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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
ENGROSSED SENATE
BILL NO. 887 By: Quinn of the Senate
and
Sneed of the House
An Act relating to insurance; amending 36 O.S. 2011,
Section 311.4, as amended by Section 1, Chapter 275,
O.S.L. 2014 (36 O.S. Supp. 2020, Section 311.4),
which relates to annual statements reporting market
conduct data of insurers; authorizing imposition of
civil fine; amending 36 O.S. 2011, Section 615.2,
which relates to Biographical Affidavits; modifying
time frame for Business Character Report; amending 36
O.S. 2011, Section 638, which relates to compliance
relating to examinations; updating statutory
references; requiring insurer using credit
information to provide certain exceptions to how
credit information is used; specifying exceptions;
authorizing insurer to require certain information
for granting of exception; declaring insurer in
compliance with law in certain situation; construing
provision; requiring i nsurer to provide notice of
exceptions; amending 36 O.S. 2011, Section 996, which
relates to assigned risks; removing prohibition on
disapproval of certain market plans; authorizing the
Oklahoma Automobile Insurance Plan to issue certain
policies; declaring policies as proof of certain
required financial responsibility; providing for
liability; requiring filing of annual audited
financial statement; authorizing Commissioner to
establish necessary rules; amending 36 O.S. 2011,
Section 1116, as amended by Sec tion 18, Chapter 45,
O.S.L. 2012 (36 O.S. Supp. 2020, Section 1116), which
relates to penalties for failure to remit taxes;
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removing time limits; specifying application of
certain penalty; amending 36 O.S. 2011, Section 1219,
which relates to claims reimbu rsement or denial;
modifying time and manner of claim payment or denial;
amending 36 O.S. 2011, Section 1250.5, as amended by
Section 1, Chapter 105, O.S.L. 2012 (36 O.S. Supp.
2020, Section 1250.5), which relates to acts by an
insurer constituting unfair claim settlement
practices; authorizing certain method of payment;
amending 36 O.S. 2011, Section 1250.7, as amended by
Section 7, Chapter 95, O.S.L. 2018 (36 O.S. Supp.
2020, Section 1250.7), which relates to property and
casualty claims; modifying time f or notice; amending
36 O.S. 2011, Section 1250.8, which relates to motor
vehicle total loss or damage claim; providing for
electronic payment; amending 36 O.S. 2011, Section
1435.20, as last amended by Section 1, Chapter 263,
O.S.L. 2019 (36 O.S. Supp. 202 0, Section 1435.20),
which relates to limited lines producers; updating
language; adding type of license limited lines
producer may receive; amending 36 O.S. 2011, Section
1445, which relates to fiduciary capacity;
authorizing electronic payments in certai n
circumstances; amending 36 O.S. 2011, Section 1450,
as amended by Section 6, Chapter 294, O.S.L. 2019 (36
O.S. Supp. 2020, Section 1450), which relates to
licensing procedure; modifying time for certain
notification; requiring background reports by certa in
persons; amending 36 O.S. 2011, Sections 2004, 2006,
as amended by Section 1, Chapter 78, O.S.L. 2014,
2007 and 2008 (36 O.S. Supp. 2020, Section 2006),
which relate to the Oklahoma Property and Casualty
Insurance Guaranty Association; modifying definit ion;
modifying composition of Board of Directors;
modifying obligations of certain insurers; specifying
entity responsible for issuance of certain policies;
adding method of certain notification; authorizing
insurer Board representative to designate altern ate
member with duties of insurer; removing authority of
Commissioner to appoint Board members in certain
circumstances; modifying duties of the Association;
removing residency requirement for certain entities;
amending 36 O.S. 2011, Section 2023, as amend ed by
Section 2, Chapter 384, O.S.L. 2019 (36 O.S. Supp.
2020, Section 2023), which relates to the Oklahoma
Life and Health Insurance Guaranty Association;
clarifying terms; amending 36 O.S. 2011, Section
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3101, which relates to definitions; modifying
definition; amending 36 O.S. Supp. 2011, Section
3105, which relates to motor service club agents;
updating language; clarifying persons who may be
appointed; removing requirement of certain
notification; modifying certain fee for producers;
modifying length Commissioner may suspend certain
license; amending 36 O.S. 2011, Section 3108, which
relates to misrepresentation; updating language;
amending 36 O.S. 2011, Section 3639.1, as amended by
Section 11, Chapter 44, O.S.L. 2012 (36 O.S. Supp.
2020, Section 3639.1 ), which relates to personal
residential insurance; requiring insured provide
certain notification for cancellation; providing that
insurer not liable after date of cancellation;
amending 36 O.S. 2011, Sections 4030 and 4030.1,
which relate to paying premi ums for single life
policies and payment of proceeds; amending 36 O.S.
2011, Section 4055.7, which relates to the Viatical
Settlements Act of 2008; amending 36 O.S. Section
4055.9, which relates to viatical settlements;
amending 36 O.S. 2011, Section 4103, which relates to
schedule of premium rates; deleting exception;
amending 36 O.S. 2011, Section 4112, which relates to
payment of proceeds; amending 36 O.S. 2011, Section
6060.11, as amended by Section 2, Chapter 75, O.S.L.
2020 (36 O.S. Supp. 2020, Sectio n 6060.11), which
relates to mental health and substance use disorders;
modifying certain deadline for Commissioner
reporting; amending 36 O.S. 2011, Section 6060.12, as
amended by Section 3, Chapter 75, O.S.L. 2020 (36
O.S. Supp. 2020, Section 6060.12), w hich relates to
calculation of premium costs; modifying penalty
determination; prohibiting change of name of prepaid
funeral benefit permit holder; requiring Insurance
Commissioner approval; providing for application for
change of name; authorizing waiver of approval
requirement; authorizing denial of change of name
application; providing for issuance of prepaid
funeral benefit permit with new name; authorizing
Insurance Commissioner to prescribe rules; amending
36 O.S. 2011, Section 6216.1, which relates t o
payment of claims to public adjuster; amending 36
O.S. 2011, Section 6217, as last amended by Section
14, Chapter 269, O.S.L. 2013 (36 O.S. Supp. 2020,
Section 6217), which relates to continuing education;
eliminating continuing education advisory commit tee;
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defining term; providing for dormant captive
insurance company to apply for certificate of
dormancy; listing requirements for certain dormant
captive insurance companies; providing exceptions;
requiring certain application prior to issuing
insurance policies; providing for revocation of
certificate of dormancy; providing for examination;
authorizing the Insurance Commissioner to promulgate
rules; amending 36 O.S. 2011, Section 6552, which
relates to definitions; modifying definition;
amending 36 O.S. 2011, Section 6753, as amended by
Section 38, Chapter 150, O.S.L. 2012 (36 O.S. Supp.
2020, Section 6753), which relates to home service
contracts; modifying type of authorized financial
security deposit; amending 36 O.S. 2011, Section
6904, which relates t o issuance of certificates;
modifying agency responsible for determining certain
compliance; removing duty and notification
requirements of State Commissioner of Health;
modifying time frame for issuance of certificate;
amending 36 O.S. 2011, Section 6907, which relates to
reasonable standards of quality care and
credentialing; modifying applicable agency; amending
36 O.S. 2011, Section 6911, which relates to
grievance procedures; modifying responsible agency;
amending 36 O.S. 2011, Section 6919, which rela tes to
examination of affairs, programs, books and records;
amending 36 O.S. 2011, Section 6920, which relates to
suspension or revocation of a certificate of
authority; eliminating role of State Commissioner of
Health in certain hearings and determination s;
modifying conditions in which Commissioner may revoke
certain license; amending 36 O.S. 2011, Section 6929,
which relates to contracts with qualified persons;
repealing 36 O.S. 2011, Sections 1435.40, as amended
by Section 1, Chapter 23, O.S.L. 2016 (O. S. Supp.
2020, Section 1435.40), 1612.1, 6221, and 6522 which
relate to applicants for licensure, property for
employees, Advisory Board to the Insurance
Commissioner, and the Oklahoma Small Employer Health
Reinsurance Program; providing for codification; and
declaring an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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SECTION 1. AMENDATORY 36 O.S. 2011, Section 311.4, as
amended by Section 1, Chapter 275, O.S.L. 2014 (36 O.S. Supp. 2020,
Section 311.4), is ame nded to read as follows:
Section 311.4. A. Insurers authorized to do business under the
provisions of the Oklahoma Insurance Code shall annually file with
the Insurance Commissioner market conduct annual statements
reporting market conduct data of insure rs on the thirty-first day of
December of the previous year. The statements shall report on the
lines of insurance and be in such general form and context as
approved by the National Association of Insurance Commissioners
(NAIC), and as supplemented for a dditional information required by
the Insurance Commissioner by rule. The statements shall be
prepared in accordance with NAIC instructions, including any
supplemental filings described in the NAIC instructions. If no
forms or instructions are available from the National Association of
Insurance Commissioners, the statements shall be in the form and
pursuant to instructions as provided by the Insurance Commissioner.
Insurers not authorized by the Insurance Commissioner to provide the
lines of insurance a pproved by the National Association or the
Insurance Commissioner shall not be required to file market conduct
annual statements. For good cause shown, the Insurance Commissioner
may extend the time within which market conduct annual statements
may be filed. The Insurance Commissioner may provide copies of
market conduct annual statements, amendments, and addendums to such
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statements and market conduct data taken from such statements to the
National Association of Insurance Commissioners only if, prior to
sharing of the market conduct annual statements, amendments,
addendums to such statements or market conduct data taken from such
statements, the National Association of Insurance Commissioners
enters into a written agreement with the Insurance Commissione r to
maintain the confidentiality of the shared information.
B. The Insurance Commissioner may adopt rules implementing this
section including rules that:
1. Add lines of insurance to be reported in market conduct
annual statements; and
2. Require the filing of market conduct annual statements and
any amendments and addendums to such statements with the National
Association of Insurance Commissioners, and the payment of
applicable filing fees required by the NAIC.
