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ENGROSSED SENATE AMENDMENT
TO
ENGROSSED HOUSE
BILL NO. 4279 By: Sneed and Phillips of the
House
and
Quinn of the Senate
An Act relating to insurance; amending 36 O.S. 2021,
Section 1250.5, which relates to acts by an insurer
constituting an unfair claim settlement pract ice;
modifying requirement applicability ; and providing an
effective date.
AMENDMENT NO. 1. Page 1, strike the title, enacting clause and
entire bill and insert
"An Act relating to insurance; amendin g 36 O.S. 2021,
Sections 6413, 6414, 6415, 6417, and 6418, which
relate to the Market Assistance Association Act;
modifying the definition of insurer; modifying the
definition of member; modifying policies of insurance
required by members to issue; clarify ing that act
applies to homeowners' liability insurance; modifying
notification requirements of member insurers;
modifying procedure for amendments to the plan of
operation; modifying Market Assistance Association
Board of Directors membership; modifying t he term of
members; specifying that the remaining Board of
Directors shall fill vacancies; directing that the
Board of Directors shall consider whether all
Association member insurers are fairly represented;
clarifying that the Association shall submit ins tead
of file a statement; clarifying that liability
insurance means homeowners' liability insurance;
updating statutory language; and providing an
effective date.
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BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 36 O.S. 2021, Section 6413, is
amended to read as follows :
Section 6413. As used in the Market Assistance Association Act:
1. "Association" means the Market Assistance Associat ion
established pursuant to this act the Market Assistance Association
Act;
2. "Board" means the Board of Directors of the Market
Assistance Association;
3. "Commissioner" means the Insurance Commissioner;
4. "Insurer" means any entity licensed to issue homeowners ' or
homeowners' liability insurance; and
5. "Member" means all property and casua lty insurers licensed
in the State of Oklahoma or this state and writing homeowners' or
homeowners' liability insurance in the state. These entities are
required to be a participant in the Association as a condition of
doing business in Oklahoma.
SECTION 2. AMENDATORY 36 O.S. 2021, Section 6414, is
amended to read as follows:
Section 6414. A. The Association created pursuant to the
Market Assistance Associ ation Act shall have the power on behalf of
its members to:
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1. Require members to issue policies of insurance , including
primary, excess, and incidental coverages, to applicants, subject to
limitations specified in the plan of operation required by the
Market Assistance Association Act; irregardless regardless of the
type of insurance coverage, the limit s of liability for homeowners'
liability insurance, shall be governed by the amounts specified in
subsection A of Section 154 of Title 51 of the Oklahoma Statutes;
and
2. Call upon member insurer s who have expertise or familiarity
with a particular line o f homeowners' liability insurance to assist
in underwriting such insurance.
B. The Board after consultation with the Association, the
Insurance Commissioner and other affected entities, shall pro mulgate
a plan of operation consist ent with the provisions o f this section,
to become effective no late r than ninety (90) days after the date of
the inception of the Associa tion.
1. The plan of operation shall provide for economic, fair and
nondiscriminatory administration and for prompt a nd efficient
provision of insurance, and shall contain other provisi ons
including, but not limited to, the following:
a. preliminary assessment of all members for initial
expenses necessary to commence operations of the
Association,
b. establishment of nec essary facilities,
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c. management of the Association,
d. assessment of members, and assessment of policyholders
if a market assistance asso ciation for professionals
is declared, to defray losses and expenses,
e. establishment of committees as may be necessa ry to
facilitate the administration of the Association,
f. procedures providing that an insured shall have proof
that he or she has coverage that has been canceled or
nonrenewed by his or her current carrier and has
subsequently requested and been refused homeowners' or
homeowners' liability coverage from two insurers
licensed to do business in this state, or that his or
her premium has been increased by seventy -five percent
(75%) or more from the previous year, before
requesting insurance coverage from the Association,
g. appointment of members of the Association on a
rotating basis to provide homeowners' and homeowners'
liability insurance coverage based upon dire ct
premiums for homeowners' and homeowners' liability
insurance, written in the state in the p receding
calendar year,
h. procedures for determining amounts of in surance to be
provided by members of the Association, and
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i. procedures for two or more member insu rers to share an
insured risk if coverage for that risk is beyond the
ability for one insu rer,
j. procedures requiring member insurers to notify their
insureds not less than forty-five (45) days prior to
the renewal date for a policy, if the premium to be
assessed will be increased to a rate greater than the
rate assessed for the previous year. If such
notification is not timely, then the premium shall be
the same as the premium which was assessed for the
coverage in the previous year .
