow him to be an effective commisioner for the State of Colorado.

Twisting

unethical act of persuading a policyowner to drop a policy solely for the purpose of selling another policy without regard to possible disadvantages to the policyowner. -Involves misrepresentation by producer to convince policyowner to switch insurance companies and/or policies.