C. Insurers shall pay a filing fee of T wo Hundred Dollars
($200.00) to the Insurance Commissioner for the filing of the market
conduct annual statement.
D. No waiver of an applicable privilege or claim of
confidentiality in the documents, materials, or other information
shall occur as a result of disclosure to the Insurance Commissioner
or the Commissioner's designee under this section or as a result of
sharing the documents, materials or other information as provided in
this section.
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E. Market conduct annual statements and any amendments and
addendums to such statements, filed with the Insurance Commissioner
pursuant to this section in electronic format or otherwise, shall be
treated as working papers and documents as set out in subsection F
of Section 309.4 of this title.
F. The Insurance Co mmissioner may use market conduct annual
statements or amendments or addendums to such statements to assist
in determining whether a market conduct examination or investigation
of an insurer should be conducted. For purposes of completing a
market conduct examination of any company under Sections 309.1
through 309.7 of this title, the Insurance Commissioner may, in the
sole discretion of the Insurance Commissioner, use market conduct
annual statements or amendments or addendums to such statements to
assist in determining compliance with the laws of this state and
rules adopted by the Insurance Commissioner.
G. For any violation of this section, the Insurance
Commissioner may, after notice and opportunity for a hearing,
subject an insurer to a civil penalty of up to One Thousand Dollars
($1,000.00) for each occurrence. Such civil penalty may be enforced
in the same manner in which civil judgments may be enforced.
SECTION 2. AMENDATORY 36 O.S. 2011, Section 615.2, is
amended to read as follows:
Section 615.2. All domestic insurers and health maintenance
organizations are required to keep biographical information current.
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Domestic insurers and health maintenance organizations are required
to provide Biographical Affidavits within th irty (30) days of any
change in officers, directors, key management or any person
acquiring ten percent (10%) or more controlling interest in a
domestic insurer. The information shall be on the National
Association of Insurance Commissioners (NAIC) UCAA B iographical
Affidavit Form. The Biographical Affidavit is to be certified by an
independent third party acceptable to the Insurance Commissioner
that has conducted a comprehensive review of the background of the
applicant and has indicated that the Biogra phical Affidavit has no
significantly inaccurate or conflicting information and is accepted
as the Business Character Report. As used in this section,
"independent third party " is one that has no affiliation with the
applicant and is in the business of pr oviding background checks or
investigations. The Business Character Report must be current and
shall not be older than one (1) year six (6) months.
SECTION 3. AMENDATORY 36 O.S. 2011, Section 638, is
amended to read as follows:
Section 638. Every MEWA Multiple Employer Welfare Arrangement
shall comply with Articles 15 through 19 and Sections 308 309.1
through 310 309.7, 311.1 and 619 of Title 36 of the Oklahoma
Statutes this title which pertain to examinations, deposits and
solvency regulation.
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SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 953.1 of Title 36, unless there
is created a duplication in numbering, reads as follows:
A. Notwithstanding any other law or regulation, an insurer that
uses credit information shall, upon written request from an
applicant for insurance coverage or an insured upon a form provided
by the Insurance Commissioner, provide reasonable exceptions to the
rate of the insurer, rating cla ssifications, company or tier
placement or underwriting rules or guidelines for a consumer who has
experienced and whose credit information has been directly
influenced by any of the following events:
1. Catastrophic event declared by the federal or state
government;
2. Serious illness or injury, or serious illness or injury to
an immediate family member;
3. Death of an immediate family member;
4. Divorce or involuntary interruption of legally owed alimony
or support payments;
5. Identity theft;
6. Temporary loss of employment for a period of three (3)
months or more, if it results from involuntary termination;
7. Military deployment overseas; and
8. Other events, as determined by the Insurance Commissioner.
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B. If an applicant or insured submits a r equest for an
exception as provided in subsection A of this section, an insurer
may, in its sole discretion:
1. Require the consumer to provide reasonable written and
independently verifiable documentation of the event;
2. Require the consumer to demonst rate that the event had
direct and meaningful impact on the credit information of the
consumer;
3. Require the request be made no more than sixty (60) days
from the date of the application for insurance or the policy
renewal;
4. Grant an exception despit e the consumer not providing the
initial request for an exception in writing; or
5. Grant an exception to requiring a written request where the
consumer asks for a consideration of repeated events or the insurer
has considered this event previously.
C. An insurer is in compliance with any other provision of law
or Insurance Department rule relating to underwriting, rating or
rate filing notwithstanding the granting an exception under this
section. Nothing in this section shall be construed to provide a
consumer or other insured with a cause of action that does not exist
in the absence of this section.
D. The insurer shall provide notice to consumers, either at the
time of acceptance of an insurance application or at policy renewal,
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that reasonable except ions are available and information about how
the consumer may inquire further.
SECTION 5. AMENDATORY 36 O.S. 2011, Section 996, is
amended to read as follows:
Section 996. Assigned Risks. A. Agreements may be made among
insurers with respect to the equitable apportionment among them of
costs for insurance which may be afforded applicants who are in good
faith entitled to, but who are unable to procure , such insurance
through ordinary methods, and such insurers may agree among
themselves on the use of reasonable rate modifications for such
insurance, such agreements and rate modifications to be subject to
the approval of the Insurance Commissioner. Nothing in the Property
and Casualty Competitive Loss Cost Rating Act shall permit
disapproval of a residual market plan permitting an insurer to elect
voluntary direct assignment .
B. The Oklahoma Automobile Insurance Plan is authorized to
issue policies of insurance in the name of the plan for the
applicants described in subsection A of this section and to act on
behalf of all participating members in connection with the policies.
The policies shall be considered proof of financial responsibility
in accordance with Section 7 -600 of the Highway Safety Code.
C. The participating member s shall be liable to the plan for
all costs, expenses and liabilities in proportion to its share of
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voluntary market premium for the types of policies written under the
plan in this state.
D. The plan shall file an annual audited financial statement
with the Commissioner.
E. The Commissioner is authorized to establish rules and
regulations required to implement the purposes of this section.
SECTION 6. AMENDATORY 36 O.S. 2011, Section 1116, as
amended by Section 18, Chapter 45, O. S.L. 2012 (36 O.S. Supp. 2020,
Section 1116), is amended to read as follows:
Section 1116. A. Any surplus lines licensee or broker who
fails to remit the surplus line tax provided for by Section 1115 of
this title for more than sixty (60) days after it i s due shall be
liable for a civil penalty of not to exceed Twenty -five Dollars
($25.00) for each additional day of delinquency, per policy. The
Insurance Commissioner shall collect the tax by distraint and shall
recover the penalty by an action in the nam e of the State of
Oklahoma. The Commissioner may request the Attorney General to
appear in the name of the state by relation of the Commissioner.
B. If any person, association or legal entity procuring or
accepting any insurance coverage from a surplus l ines insurer where
Oklahoma is the home state of the insured, otherwise than through a
surplus lines licensee or broker, fails to remit the surplus line
tax provided for by Section 1115 of this title, the person,
association or legal entity shall, in addit ion to the tax, be liable
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to a civil penalty in an amount equal to one percent (1%) of the
premiums paid or agreed to be paid for the policy or policies of
insurance for each calendar month of delinquency or a civil penalty
in the amount of Twenty -five Dollars ($25.00) whichever shall be the
greater. The Insurance Commissioner shall collect the tax by
distraint and shall recover the civil penalty in an action in the
name of the State of Oklahoma. The Commissioner may request the
Attorney General to appear in the name of the state by relation of
the Commissioner.
SECTION 7. AMENDATORY 36 O.S. 2011, Section 1219, is
amended to read as follows:
Section 1219. A. In the administration, servicing, or
processing of any accident and hea lth insurance policy, every
insurer shall reimburse all clean claims of an insured, an assignee
of the insured, or a health care provider within forty -five (45)
calendar days after receipt of the a paper claim and thirty (30)
calendar days after receipt of an electronic claim by the insurer.
B. As used in this section:
1. "Accident and health insurance policy " or "policy" means any
policy, certificate, contract, agreement or other instrument that
provides accident and health insurance, as defined in Secti on 703 of
this title, to any person in this state, and any subscriber
certificate or any evidence of coverage issued by a health
maintenance organization to any person in this state;
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2. "Clean claim" means a claim that has no defect or
impropriety, including a lack of any required substantiating
documentation, or particular circumstance requiring special
treatment that impedes prompt payment; and
3. "Insurer" means any entity that provides an accident and
health insurance policy in this state, including, but not limited
to, a licensed insurance company, a not -for-profit hospital service
and medical indemnity corporation, a health maintenance
organization, a fraternal benefit society, a multiple employer
welfare arrangement, or any other entity subject to r egulation by
the Insurance Commissioner.
C. If a claim or any portion of a claim is determined to have
defects or improprieties, including a lack of any required
substantiating documentation, or particular circumstance requiring
special treatment, the ins ured, enrollee or subscriber, assignee of
the insured, enrollee or subscriber, and health care provider shall
be notified in writing within thirty (30) calendar days after
receipt of the claim by the insurer. The written notice shall
specify the portion o f the claim that is causing a delay in
processing and explain any additional information or corrections
needed. Failure of an insurer to provide the insured, enrollee or
subscriber, assignee of the insured, enrollee or subscriber, and
health care provider with the notice shall constitute prima facie
evidence that the claim will be paid in accordance with the terms of
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the policy. Provided, if a claim is not submitted into the system
due to a failure to meet basic Electronic Data Interchange (EDI)
and/or Health Insurance Portability and Accountability Act (HIPAA)
edits, electronic notification of the failure to the submitter shall
be deemed compliance with this subsection. Provided further, health
maintenance organizations shall not be required to notify th e
insured, enrollee or subscriber, or assignee of the insured,
enrollee or subscriber of any claim defect or impropriety.
D. Upon receipt of the additional information or corrections
which led to the claim 's being delayed and a determination that the
information is accurate, an insurer shall either pay or deny the
claim or a portion of the claim within forty -five (45) calendar days
for a paper claim and thirty (30) calendar days for an electronic
claim.