2. The plan of operation shall provide that any balance
remaining in the funds of the Association at the clos e of its fiscal
year shall be added to the reserves of the Associati on and may be
used for expenses of the Association or any successor association.
3. Amendments to the plan of operation may be made by the
board, subject to the approval of the Commission er Board.
C. All insurers who are members of the Association shall
participate in the Association's writings, expenses, and losses in
the proportion that the net direct pre miums of each such member
written during the pre ceding calendar year bears to the a ggregate
net direct premiums written in this state by all members of the
Association. Each insurer's proportion of participation in the
Association shall be determined annu ally on the basis of such net
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direct premiums written during the preceding calendar year, as
reported in the annual statements and other reports filed by the
insurer that may be required by the board of directors Board of
Directors. No member shall be obligated in any one ( 1) year to
write liability insurance business from the Associati on which that
would result in the member ins urer writing more than ten percent
(10%) of its total annual liability insurance, from all lines of
liability insurance, from the Association. Likewise, no member
shall be obligated in any one (1) year to write homeowners'
insurance business from the Asso ciation which that would result in
the member insurer writing more than ten percent (10%) of its total
annual homeowners' insurance, from the Associa tion.
D. An applicable insurer ceasing to be licensed or autho rized
to transact insurance business pursuan t to the Insurance Code shall
automatically cease to be a member of the Association effective at
12:01 a.m. on the day following the termination or e xpiration of its
certificate of authority and shall no longer b e subject to the plan
of operation or requir ements of the Association; provided, howeve r,
such insurer shall remain liable for any annual assessments of the
Association based on expenses incur red by the Association while such
license or authority was in ef fect.
SECTION 3. AMENDATORY 36 O.S. 2021, Section 6415, is
amended to read as follows:
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Section 6415. A. The business and functions of the Association
shall be managed and administered by a board Board of eleven (11)
directors composed of two directors selected by the Americ an
Insurance Association, who are represent atives of Association
members; two directors selected by the Alliance of American
Insurers, who are repre sentatives of Association members; two
directors selected by the National Association of Independent
Insurers, who are representatives of Association m embers; two
directors appointed by the Commissioner, who are representatives of
Oklahoma domestic insurer s who are Association members; one director
who shall be the Pre sident of the Oklahoma Surplus Lines
Association; and two directors appointed by the Co mmissioner, who
are representatives of nonaffiliated foreign or alien insurers who
are Association member s eight (8) directors composed of four
directors representing As sociation members, two directors who are
representatives of Oklahoma domestic insurers who are Association
members, one director who represents a surplus lines carrier who is
an Association member, and the Insurance Commissioner or an
Insurance Department staff member chosen as a d esignee by the
Insurance Commissioner. Each director shall designate a full-time
salaried employee of the insurer to represent the director as an
alternate in the absence of the director on the Board. Each
director shall serve f or a term of two (2) years or until the
Association is termi nated, whichever comes first. The appointment
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to the board of directors shall be subject to approval by th e
Commissioner. The term of office of each director shall continue
until the appointment and qualification of a successor. Any vacancy
on the Board shall be filled for the remaining period of the term by
appointment by the appointing authority which orig inally filled the
vacant post, subject to the approval of the Commissioner the
remaining Board directors. If no directors are selected and
appointed within sixty (60) days after the effective date of the
inception of the Association, the Commissioner s hall appoint the
initial directors of the Board.
B. The chairman shall call all meetings of the Board and shall
give reasonable notice of meetings to al l directors. At any meeting
of the Board, each Board director or his predesignated alternate
shall have one vote. Six members of the Board or their
predesignated alternates shall constitute a q uorum for the
transaction of business an d the acts of a major ity of the Board
members present at a meeting at which a quorum is present shall be
the acts of the Board. The Board shall meet as often as may be
required to perform the general duties of admin istration of the
Association, but not les s frequently than an nually.
