Relative to notifying broker prior to termination of coverage
The implementation of S650 would modify Chapter 175 of the General Laws by introducing a new section focused on broker notification. By doing so, it enhances the responsibilities of insurers regarding communication with brokers. Supporters of this bill believe that it could lead to better consumer protection, as brokers would be equipped to alert policyholders about their impending lapse in coverage. It is presumed that this change could significantly reduce the number of unintentional coverage lapses, thus providing better security for consumers relying on these insurance policies.
Senate Bill S650, titled 'An Act relative to notifying broker prior to termination of coverage', seeks to enhance communication between insurance companies and brokers. Specifically, the bill mandates insurers to notify the agent of record when a life, disability, or long-term care insurance policy is at risk of lapsing. This notification must be sent at least 21 days before the effective date of the lapse. The bill is intended to ensure that brokers are informed sufficiently in advance, allowing them to take appropriate actions to inform policyholders and potentially prevent a lapse in coverage.
While the intent of S650 is to provide additional protections for consumers, there are potential points of contention regarding its implementation. Critiques may arise concerning the logistical challenges for insurers in establishing the required notification systems, especially if they are not already in place. Additionally, the bill specifies exemptions where insurers might not be required to notify brokers, such as in cases where an online system is utilized to alert brokers proactively. This necessity for clear operational guidelines could spark debate among insurance stakeholders about the feasibility of such notifications and the responsibilities of insurers versus brokers.