E. Payment shall be considered made on:
1. The date a draft or other valid instrument which is
equivalent to the amount of the payment is placed in the United
States mail in a properly addressed, postpaid envelope; or
2. If not so posted, the date of delivery.
F. An overdue payment shall bear simple inte rest at the rate of
ten percent (10%) per year.
G. In the event litigation should ensue based upon such a
claim, the prevailing party shall be entitled to recover a
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reasonable attorney fee to be set by the court and taxed as costs
against the party or par ties who do not prevail.
H. The Insurance Commissioner shall develop a standardized
prompt pay form for use by providers in reporting violations of
prompt pay requirements. The form shall include a requirement that
documentation of the reason for the del ay in payment or
documentation of proof of payment must be provided within ten (10)
days of the filing of the form. The Commissioner shall provide the
form to health maintenance organizations and providers.
I. The provisions of this section shall not app ly to the
Oklahoma Life and Health Insurance Guaranty Association or to the
Oklahoma Property and Casualty Insurance Guaranty Association.
SECTION 8. AMENDATORY 36 O.S. 2011, Section 1250.5, as
amended by Section 1, Chapter 105, O .S.L. 2012 (36 O.S. Supp. 2020,
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 o f 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, cover ages or other provisions
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 a rising under its insurance policies
or insurance contracts;
4. Not attempting in good faith to effectuate prompt, fair and
equitable settlement of claims submitted in which liability has
become reasonably clear;
5. Failing to comply with the provisions o f 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 otherw ise, which require a claimant to
give written notice of loss or proof of loss within a specified time
limit and which seek to relieve the company of its obligations if
the time limit is not complied with unless the failure to comply
with the time limit pre judices the rights of an insurer;
8. Requesting a claimant to sign a release that extends beyond
the subject matter that gave rise to the claim payment;
9. Issuing checks or, drafts or electronic payment in partial
settlement of a loss or claim under a s pecified coverage which
contain language releasing an insurer or its insured from its total
liability;
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10. Denying payment to a claimant on the grounds that services,
procedures, or supplies provided by a treating physician or a
hospital were not medicall y necessary unless the health insurer or
administrator, as defined in Section 1442 of this title, first
obtains an opinion from any provider of health care licensed by 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 opinion shall be set
forth in a written report, prepared and signed by the reviewing
physician. The report shall detail which specific services,
procedures, or supplies were not medically necessary, in the opinion
of the reviewing physician, and an explanation of that conclusion.
A copy of each report of a reviewing physician shall be mailed b y
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 l icense
to practice medicine and surgery, osteopathic medicine, podiatric
medicine, dentistry, chiropractic, or optometry, pursuant to the
state licensing provisions of Title 59 of the Oklahoma Statutes;
11. Compensating a reviewing physician, as defined i n paragraph
10 of this subsection, on the basis of a percentage of the amount by
which a claim is reduced for payment;
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12. Violating the provisions of the Health Care Fraud
Prevention Act;
13. Compelling, without just cause, policyholders to institute
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 them, when the
policyholders have made claims for amounts reasonably similar to the
amounts ultimately recovered;
14. Failing to maintain a complete record 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, whichever time is longer. This record shall
indicate the total number of complaints, 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 par agraph, "complaint" means any written
communication primarily expressing a grievance;
15. Requesting a refund of all or a portion of a payment of a
claim made to a claimant or health care provider more than twenty -
four (24) months after the payment is mad e. This paragraph shall
not apply:
a. if the payment was made because of fraud committed by
the claimant or health care provider, or
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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 failed to pay the
applicable premium and all grace periods and
extensions of coverage have expired; or
17. Denying or refusing to accept an application for life
insurance, or refusing to renew, cancel, restrict or otherwise
terminate a policy of life insurance, or charge a different rate
based upon the lawful travel destination of an applicant or insured
as provided in Section 4024 of this title.
SECTION 9. AMENDATORY 36 O.S. 2011, Section 1250.7, as
amended by Section 7, Chapter 95, O.S.L. 2018 (36 O.S. Supp. 2020,
Section 1250.7), is amended to read as follows:
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Section 1250.7. A. Within sixty (60) days after receipt by a
property and casualty insurer of properly executed proofs of loss,
the first party claim ant shall be advised of the acceptance or
denial of the claim by the insurer, or if further investigation is
necessary. No property and casualty insurer shall deny a claim
because of a specific policy provision, condition, or exclusion
unless reference to such provision, condition, or exclusion is
included in the denial. A denial shall be given to any claimant in
writing, and the claim file of the property and casualty insurer
shall contain a copy of the denial. If there is a reasonable basis
supported by specific information available for review by the
Commissioner that the first party claimant has fraudulently caused
or contributed to the loss, a property and casualty insurer shall be
relieved from the requirements of this subsection. In the event of
a weather-related catastrophe or a major natural disaster, as
declared by the Governor, the Insurance Commissioner may extend the
deadline imposed under this subsection an additional twenty (20)
days.
B. If a claim is denied for reasons other than those de scribed
in subsection A of this section, and is made by any other means than
writing, an appropriate notation shall be made in the claim file of
the property and casualty insurer until such time as a written
confirmation can be made.
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C. Every property and casualty insurer shall complete
investigation of a claim within sixty (60) days after notification
of proof of loss unless such investigation cannot reasonably be
completed within such time. If such investigation cannot be
completed, or if a property and casualty insurer needs more time to
determine whether a claim should be accepted or denied, it shall so
notify the claimant within sixty (60) days after receipt of the
proofs of loss, giving reasons why more time is needed. If the
investigation remains i ncomplete, a property and casualty insurer
shall, within sixty (60) days from the date of the initial
notification, send to such claimant a letter setting forth the
reasons additional time is needed for investigation. Except for an
investigation of possib le fraud or arson which is supported by
specific information giving a reasonable basis for the
investigation, the time for investigation shall not exceed one
hundred twenty (120) days after receipt of proof of loss. Provided,
in the event of a weather -related catastrophe or a major natural
disaster, as declared by the Governor, the Insurance Commissioner
may extend this deadline for investigation an additional twenty (20)
days.
D. Insurers shall not fail to settle first party claims on the
basis that responsibility for payment should be assumed by others
except as may otherwise be provided by policy provisions.
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E. Insurers shall not continue or delay negotiations for
settlement of a claim directly with a claimant who is neither an
attorney nor represented by an attorney, for a length of time which
causes the claimant's rights to be affected by a statute of
limitations, or a policy or contract time limit, without giving the
claimant written notice that the time limit is expiring and may
affect the claimant's rights. Such notice shall be given to first
party claimants thirty (30) days, and to third party claimants sixty
(60) days, before the date on which such time limit may expire one
year after the date of the loss .
F. No insurer shall make statements whi ch indicate that the
rights of a third party claimant may be impaired if a form or
release is not completed within a given period of time unless the
statement is given for the purpose of notifying a third party
claimant of the provision of a statute of lim itations.
G. If a lawsuit on the claim is initiated, the time limits
provided for in this section shall not apply.
SECTION 10. AMENDATORY 36 O.S. 2011, Section 1250.8, is
amended to read as follows:
Section 1250.8. A. If an insu rance policy or insurance
contract provides for the adjustment and settlement of first party
motor vehicle total losses, on the basis of actual cash value or
replacement with another of like kind and quality, one of the
following methods shall apply:
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1. An insurer may elect to offer a replacement motor vehicle
which is a specific comparable motor vehicle available to the
insured, with all applicable taxes, license fees, and other fees
incident to the transfer of evidence of ownership of the motor
vehicle paid, at no cost to the insured other than any deductible
provided in the policy. The offer and any rejection thereof shall
be documented in the claim file; or
2. An insurer may elect a cash settlement based upon the actual
cost, less any deductible provi ded in the policy, to purchase a
comparable motor vehicle, including all applicable taxes, license
fees and other fees incident to a transfer of evidence of ownership,
or a comparable motor vehicle. Such cost may be determined by:
a. the cost of a compara ble motor vehicle in the local
market area when a comparable motor vehicle is
currently or recently available in the prior ninety
(90) days in the local market area,
b. one of two or more quotations obtained by an insurer
from two or more qualified dealers located within the
local market area when a comparable motor vehicle is
not available in the local market area, or
c. the cost of a comparable motor vehicle as quoted in
the latest edition of the National Automobile Dealers
Association Official Used Car G uide or monthly edition
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of any other nationally recognized published
guidebook.
B. If a first party motor vehicle total loss is settled on a
basis which deviates from the methods described in subsection A of
this section, the deviation shall be supported by documentation
giving particulars of the condition of the motor vehicle. Any
deductions from such cost, including, but not limited to, deduction
for salvage, shall be measurable, discernible, itemized and
specified as to dollar amount and shall be appro priate in amount.
The basis for such settlement shall be fully explained to a first
party claimant.
C. If liability for motor vehicle damages is reasonably clear,
insurers shall not recommend that third party claimants make claims
pursuant to the third p arty claimants' own policies solely to avoid
paying claims pursuant to such insurer 's insurance policy or
insurance contract.
D. Insurers shall not require a claimant to travel unreasonably
either to inspect a replacement motor vehicle, obtain a repair
estimate or have the motor vehicle repaired at a specific repair
shop.
E. Insurers shall, upon the request of a claimant, include the
deductible of a first party claimant, if any, in subrogation
demands. Subrogation recoveries shall be shared on a proporti onate
basis with a first party claimant, unless the deductible amount has
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been otherwise recovered. No deduction for expenses shall be made
from a deductible recovery unless an outside attorney is retained to
collect such recovery. The deduction shall th en be made for only a
pro rata share of the allocated loss adjustment expense.
F. If an insurer prepares an estimate of the cost of automobile
repairs, such estimate shall be in an amount for which it reasonably
may be expected that the damage can be repa ired satisfactorily. An
insurer shall give a copy of an estimate to a claimant and may
furnish to the claimant the names of one or more conveniently
located repair shops, if requested by the claimant.
G. If an amount claimed is reduced because of betterm ent or
depreciation, all information for such reduction shall be contained
in the claim file. Such deductions shall be itemized and specified
as to dollar amount and shall be appropriate for the amount of
deductions.