C. In approving selections to the Board, the Commissioner Board
of Directors shall consider, among other things, whether all
Association member insurer s are fairly represented.
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D. Members of the Board and their predesignated alternates
shall serve without compensation but may be reimbursed from the
assets of the Association for all actual and necessary expenses
incurred by them in performance of their d uties for the Board.
SECTION 4. AMENDATORY 36 O.S. 2021, Section 6417, is
amended to read as follows:
Section 6417. A. The Association shall file with submit to the
Insurance Commissioner, annu ally, from the date of its inception, a
statement prepared by an independent certified public accountant
which shall contain information with respect to its transactions,
condition, operations, and affairs during the preceding calendar
year. The statement shall contain such matters and infor mation as
are prescribed and shall be in such form as is approved by the
Commissioner. The Commissioner may, at any time, require the
association Association to furnish additional information with
respect to its transactions, cond ition, operations, and affairs, or
any matter connected ther ewith considered to be material and of
assistance in evaluati ng the scope, operation and experience of the
Association.
B. The books of account, records, reports and other doc uments
of the Association shall be open and free for examination to the
Commissioner at all reasonable times.
C. The books of account, records , reports and other documents
of the Association shall be open to inspection by the members at
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such times and under such conditions a nd regulations as the Board
shall determine.
D. The Association shall provide for the making of detailed
reports of liability approved or canceled, for the drawing up of
annual budgets of the Association and for the rendering of accoun ts
to each member Board member at least every twelve (12) months.
SECTION 5. AMENDATORY 36 O.S. 2021, Section 6418, is
amended to read as follows:
Section 6418. Each member insurer shall use the filed rate for
the homeowners' liability and homeowners' insurance being written.
Any variance from such rate , including a variance based upon debit,
shall be submitted or filed with the I nsurance Commissioner.
SECTION 6. This act shall become effective November 1, 2022."
Passed the Senate the 27th day of April, 2022.
Presiding Officer of the Sen ate
Passed the House of Representatives the ____ day of __________,
2022.
Presiding Officer of the House
of Representatives
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ENGROSSED HOUSE
BILL NO. 4279 By: Sneed and Phillips of the
House
and
Quinn of the Senate
An Act relating to insurance; amending 36 O.S. 2021,
Section 1250.5, which relates to acts by an insurer
constituting an unfair claim settlement pract ice;
modifying requirement applicability ; and providing an
effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 7. AMENDATORY 36 O.S. 2021, Section 1250.5, is
amended to read as follows :
Section 1250.5 Any of the following acts by an insurer, if
committed in violation of Section 1250.3 of this title, constitutes
an unfair claim settlement practice exclusive of paragraph 16 of
this section which shall be applicable solely to health benefit
plans:
1. Failing to fully disclose to first party claimants,
benefits, coverages, or other provisions of any insurance policy or
insurance contract when the benefits, coverages or other p rovisions
are pertinent to a claim;
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2. Knowingly misrepresenting to claimants pertinent facts or
policy provisions relating to coverages at issue;
3. Failing to adopt and implement reasonable standards for
prompt investigations of claims arising under it s insurance policies
or insurance contracts;
4. Not attempting in good faith to effectuate prompt, fair and
equitable settlement of claims submitte d in which liability has
become reasonably clear;
5. Failing to comply with the provisions of Section 1219 of
this title;
6. Denying a claim for failure to exhibit the property without
proof of demand and unfounded refusal by a claimant to do so;
7. Except where there is a time limit specified in the policy,
making statements, written or otherwise, which requ ire a claimant to
give written notice of loss or proof of loss within a specified time
limit and which seek to relieve t he company of its obligation s if
the time limit is not complied with unless the fail ure to comply
with the time limit prejudices the rig hts of an insurer. Any policy
that specifies a time limit covering damage to a r oof due to wind or
hail must include a provision allowing the filing of claims after
the first anniversary but no later tha n twenty-four (24) months
after the date of the loss , if the damage is not evident without
inspection;
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8. Requesting a claimant to s ign a release that extends beyond
the subject matter that gave rise to the claim payment;
9. Issuing checks, drafts or electronic payment in partial
settlement of a loss or c laim under a specified coverage which
contain language releasing an insurer or i ts insured from its total
liability;
10. Denying payment to a claimant on the grounds that services ,
procedures, or supplies provided by a treating physician or a
hospital were not medically necessary unless the health insurer or
administrator, as define d in Section 1442 of this title, first
obtains an opinion from any provider of health care licensed b y law
and preceded by a medical examination or claim review, to the effect
that the services, procedures or supplies for which payment is being
denied were not medically necessary. Upon written request of a
claimant, treating physician, or hospital, the o pinion shall be set
forth in a written report, prepared and signed by the re viewing
physician. The report shall detail which specific services,
procedures, or supplies were not medically necessary, in the opinion
of the reviewing physician, and an explana tion of that conclusion.
