Relative to notifying broker prior to termination of coverage
The bill amends Chapter 175 of the General Laws, creating a new section that mandates this notification protocol between insurers and insurance brokers. The intent behind such regulation is to improve protections for consumers, as policyholders may not always be aware of the impending loss of their coverage until it is too late. This could subsequently lead to financial or health coverage gaps that adversely affect individuals and families relying on these policies during critical times.
Senate Bill S729 introduces a requirement for insurers to notify the agent of record at least 21 days before a life, disability, or long-term care insurance policy is set to lapse. This legislative measure aims to enhance communication and ensure that insurance brokers are informed of pending terminations, allowing them the opportunity to assist policyholders in maintaining their coverage. In situations where a policyholder may be at risk of losing their insurance benefits, timely notice to the broker could play a pivotal role in counseling their clients and exploring options to avoid lapsing.
Notable points of contention surrounding Bill S729 may arise from the responsibilities placed on insurers regarding notification. The bill allows for certain exceptions where insurers may not be required to inform brokers, such as if the insurer has an online system providing notifications or lacks records of a current agent. Opponents may argue that this could create vulnerabilities in communication between brokers and insurers, potentially leaving some policyholders underserved or uninformed about their coverage status. Proponents, however, maintain that the bill fortifies the agent's role as an essential link in ensuring clients remain informed and protected.