H. An insurer or its representative s hall not require a
claimant to obtain motor vehicle repairs at a specific repair
facility. An insurer or its representative shall not require a
claimant to obtain motor vehicle glass repair or replacement at a
specific motor vehicle glass repair or replac ement facility. An
insurer shall fully and promptly pay for the cost of the motor
vehicle repair services or products, less any applicable deductible
amount payable according to the terms of the policy. The claimant
shall be furnished an itemized priced statement of repairs by the
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repair facility at the time of acceptance of the repaired motor
vehicle. Unless a cash settlement is made, if a claimant selects a
motor vehicle repair or motor vehicle glass repair or replacement
facility, the insurer shall pr ovide payment to the facility or
claimant based on a competitive price, as established by that
insurer through market surveys or by the insured through competitive
bids at the insured's option, to determine a fair and reasonable
market price for similar se rvices. Reasonable deviation from this
market price is allowed based on the facts in each case.
I. An insurer shall not use as a basis for cash settlement with
a first party claimant an amount which is less than the amount which
an insurer would pay if r epairs were made, other than in total loss
situations, unless such amount is agreed to by the insured.
J. An insurer shall not force a claimant to execute a full
settlement release in order to settle a property damage claim
involving a personal injury.
K. All payment or satisfaction of a claim for a motor vehicle
which has been transferred by title to the insurer shall be paid by
check or, draft or electronic payment , payable on demand.
L. In the event of payment of a total loss to a third party
claimant, the insurer shall include any registered lienholder as
copayee to the extent of the lienholder 's interest.
M. As used in this section, "total loss" means that the vehicle
repair costs plus the salvage value of the vehicle meets or exceeds
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the actual cash value of the motor vehicle prior to the loss, as
provided in used automobile dealer guidebooks.
N. An insurer shall not offer a cash settlement as provided in
paragraph 2 of subsection A of this section for the purchase of a
comparable motor vehicle and then subsequently sell the motor
vehicle which has been determined to be a total loss back to the
claimant if the insurer has determined that the repair of the
vehicle would not result in the vehicle being restored to operative
condition as provided in Se ction 1111 of Title 47 of the Oklahoma
Statutes unless the claimant specifies in writing or via an
electronic signature that the claimant understands that the motor
vehicle shall be titled as a "junked vehicle".
SECTION 11. AMENDATORY 36 O.S. 2011, Section 1435.20, as
last amended by Section 1, Chapter 263, O.S.L. 2019 (36 O.S. Supp.
2020, Section 1435.20), is amended to read as follows:
Section 1435.20. A. A limited lines producer may receive
qualification for a license in one or more of the following
categories:
1. Prepaid legal liability insurance, which means the
assumption of an enforceable contractual obligation to provide
specified legal services or to reimburse policyholders for specified
legal expenses, pursuant to the pr ovisions of a group or individual
policy;
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2. Crop - insurance providing protection against damage to
crops from unfavorable weather conditions, fire or lightning, flood,
hail, insect infestation, disease or other yield -reducing conditions
or perils provided by the private insurance market, or that is
subsidized by the Federal Crop Insurance Corporation, including
Multi-Peril Crop Insurance;
3. Car rental - insurance offered, sold or solicited in
connection with and incidental to the rental of rental cars for a
period of two (2) years, whether at the rental office or by
preselection of coverage in master, corporate, group or individual
agreements that:
a. is nontransferable,
b. applies only to the rental car that is the subject of
the rental agreement, and
c. is limited to the following kinds of insurance:
(1) personal accident insurance for renters and other
rental car occupants, for accidental death or
dismemberment, and for medical expenses resulting
from an accident that occurs with the rental car
during the rental period,
(2) liability insurance that provides protection to
the renters and other authorized drivers of a
rental car for liability arising from the
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operation or use of the rental car during the
rental period,
(3) personal effects insurance that provides coverage
to renters and other vehicle occupants for loss
of, or damage to, personal effects in the rental
car during the rental period,
(4) roadside assistance and emergency sickness
protection insurance, or
(5) any other coverage designated by t he Insurance
Commissioner.
A car rental limited lines license issued to a rental or leasing
company shall authorize any employee or authorized representative of
the rental or leasing company to sell or offer coverage at each
location at which the rental or leasing company operates. Employees
or authorized representatives are not required to be individually
licensed;
4. Credit - credit life, credit disability, credit property,
credit unemployment, involuntary unemployment, mortgage life,
mortgage guaranty, mortgage disability, guaranteed automobile
protection insurance, or any other form of insurance offered in
connection with an extension of credit that is limited to partially
or wholly extinguishing that credit obligation and that is
designated by the Ins urance Commissioner as limited line credit
insurance;
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5. Surety - insurance or bond that covers obligations to pay
the debts of, or answer for the default of another, including
faithlessness in a position of public or private trust. For purpose
of limited line licensing, surety does not include surety bail
bonds;
6. Travel; and
7. Self-service storage insurance, pursuant to Section 2 of
this act 1435.20a of this title; and
8. Motor Service Club limited lines producer, pursuant to
Sections 3101 et seq. of this title.
B. 1. An insurance producer or limited lines producer may
solicit applications for and issue travel accident policies or
baggage insurance by means of mechanical vending machines supervised
by the insurance producer or limited lines produc er only if the
Insurance Commissioner shall determine that the form of policy to be
sold is reasonably suited for sale and issuance through vending
machines, that use of vending machines for the sale of policies
would be of convenience to the public, and t hat the type of vending
machine to be used is reasonably suitable and practical for the sale
and issuance of policies. Policies so sold do not have to be
countersigned.
2. The Commissioner shall issue to the insurance agent or
limited insurance represent ative a special vending machine license
for each such machine to be used. The license shall specify the
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name and address of the insurer and licensee, the kind of insurance
and type of policy to be sold, and the place where the machine is to
be in operation. The license shall expire, be renewable, and be
suspended or revoked coincidentally with the insurance agent license
or limited representative license of the licensee. The license fee
for each vending machine shall be that stated in the provisions of
Section 1435.23 of this title. Proof of existence of the license
shall be displayed on or about each machine in such manner as the
Commissioner may reasonably require.
SECTION 12. AMENDATORY 36 O.S. 2011, Section 1445, is
amended to read as follows:
Section 1445. A. All insurance charges or premiums collected
by an administrator for an insurer or trust and all return premiums
received from the insurer or trust shall be held by the
administrator in a fiduciary capacity. These fund s shall be
immediately remitted to the person entitled to the funds or shall be
deposited promptly in a fiduciary bank account established and
maintained by the administrator.
B. If charges or premiums deposited in a fiduciary account have
been collected for more than one insurer or trust, the administrator
shall keep records showing the deposits to and withdrawals from the
account for each insurer or trust. The administrator, upon request
of an insurer or trust, shall furnish copies of the records
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pertaining to deposits to and withdrawals from the account for that
insurer or trust.
C. The administrator shall not pay any claim by withdrawals
from a fiduciary account unless provisions for said withdrawals are
included in the written agreement between the i nsurer or trust and
the administrator. The written agreement shall authorize
withdrawals by the administrator from the fiduciary account only
for:
1. remittance Remittance to an insurer or trust entitled to a
remittance; or
2. deposit Deposit in an account maintained in the name of an
insurer or trust; or
3. transfer Transfer to and deposit in an account established
for payment of claims, as provided for by subsection D of this
section; or
4. payment Payment to a group policyholder for remittance to
the insurer or trust entitled to such remittance; or
5. payment Payment of commission, fees, or charges to the
administrator; or
6. remittance Remittance of return premiums to the person
entitled to such return premiums.
D. All claims paid by the administ rator from funds collected on
behalf of the insurer or trust shall be paid on drafts or, checks or
electronic payment authorized by the insurer or trust.
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SECTION 13. AMENDATORY 36 O.S. 2011, Section 1450, as
amended by Section 6, C hapter 294, O.S.L. 2019 (36 O.S. Supp. 2020,
Section 1450), is amended to read as follows:
Section 1450. A. No person shall act as or present himself or
herself to be an administrator, as defined by the provisions of the
Third-party Administrator Act, in this state, unless the person
holds a valid license as an administrator which is issued by the
Insurance Commissioner.
B. An administrator shall not be eligible for a nonresident
administrator license under this section if the administrator does
not hold a home state certificate of authority or license in a state
that has adopted the Third -party Administrator Act or that applies
substantially similar provisions as are contained in the Third -party
Administrator Act to that administrator. If the Third -party
Administrator Act in the administrator 's home state does not extend
to stop-loss insurance, but if the home state otherwise applies
substantially similar provisions as are contained in the Third -party
Administrator Act to that administrator, then that om ission shall
not operate to disqualify the administrator from receiving a
nonresident administrator license in this state.
1. "Home state" means the United States jurisdiction that has
adopted the Third-party Administrator Act or a substantially similar
law governing third-party administrators and which has been
designated by the administrator as its principal regulator. The
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administrator may designate either its state of incorporation or its
principal place of business within the United States if that
jurisdiction has adopted the Third -party Administrator Act or a
substantially similar law governing third -party administrators. If
neither the administrator 's state of incorporation nor its principal
place of business within the United States has adopted th e Third-
party Administrator Act or a substantially similar law governing
third-party administrators, then the third -party administrator shall
designate a United States jurisdiction in which it does business and
which has adopted the Third -party Administrator Act or a
substantially similar law governing third -party administrators. For
purposes of this definition paragraph, "United States jurisdiction "
means the District of Columbia or a state or territory of the United
States.
2. "Nonresident administrator " means a person who is applying
for licensure or is licensed in any state other than the
administrator's home state.