A copy of each report of a reviewing physician sha ll be mailed by
the health insurer, or administrator, postage prepaid, to the
claimant, treating physician or hospital requesting same within
fifteen (15) days after receipt of the written request. As used in
this paragraph, "physician" means a person holding a valid license
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to practice medicine and surgery, osteopathic medicine, po diatric
medicine, dentistry, chiropractic, or optometry, pursuant to the
state licensing provisions o f Title 59 of the Oklahoma Statutes;
11. Compensating a reviewing physician , as defined in paragraph
10 of this section, on the basis of a percentage of the amount by
which a claim is reduced for payment;
12. Violating the provisions of the Health Care F raud
Prevention Act;
13. Compelling, without just cause, policyholders to i nstitute
suits to recover amounts due under its insurance policies or
insurance contracts by offering substantially less than the amounts
ultimately recovered in suits brought by t hem, when the
policyholders have made claims for amounts reasonably similar to the
amounts ultimately recovered;
14. Failing to maintain a complete re cord of all complaints
which it has received during the preceding three (3) years or since
the date of its last financial examination conducted or accepted by
the Commissioner, whic hever time is longer. This record shall
indicate the total number of compl aints, their classification by
line of insurance, the nature of each complaint, the disposition of
each complaint, and the time it took to process each complaint . For
the purposes of this paragraph, "complaint" means any written
communication primarily ex pressing a grievance;
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15. Requesting a refund of all or a portion of a payment of a
claim made to a clai mant more than twelve (12) months or health care
provider more than twenty-four (24) eighteen (18) months after the
payment is made. This paragraph shall not apply:
a. if the payment was made because of fraud committed by
the claimant or health care provider, or
b. if the claimant or health care provider has otherwise
agreed to make a refund to the insurer for overpayment
of a claim;
16. Failing to pay, or requesting a refund of a payment, for
health care services covered under the policy if a health benefit
plan, or its agent, has provided a preauthorization or
precertification and verification of eligibility for those health
care services. This paragraph shall not apply if:
a. the claim or payment was made because of fraud
committed by the claimant or health care provider,
b. the subscriber had a preexisting exclusion under the
policy related to the service provided, or
c. the subscriber or employer f ailed to pay the
applicable premium and all grace periods and
extensions of coverage have expired;
17. Denying or refusing to ac cept an application for life
insurance, or refusing to renew, cancel, restrict or otherwise
terminate a policy of life insura nce, or charge a different rate
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based upon the lawful travel destination of an applicant or insured
as provided in Section 4024 of this title; or
18. a. As a health insurer that provi des pharmacy benefits or
a pharmacy benefits manager that administers phar macy
benefits for a health plan, fail ing to include any
amount paid by an enrollee or on behalf of an enrollee
by another person when calculating the enrollee's
total contribution to an out-of-pocket maximum,
deductible, copayment, coinsurance or other cos t-
sharing requirement.
b. If under federal law, application of subparagraph a of
this paragraph would result in health savings account
ineligibility under Section 223 of the federal
Internal Revenue Code, as amended, this requirement
shall apply only for health savings accounts with
qualified high deductible health plans with respect to
the deductible of such a plan after the enrolle e has
satisfied the minimum deductible, except with respect
to items or services that are preventive care pursuant
to Section 223(c)(2)(C) of the federal Internal
Revenue Code, as amended, in which case the
requirements of subparagraph a of this paragraph shall
apply regardless of whether the minimum deduct ible has
been satisfied.
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SECTION 8. This act shall become effect ive November 1, 2022.
Passed the House of Representatives the 23rd day of March, 2022.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of __________, 2022.
Presiding Officer of the Senate