C. In the case of a partnership which has been licensed, each
general partner shall be named in the license licensed and shall
qualify therefore as though an individual licensee. The
Commissioner shall charge a full additional license fee and a
separate license shall be issued for each individual so named in
such a license. The partnership shall notify the Commissioner
within fifteen (15) thirty (30) days if any individual licensed on
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its behalf has been terminated, or is no longer associated with or
employed by the partnership. Any entity or partnership person
making application as an administrator or currently licensed as
administrators an administrator under the Third-party Administrators
Act shall provide a National Association of Insurance Commissioner
(NAIC) Biographical Affidavits Affidavit and a comprehensive review
of the background report by an independent third -party NAIC-approved
vendor as required for domestic insurers pursuant to the insurance
laws of this state.
D. An application for an administrator 's license shall be in a
form prescribed by the Commissioner and shall be accompanied by a
fee of One Hundred Dollars ($100.00) . This fee shall not be
refundable if the application is denied or refused for any reason by
either the applicant or the Commissioner.
E. The administrator 's license shall continue in force no
longer than twelve (12) months from the original month of iss uance.
Upon filing a renewal form prescribed by the Commissioner,
accompanied by a fee of One Hundred Dollars ($100.00), the license
may be renewed annually for a one -year term. Late application for
renewal of a license shall require a fee of double the amount of the
original license fee. The administrator shall submit, together with
the application for renewal, a list of the names and addresses of
the persons with whom the administrator has contracted in accordance
with Section 1443 of this title. The Commissioner shall hold this
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information confidential except as provided in Section 1443 of this
title.
F. 1. The administrator 's license shall be issued or renewed
by the Commissioner unless, after notice and opportunity for
hearing, the Commissioner de termines that the administrator is not
competent, trustworthy, or financially responsible, or has had any
insurance license denied for cause by any state, has been convicted
or has pleaded guilty or nolo contendere to any felony or to a
misdemeanor involving moral turpitude or dishonesty.
2. The administrator shall report to the Insurance Commissioner
any administrative or criminal action taken against the
administrator in another jurisdiction or by another governmental
agency in this state within thirty ( 30) calendar days of the final
disposition of the matter. This report shall include a copy of the
order, consent to order, copy of any payment required as a result of
the administrative or criminal action, or other relevant legal
documents.
3. Any entity making application to the Oklahoma Insurance
Department as a third -party administrator (TPA) or within thirty
(30) days of a change for a licensed TPA shall provide current
National Association of Insurance Commissioners (NAIC) Biographical
Affidavits and independent third-party background reports from a
NAIC-approved vendor on behalf of all officers, directors and key
managerial personnel of the TPA, and individuals with a ten percent
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(10%) or more beneficial ownership in the TPA and the TPA 's ultimate
controlling person (affiant) as required for insurers pursuant to
the laws of this state.
G. After notice and opportunity for hearing, and upon
determining that the administrator has violated any of the
provisions of the Oklahoma Insurance Code or upon find ing reasons
for which the issuance or nonrenewal of such license could have been
denied, the Commissioner may either suspend or revoke an
administrator's license or assess a civil penalty of not more than
Five Thousand Dollars ($5,000.00) for each occurren ce. The payment
of the penalty may be enforced in the same manner as civil judgments
may be enforced.
H. Any person who is acting as or presenting himself or herself
to be an administrator without a valid license shall be subject,
upon conviction, to a f ine of not less than One Thousand Dollars
($1,000.00) nor more than Ten Thousand Dollars ($10,000.00) for each
occurrence. This fine shall be in addition to any other penalties
which may be imposed for violations of the Oklahoma Insurance Code
or other laws of this state.
I. Except as provided for in subsections F and G of this
section, any person convicted of violating any provisions of the
Third-party Administrator Act shall be guilty of a misdemeanor and
shall be subject to a fine of not more than One Thousand Dollars
($1,000.00).
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SECTION 14. AMENDATORY 36 O.S. 2011, Section 2004, is
amended to read as follows:
Section 2004. As used in the Oklahoma Property and Casualty
Insurance Guaranty Association Act:
1. "Affiliate" means a person who directly or indirectly,
through one or more intermediaries, controls, is controlled by, or
is under common control with another person on December 31 of the
year next preceding the date the insurer becomes an insolvent
insurer;
2. "Association" means the Oklahoma Property and Casualty
Insurance Guaranty Association as created in Section 2005 of this
title;
3. "Assumed claims transaction " means:
a. policy obligations that have been assumed by the
insolvent insurer, prior to the entry of a fina l
order of liquidation, pursuant to a plan, approved by
a domestic commissioner of the assuming insurer,
which transfers the direct policy obligations and
future policy renewals from one insurer to another
insurer, or
b. an assumption reinsurance transacti on in which all of
the following have occurred:
(1) the insolvent insurer assumed, prior to the
entry of a final order of liquidation, the claim
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or policy obligations of another insurer under
the claims or policies,
(2) the assumption of the claim or polic y
obligations has been approved, if an approval is
required, by the appropriate regulatory
authorities, and
(3) as a result of the assumption, the claim or
policy obligations became the direct obligations
of the insolvent insurer through novation of the
claims or policies;
4. "Claimant" means any person instituting a covered claim;
provided that no person who is an affiliate of the insolvent insurer
may be a claimant;
5. "Commissioner" means the Insurance Commissioner of Oklahoma;
6. "Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract other than a commercial contract for goods
or nonmanagement services, or otherwise, unless the power is the
result of an official position with or corporate office held by the
person. Control shall be presumed to exist if a person, directly or
indirectly, owns, controls, holds with the power to vote, or holds
proxies representing ten percent (10%) or more of the voting
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securities of any other person. This presumption may be rebutted by
a showing that control does not exist in fact;
7. "Covered claim" means:
a. an unpaid claim, including one of unearned premiums,
submitted by a claimant, which arises out of and is
within the coverage and is subject to the applicable
limits of an insurance policy to which this act
applies, if the insurer becomes an insolvent insurer
after the effective date of this act and the policy
was issued by the insurer, and:
(1) the claimant or insured is a resident of this
state at the time of the insured event, provided
that for entities other than an individual, the
residence of a claimant or insured is the state
in which its principal place of busin ess is
located at the time of the insured event, or
(2) the property from which the claim arises is
permanently located in this state,
b. "Covered claim" shall not include:
(1) any amount awarded as punitive or exemplary
damages,
(2) any amount sought as a return of premium under
any retrospective rating plan,
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(3) any amount due any reinsurer, insurer, insurance
pool, or underwriting association, health
maintenance organization, hospital plan
corporation, professional health service
corporation or self-insurer as subrogation
recoveries, reinsurance recoveries, contribution,
indemnification or otherwise. No claim for any
amount due any reinsurer, insurer, insurance
pool, or underwriting association, health
maintenance organization, hospital plan
corporation, professional health service
corporation or self-insurer may be asserted
against a person insured under a policy issued by
an insolvent insurer other than to the extent the
claim exceeds the association obligation
limitations set for in Section 2007 of thi s
title,
(4) any claims excluded pursuant to Section 15 of
this act due to the high net worth of an insured,
(5) any first party claims by an insured that is an
affiliate of the insolvent company,
(6) any fee or other amount relating to goods or
services sought by or on behalf of any attorney
or other provider of goods and services retained
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by the insolvent insurer or an insured prior to
the date it was determined to be insolvent,
(7) any fee or other amount sought by or on behalf of
any attorney or other p rovider of goods and
services retained by any insured or claimant in
connection with the assertion or prosecution of
any claim, covered or otherwise, against the
Association,
(8) any claims for interest, or
(9) any claim filed with the association or a
liquidator for protection afforded under the
policy of the insured for incurred -but-not-
reported losses, or
(10) notwithstanding any other provision of this act
or any other law to the contrary, a claim that is
filed with the association on a date that is
later than eighteen (18) months after the date of
the order of liquidation or that is unknown and
unreported as of said date; provided, however,
that this shall not include any claim for
workers' compensation benefits pursuant to Title
85A of the Oklahoma Sta tutes and the applicable
rules of OAC Title 810 ;
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8. "Insolvent insurer" means an insurer that is licensed to
transact insurance in this state either at the time the policy was
issued, when the obligation with respect to the covered claim was
assumed under an assumed claims transaction, or when the insured
event occurred and against whom a final order of liquidation has
been entered after the effective date of this act with a finding of
insolvency by a court of competent jurisdiction in the state of
domicile of the insurer;
9. "Insured" means any named insured, any additional insured,
any vendor, lessor or any other party identified as an insured under
the policy;
10. a. "Member insurer" means any person who:
(1) writes any kind of insurance to which the
Oklahoma Property and Casualty Insurance Guaranty
Association Act applies pursuant to Section 2003
of this title, including the exchange of
reciprocal or inter-insurance contracts, and
(2) is licensed to transact insurance in this state,
except those insurers enumerated in Section 110
of this title or those insurers that are
otherwise exempted by law or order of the
Commissioner.
b. An insurer shall cease to be a member insurer
effective on the day following the termination or
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expiration of its license to tr ansact the kinds of
insurance to which the Oklahoma Property and Casualty
Insurance Guaranty Association Act applies; however,
the insurer shall be liable as a member insurer for
any and all obligations, including but not limited to
obligations for assessm ents levied after the
termination or expiration, which relate to any insurer
that becomes an insolvent insurer prior to the
termination or expiration of the license of the
insurer;
11. "Net direct written premiums " means direct gross premiums
written in this state on insurance policies to which this act
applies, including but not limited to policy and membership fees,
less the following amounts:
a. return premiums,
b. premiums on policies not taken, and
c. dividends paid or credited to policyholders on dir ect
business. "Net direct written premiums " does not
include premiums on contracts between insurers or
reinsurers;
12. "Novation" means that the assumed claim or policy
obligations became the direct obligations of the insolvent insurer
through consent of the policyholder and that thereafter the ceding
insurer or entity initially obligated under the claims or policies
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is released by the policyholder from performing its claim or policy
obligations. Consent shall be express and an implied novation shall
not be allowed for the purposes, implementation and application of
the Oklahoma Property and Casualty Insurance Guaranty Association
Act;
13. "Person" means the individual or other entities as defined
in Section 104 of this title;
14. "Receiver" means liquidator, rehabilitator, conservator or
ancillary receiver, as the context requires; and
15. "Self-insurer" means a person who covers its liability
through a qualified individual or group self -insurance program or
any other formal program created for the spe cific purpose of
covering liabilities typically covered by insurance.
SECTION 15. AMENDATORY 36 O.S. 2011, Section 2006, as
amended by Section 1, Chapter 78, O.S.L. 2014 (36 O.S. Supp. 2020,
Section 2006), is amended to read as fol lows:
Section 2006. A. The business and functions of the Oklahoma
Property and Casualty Insurance Guaranty Association shall be
managed and administered by a board of twelve (12) directors
composed of two members selected by the American Insurance
Association who are member insurers; at the expiration of the terms
of the members selected by the Alliance of American Insurers who are
serving on November 1, 2014, two members selected by the Property
and Casualty Insurers Association of America who are member
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insurers; at the expiration of the terms of the members selected by
the National Association of Independent Insurers who are serving on
November 1, 2014, two members selected by the National Association
of Mutual Insurance Companies who are member insurer s; two Oklahoma
domestic insurers who are member insurers; two nonaffiliated foreign
or alien insurers who are member insurers; two insurance agents who
shall serve as ex officio members on the board domestic, foreign and
alien insurers who are member insu rers, including a minimum of two
domestic insurers, and two insurance agents who shall serve as ex
officio members. In determining candidates to fill the member
insurer positions, the board shall consider whether all insurers are
fairly represented, inclu ding workers' compensation insurers and
other property and casualty insurers . One of the ex officio members
shall be the Executive Director of the Independent Insurance Agents
of Oklahoma, Inc.; the other ex officio member shall be a licensed,
resident property and casualty insurance agent chosen by the
Governor. Each member of the board of directors shall designate a
full-time salaried employee to represent it on the board of
directors. Each member except for the ex officio members shall
serve for a term of two (2) years. The ex officio member who is
appointed by the Governor shall serve at the pleasure of the
Governor. Each appointed member insurer representative may
designate an alternate representative to represent the insurer at
any meeting of the board. Any person serving as an alternate
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representative shall, while serving, have all the powers and
responsibilities of the appointed insurer representative. The
members of the board of directors except for the ex officio members
shall be subject to a pproval by the Insurance Commissioner.
Vacancies on the board except for the ex officio members shall be
filled for the remaining period of the term by a majority vote of
the remaining board members, subject to the approval of the
Commissioner. If no members are selected and appointed within sixty
(60) days after the effective date of this act, the Commissioner may
appoint the initial members of the board of directors .
B. In approving selections to the board, the Commissioner shall
consider, among other things, whether all member insurers are fairly
represented.
C. Members of the board shall serve without compensation but
may be reimbursed from the assets of the Association for expenses
incurred by them as members of the board of directors.
SECTION 16. AMENDATORY 36 O.S. 2011, Section 2007, is
amended to read as follows:
Section 2007. A. The Oklahoma Property and Casualty Insurance
Guaranty Association shall:
1. Be obligated to pay the covered claims existing prior to the
determination of insolvency if the claims arise within thirty (30)
days after the determination of insolvency, or before the policy
expiration date if less than thirty (30) days after the
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determination, or before the insured replaces the policy or causes
its cancellation, if the insured does so within thirty (30) days of
the determination. The obligation shall be satisfied by paying to
the claimant an amount as follows:
a. the full amount of a covered claim for benefits under
a workers' compensation insurance c overage,
b. an amount not exceeding Ten Thousand Dollars
($10,000.00) per policy for a covered claim for the
return of unearned premium, and
c. an amount not exceeding One Hundred Fifty Thousand
Dollars ($150,000.00) per claimant for all other
covered claims.
In no event shall the Association be obligated to pay a claimant
an amount in excess of the obligation of the insolvent insurer under
the policy or coverage from which the claim arises or in excess of
the limits of the obligation of the Association exi sting on the date
on which the order of liquidation is filed with the court clerk;
2. Any obligation of the association to defend an insured shall
cease upon the payment or tender by the association of an amount
equal to the lesser of the covered claim ob ligation limit of the
association or the applicable policy limit;
3. Be deemed the insurer to the extent of the obligations on
covered claims and to that extent subject to the limitations
provided in the Oklahoma Property and Casualty Insurance Guaranty
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Association Act shall As payor of last resort, have all rights,
duties and obligations of the insolvent insurer as if the insurer
had not become insolvent , including, but not limited to, the right
to pursue and retain salvage and subrogation recoverable on covered
claim obligations to the extent paid by the association. The
association shall not be deemed the insolvent insurer for the
purpose of conferring jurisdiction;
4. Allocate claims paid and expenses incurred among the three
accounts set out in Secti on 2005 of this title separately, and
assess member insurers separately for each account amounts necessary
to pay the obligations of the Association under this section
subsequent to a member insurer becoming an insolvent insurer, the
expenses of handling c overed claims subsequent to an insolvency, and
other expenses authorized by the Oklahoma Property and Casualty
Insurance Guaranty Association Act, Sections 2001 through 2020 of
this title and Sections 14 2020.1 and 15 2020.2 of this act title.
The assessments of each member insurer shall be in the proportion
that the net direct written premiums of the member insurer for the
calendar year preceding the assessment on the kinds of insurance in
the account bear to the net direct written premiums of all
participating insurers for the calendar year preceding the
assessment on the kinds of insurance in the account. Each member
insurer shall be notified in writing of the assessment not later
than thirty (30) days before it is due. No member insurer may be
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assessed in any year an amount greater than two percent (2%) of the
net direct written premiums of that member or one percent (1%) of
that surplus of the member insurer as regards policyholders for the
calendar year preceding the assessment on the kinds of insura nce in
the account, whichever is less. If the maximum assessment, together
with the other assets of the Association, does not provide in any
one (1) year in any account an amount sufficient to make all
necessary payments from that account, the funds avail able may be
prorated and the unpaid portion shall be paid as soon thereafter as
funds become available. The Association shall pay claims in any
order which it deems reasonable, including the payment of claims as
the claims are received from the claimants or in groups or
categories of claims. The Association may exempt or defer, in whole
or in part, the assessment of any member insurer, if the assessment
would cause the financial statement of the member insurer to reflect
amounts of capital or surplus less than the minimum amounts required
for a certificate of authority by any jurisdiction in which the
member insurer is authorized to transact insurance. During the
period of deferment, no dividends shall be paid to shareholders or
policyholders. Deferred a ssessments shall be paid when the payments
will not reduce capital or surplus below required minimums. The
payments may be refunded to those companies receiving larger
assessments by virtue of the deferment, or, at the election of any
company credited aga inst future assessments. Each member insurer
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serving as a servicing facility may set off against any assessment
authorized payments made on covered claims and expenses incurred in
the payment of covered claims by a member insurer if they are
chargeable to the account for which the assessment is made;
5. Investigate claims brought against the Association and
adjust, compromise, settle and pay covered claims to the extent of
the obligation of the Association and deny all other claims. The
Association shall pay claims in any order that it may deem
reasonable, including, but not limited to, the payment of claims as
they are received from claimants or in groups of categories of
claims. The Association shall have the right to select and to
direct legal counsel under liability insurance policies for the
defense of covered claims;
6. Notify claimants in this state as deemed necessary by the
Commissioner and upon the request of the Commissioner, to the extent
records are available to the Association . Notification may include,
but shall not be limited to, a legal posting on the website of the
Association;
7. a. Handle claims through employees or through one or more
insurers or other persons incorporated and resident in
the State of Oklahoma designated as servicing
facilities. Designation of a servicing facility is
subject to approval of the Commissioner, but such
designation may be declined by a member insurer.
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b. The Association shall have the right to review and
contest as set forth in this paragraph, settlement s,
releases, compromises, waivers and judgments to which
the insolvent insurer or its insureds were parties
prior to the entry of the order of liquidation. In an
action to enforce settlements, releases and judgments
to which the insolvent insurer or its i nsureds were
parties prior to the entry of the order of
liquidation, the Association shall have the right to
assert the following defenses:
(1) the Association shall not be bound by a
settlement, release, compromise or waiver
executed by an insured or the insurer, or any
judgment entered against the insured or the
insurer by consent or through a failure to
exhaust all appeals, if the settlement, release,
compromise waiver or judgment was:
(a) executed or entered within one hundred
twenty (120) days prior to the entry of an
order of liquidation, and the insured or the
insurer did not use reasonable care in
entering into the settlement, release,
compromise, waiver or judgment, or did not
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pursue all reasonable appeals of an adverse
judgment, or
(b) executed by or taken against an insured or
the insurer based on default, fraud,
collusion or the failure of the insurer to
defend,
(2) if a court of competent jurisdiction finds that
the Association is not bound by a settlement,
release, compromise, waiver or judgment for the
releases provided for in division (1) of
subparagraph b of this paragraph, the settlement,
release, compromise, waiver or judgment shall be
set aside and the Association shall be permitted
to defend any covered claim on the merits. The
settlement, release, compromise, waiver or
judgment shall not be considered as evidence of
liability in connection with any claim brought
against the Association or any other party
pursuant to the Oklahoma Property and Casualty
Insurance Guaranty Association Act, an d
(3) the Association shall have the right to assert
any statutory defenses or rights of offset
against any settlement, release, compromise or
waiver executed by an insured or the insurer, or
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any judgment taken against the insured or the
insurer.
c. As to any covered claims arising from a judgment under
any decision, verdict or finding based on the default
of the insolvent insurer or its failure to defend, the
Association, either on its own behalf or on behalf of
an insured, may apply to have the judgment, order,
decision, verdict or finding set aside by the same
court or administrator that entered the judgment,
claim, decision, verdict or finding and shall be
permitted to defend on the merits;
8. Reimburse each servicing facility for obligations of the
Association paid by the facility and for reasonable expenses
incurred by the facility while handling claims on behalf of the
Association and pay the other expenses of the Association authorized
by the Oklahoma Property and Casualty Insurance Guaranty Associat ion
Act; and
9. Have standing to appear before any court of this state which
has jurisdiction over an impaired or insolvent insurer for whom the
Association is or may become obligated pursuant to the provisions of
the Oklahoma Property and Casualty Insura nce Guaranty Association
Act. Standing shall extend to all matters germane to the powers and
duties of the Association including, but not limited to, proposals
for rehabilitation, acquisition, merger, reinsuring, or guaranteeing
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the covered policies of th e impaired or insolvent insurer, and the
determination of covered policies and contractual obligations of the
impaired or insolvent insurer ; and
10. Notwithstanding any other provision of the Oklahoma
Property and Casualty Insurance Guaranty Association A ct, an
insurance policy issued by a member insurer and later allocated,
transferred, assumed by or otherwise made the sole responsibility of
another insurer pursuant to any provision of law providing for the
division of an insurance company, or the statuto ry assumption or
transfer of designated policies under which there is no remaining
obligation to the transferring entity, shall be considered to have
been issued by a member insurer which is an insolvent insurer for
the purposes of this Act in the event th at the insurer to which the
policy has been allocated, transferred, assumed or otherwise made
the sole responsibility of is placed in liquidation. An insurance
policy that was issued by an insurer who is not a member insurer and
subsequently allocated, tr ansferred, assumed by or otherwise made
the sole responsibility of a member insurer under any provision of
law providing for the division of an insurance company shall not be
considered to have been issued by a member insurer pursuant to this
Act.
B. The Association may:
1. Employ or retain persons as are necessary to handle claims
and perform other duties of the Association;
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2. Borrow funds necessary to effect the purposes of the
Oklahoma Property and Casualty Insurance Guaranty Association Act in
accordance with the plan of operation;
3. Sue or be sued;
4. Negotiate and become a party to contracts as are necessary
to carry out the purpose of the Oklahoma Property and Casualty
Insurance Guaranty Association Act;
5. Refund to member insurers in proport ion to the contribution
of each member insurer that amount by which the assets of the
Association exceed its liabilities, if at the end of any calendar
year the board of directors finds that the assets of the Association
exceed the liabilities as estimated by the board of directors for
the coming year;
6. Lend monies to an insurer declared to be impaired by the
Commissioner. The Association, with approval of the Commissioner,
shall approve the amount, length and terms of the loan. "Impaired
Insurer" for purposes of this paragraph section shall mean an
insurer potentially unable to fulfill its contractual obligations,
but shall not mean an insolvent insurer;
7. Perform other acts as are necessary or proper to effectuate
the purpose of the Oklahoma Propert y and Casualty Insurance Guaranty
Association Act;
8. Intervene as a party in interest in any supervision,
conservation, liquidation, rehabilitation, impairment or
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receivership in which policyholders ' interests and interests of the
Association may be or a re affected; and
9. Be designated or may contract as a servicing facility for
any entity which may be recommended by the board of directors of the
Association and shall be approved by the Commissioner.
SECTION 17. AMENDATORY 36 O. S. 2011, Section 2008, is
amended to read as follows:
Section 2008. A. The Oklahoma Property and Casualty Insurance
Guaranty Association shall submit to the Commissioner a plan of
operation and any amendments thereto necessary or suitable to assure
the fair, reasonable and equitable administration of the
Association. The plan of operation and any amendments thereto shall
become effective upon approval in writing by the Commissioner.
B. If the Association fails to submit a suitable plan of
operation within ninety (90) days following the effective date of
this act June 27, 1980, or if at any time thereafter the Association
fails to submit suitable amendments to the plan, the Commissioner
shall, after notice and hearing, adopt and promulgate reasonable
rules as are necessary or advisable to effectuate the provisions of
this act Section 2001 et seq. of this title . Any rules promulgated
shall continue in force until modified by the Commissioner or
superseded by a plan submitted by the Association and approved by
the Commissioner. All member insurers shall comply with the plan of
operation.
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C. The plan of operation shall:
1. Establish the procedures whereby all the powers and duties
of the Association under this act will be performed;
2. Establish procedure s for handling assets of the Association;
3. Require the amount and method of reimbursing members of the
board of directors under Section 2006 of this title;
4. Establish procedures by which claims may be filed with the
Association and establish acceptab le forms of proof of covered
claims;
5. Establish regular places and times for meetings of the board
of directors;
6. Require that the written procedures be established for
records to be kept of all financial transactions of the Association,
its agents and the board of directors;
7. Provide that any member insurer aggrieved by any final
action or decision of the Association may appeal to the Commissioner
within thirty (30) days after the action or decision;
8. Establish the procedures whereby selections for the board of
directors will be submitted to the Commissioner; and
9. Contain additional provisions necessary or proper for the
execution of the powers and duties of the Association.
D. The plan of operation may provide that any or all powers and
duties of the Association, except those under paragraph 3 of
subsection A and paragraph 2 of subsection B of Section 2007 of this
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title, are delegated to a corporation, association or other
organization incorporated and resident in the State of Oklahoma
which performs or will perform functions similar to those of this
Association, or its equivalent. The corporation, association or
organization shall be reimbursed as a servicing facility would be
reimbursed and shall be paid for its performance of any other
functions of the Association. A delegation under this subsection
shall take effect only with the approval of both the board of
directors and the Commissioner, and may be made only to a
corporation, association or organization which extends protection
not substantially less favorable and effective than that provided by
this act Section 2001 et seq. of this title .
SECTION 18. AMENDATORY 36 O.S. 2011, Section 2023, as
amended by Section 2, Chapter 384, O.S.L. 2019 (36 O.S. Supp. 2020,
Section 2023), is amended to read as follows:
Section 2023. A. There is created a nonprofit legal entity to
be known as the Oklahoma Life and Health Insurance Guaranty
Association. All member insurers shall be and remain members of the
Association as a condition of their authority to transact insurance
as a or health maintenance organization business in this state.
B. The Association shall perform its functions under a plan of
operation established and approved in accordance with this act and
shall exercise its powers through the Board of Directors established
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in this act. For purposes of administration and assessment, the
Association shall maintain three accounts:
1. The health account;
2. The life insurance account; and
3. The annuity account.
C. The Association shall come under the immediate supervision
of the Insurance Commissioner and shall be subject to the applicable
provisions of the insurance laws of this state.
SECTION 19. AMENDATORY 36 O.S. 2011, Section 3101, is
amended to read as follows:
Section 3101. The words and phrases as As used in this act,
unless a different meaning is plainly required by the context, shall
have the following meanings :
1. "Commissioner" means the Commissioner of Insurance, his or
her assistants or deputies, or other persons authorized to act for
him. or her;
2. "Company" means any person, firm, copartnership, company,
association or corporation engaged in selling, furnishing or
procuring, either as principal or agent producer, for a
consideration, motor club service .;
3. "Agent" "Producer" means a limited insurance representative
who solicits the purchase of service contracts or transmits for
another any such contract, or application therefor, to or from the
company, or acts or aids in an y manner in the delivery or
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negotiation of any such contract, or in the renewal or continuance
thereof. This, however, shall not include any person performing
only work of a clerical nature in the office of the motor club .;
4. "Towing service" means any act by a company which consists
of towing or moving a motor vehicle from one place to another under
other than its own power .;
5. "Emergency road service " means any act by a company to
adjust, repair or replace the equipment, tires or mechanical parts
of a motor vehicle so it may operate under its own power; or
reimbursement of expenses incurred by a member when his or her motor
vehicle is unable to operate under its own power .;
6. "Insurance service" means any act to sell or give to the
holder of a service contract or as a result of membership in or
affiliation with a company a policy of insurance covering the holder
for liability or loss for personal injury or property damage
resulting from the ownership, maintenance, operation or use of a
motor vehicle.;
7. "Bail bond service" means any act by a company to furnish or
procure a cash deposit, bond or other undertaking required by law
for any person accused of a law violation of this state, pending the
trial.;
8. "Discount service" means any act by a comp any resulting in
special discounts, rebates or reductions of price on gasoline, oil,
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repairs, insurance, parts, accessories or service for motor vehicles
to holders of service contracts .;
9. "Financial service" means any act by a company to loan or
otherwise advance monies, with or without security, to a service
contract holder.;
10. "Buying and selling service " means any act by a company to
aid the holder of a service contract in the purchase or sale of an
automobile.;
11. "Theft service" means any act by a company to locate,
identify or recover a stolen or missing motor vehicle owned or
controlled by the holder of a service contract or to detect or
apprehend the person guilty of such theft .;
12. "Map service" means any act by a company to furnish road
maps without cost to holders of service contracts .;
13. "Touring service" means any act by a company to furnish
touring information without cost to holders of service contracts .;
14. "Legal service" means any act by a company to furnish to a
service contract holder, without cost, the services of an attorney .;
15. "Motor club service" means the rendering, furnishing or
procuring of, or reimbursement for, towing service, emergency road
service, insurance service, bail bond service, legal service,
discount service, financial service, buying and selling service,
theft service, map service, touring service, or any three or more
thereof, to any person, in connection with the ownership, operation,
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use or maintenance of a motor vehicle by such person , that has
membership, for consideration.; and
16. "Service contract" means any written agreement whereby any
company, for a consideration, promises to render, furnish or procure
for any person motor club service.
SECTION 20. AMENDATORY 36 O.S . 2011, Section 3105, is
amended to read as follows:
Section 3105. A. Each motor service club operating in this
state pursuant to certificate of authority issued hereunder shall
file with the Commissioner, within ten (10) days of the date of
employment, a notice of appointment of any agent limited lines
producer, resident or nonresident, appointed by the automobile club
to sell memberships in the motor service club to the public. This
notification shall be upon such form as the Commissioner may
prescribe and shall contain the name, address, age, sex, and Social
Security number of such club agent producer, and shall also contain
proof satisfactory to the Commissioner that such applicant is not
less than eighteen (18) years of age, is of good reputation, an d has
received training from the club or is otherwise qualified in the
field of motor service club service contracts and knowledgeable of
the laws of this state pertaining thereto . Upon termination of any
agent's employment by the motor service club, such motor service
club shall notify the Commissioner, in writing, within five (5) days
of such termination.
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B. A registration licensing fee for agents limited lines
producers, resident or nonresident, shall be Twenty Dollars ($20.00)
annually, and such regis tration shall expire on July 1 of each year
unless sooner revoked or suspended as provided for in this section
Forty Dollars ($40.00) biennially .
C. Upon notice and hearing, the Commissioner may suspend for
not over twelve (12) months , censure, revoke, or refuse to renew any
agent's license of a producer if he finds as to the licensee that
any one or more of the following causes exist:
1. Any violation of or noncompliance with any provision of this
act;
2. Obtaining or attempting to obtain any such licen se through
misrepresentation or fraud;
3. Oral or written misrepresentation of the terms, conditions,
benefits, or privileges of any motor service club service contract
issued or to be issued by the motor service club he represents or
any other motor serv ice club;
4. Misappropriation or conversion to his own use or illegal
holding of monies, belonging to members or others, received in the
conduct of business under his license;
5. Pleading nolo contendere or guilty to a felony or conviction
by final judgment of a felony;
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6. Demonstration of incompetence sufficient in the opinion of
the Commissioner to make the agent producer a source of injury and
loss to the public;
7. Fraudulent or dishonest practices;
8. Willful solicitation of membership from an ind ividual who is
or has been a member of another motor service club by giving said
person credit for his years of membership with the other motor
service club;
9. Waiving the enrollment fee or otherwise reducing the usual
fees and charges for a new member w hen soliciting membership from an
individual who is or has been a member of another motor service
club.
D. In addition to the penalties provided for in this section, a
fine of not less than One Hundred Dollars ($100.00) nor more than
One Thousand Dollars ($1,000.00) for each occurrence may be levied.
SECTION 21. AMENDATORY 36 O.S. 2011, Section 3108, is
amended to read as follows:
Section 3108. A motor service club or an officer or agent
producer thereof shall not in any manner mi srepresent the terms,
benefits or privileges of any service contract issued or to be
issued by it or by another motor service club.
SECTION 22. AMENDATORY 36 O.S. 2011, Section 3639.1, as
amended by Section 11, Chapter 44, O.S.L. 2 012 (36 O.S. Supp. 2020,
Section 3639.1), is amended to read as follows:
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Section 3639.1. A. No insurer shall cancel, refuse to renew or
increase the premium of a homeowner 's insurance policy or any other
personal residential insurance coverage, which has been in effect
more than forty-five (45) days, solely because the insured filed a
first claim against the policy. The provisions of this section
shall not be construed to prevent the cancellation, nonrenewal or
increase in premium of a homeowner 's insurance policy for the
following reasons:
1. Nonpayment of premium;
2. Discovery of fraud or material misrepresentation in the
procurement of the insurance or with respect to any claims submitted
thereunder;
3. Discovery of willful or reckless acts or omiss ions on the
part of the named insured which increase any hazard insured against;
4. A change in the risk which substantially increases any
hazard insured against after insurance coverage has been issued or
renewed;
5. Violation of any local fire, health, safety, building, or
construction regulation or ordinance with respect to any insured
property or the occupancy thereof which substantially increases any
hazard insured against;
6. A determination by the Insurance Commissioner that the
continuation of the policy would place the insurer in violation of
the insurance laws of this state; or
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7. Conviction of the named insured of a crime having as one of
its necessary elements an act increasing any hazard insured against.
B. An insurer shall give to the name d insured at the mailing
address shown on a homeowner 's policy, a written renewal notice that
shall include new premium, new deductible, new limits or coverage at
least thirty (30) days prior to the expiration date of the policy.
If the insurer fails to p rovide such notice, the premium,
deductible, limits and coverage provided to the named insurer prior
to the change shall remain in effect until notice is given or until
the effective date of replacement coverage obtained by the named
insured, whichever occ urs first. If notice is given by mail, the
notice shall be deemed to have been given on the day the notice is
mailed. If the insured elects not to renew, any earned premium for
the period of extension of the terminated policy shall be calculated
pro rata at the lower of the current or previous year 's rate. If
the insured accepts the renewal, the premium increase, if any, and
other changes shall be effective the day following the prior
policy's expiration or anniversary date.
C. In the event an insured c ancels a homeowner's insurance
policy or any other personal residential insurance coverage, notice
shall be provided to the prior insurer and shall include the date of
the policy cancellation and the date of policy inception of the new
policy.
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D. An insurer canceling a policy under subsection C of this
section shall not be liable for claims arising after the date of
cancellation.
SECTION 23. AMENDATORY 36 O.S. 2011, Section 4030, is
amended to read as follows:
Section 4030. A. Ex cept as may be otherwise approved by the
Insurance Commissioner, no single premium policy of life insurance
or single premium annuity contract shall be delivered or issued for
delivery in Oklahoma for a consideration other than cash, cashier 's
check, check, bank draft, money order, or premium note or electronic
payment. This act shall not apply to the transfer of securities to
an insurer pursuant to the insuring of a pension or profit sharing
plan qualified under the Federal Internal Revenue Code.
B. This act shall not be held to repeal or alter any law now in
effect, but shall be construed as cumulative with and supplemental
to other laws and acts now in effect or enacted hereafter.
SECTION 24. AMENDATORY 36 O.S. 2011, Section 403 0.1, is
amended to read as follows:
Section 4030.1. A. Within ten (10) days after an insurer
receives written notification of the death of a person covered by a
policy of life insurance, the insurer shall provide to the claimant
the necessary forms to be completed to establish proof of the death
of the insured and, if required by the policy, the interest of the
claimant. If the policy contains a provision requiring surrender of
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the policy prior to settlement, the insurer shall include a written
statement to that effect with the forms to be completed. Forms to
establish proof of death and proof of the interest of the claimant
shall be approved by the Insurance Commissioner.
B. An insurer shall pay the proceeds of any benefits under a
policy of life insur ance not more than thirty (30) days after the
insurer has received proof of death of the insured. If the proceeds
are not paid within this period, the insurer shall pay interest on
the proceeds, at a rate which is not less than the current rate of
interest on death proceeds on deposit with the insurer, from the
date of death of the insured to the date when the proceeds are paid.
Should the insurer hold its deposits in a noninterest bearing
account, the rate of interest to be paid shall be the same rate of
interest as the average United States Treasury Bill rate of the
preceding calendar year, as certified to the Insurance Commissioner
by the State Treasurer on the first regular business day in January
of each year, plus two (2) percentage points, which sha ll accrue
from the thirty-first day after receipt of proof of loss until the
proceeds are paid. Payment shall be deemed to have been made on the
date an electronic payment is made or the date a check, draft or
other valid instrument which is equivalent to payment was placed in
the U.S. mails in a properly addressed, postpaid envelope; or, if
not so posted, on the date of delivery of such instrument to the
beneficiary.
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C. Subsection B of this section shall not apply to any life
insurance policy issued befo re October 1, 1978, which contains
specific provisions to the contrary.
SECTION 25. AMENDATORY 36 O.S. 2011, Section 4055.7, is
amended to read as follows:
Section 4055.7. A. 1. The Insurance Commissioner may conduct
an examination under the Viatical Settlements Act of 2008 of a
licensee as often as the Commissioner in his or her discretion deems
appropriate after considering the factors set forth in this
paragraph. In scheduling and determining the nature, scope, and
frequency of the examinations, the Commissioner shall consider such
matters as the consumer complaints, results of financial statement
analyses and ratios, changes in management or ownership, actuarial
opinions, report of independent certified public accountants, an d
other relevant criteria as determined by the Commissioner.
2. For purposes of completing an examination of a licensee
under the Viatical Settlements Act of 2008, the Commissioner may
examine or investigate any person, or the business of any person,
insofar as the examination or investigation is, in the sole
discretion of the Commissioner, necessary or material to the
examination of the licensee.
3. In lieu of an examination under the Viatical Settlements Act
of 2008 of any foreign or alien licensee lice nsed in this state, the
Commissioner may, at the Commissioner 's discretion, accept an
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examination report on the licensee as prepared by the Commissioner
for the licensee's state of domicile or port -of-entry state.
4. As far as practical, the examination o f a foreign or alien
licensee shall be made in cooperation with the insurance supervisory
officials of other states in which the licensee transacts business.
B. 1. A person required to be licensed by the Viatical
Settlements Act of 2008 shall for five (5 ) years for all settled
policies and for two (2) years for all policies which are not
settled retain copies of all:
a. proposed, offered or executed contracts, purchase
agreements, underwriting documents, policy forms, and
applications from the date of the proposal, offer or
execution of the contract or purchase agreement,
whichever is later,
b. all checks, drafts, electronic payment or other
evidence and documentation related to the payment,
transfer, deposit or release of funds from the date of
the transaction, and
c. all other records and documents related to the
requirements of the Viatical Settlements Act of 2008.
2. This subsection does not relieve a person of the obligation
to produce these documents to the Commissioner after the retention
period has expired if the person has retained the documents.
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3. Records required to be retained by this subsection must be
legible and complete and may be retained in paper, photograph,
microprocess, magnetic, mechanical, or electronic media, or by any
process that accurately reproduces or forms a durable medium for the
reproduction of a record.
C. 1. Upon determining that an examination should be
conducted, the Commissioner shall issue an examination warrant
appointing one or more examiners to perform the examina tion and
instructing them as to the scope of the examination. In conducting
the examination, the examiner shall observe those guidelines and
procedures set forth in the Examiners Handbook adopted by the
National Association of Insurance Commissioners (NAI C). The
Commissioner may also employ such other guidelines or procedures as
the Commissioner may deem appropriate.
2. Every licensee or person from whom information is sought,
its officers, directors and agents shall provide to the examiners
timely, convenient and free access at all reasonable hours at its
offices to all books, records, accounts, papers, documents, assets
and computer or other recordings relating to the property, assets,
business and affairs of the licensee being examined. The officers,
directors, employees and agents of the licensee or person shall
facilitate the examination and aid in the examination so far as it
is in their power to do so. The refusal of a licensee, by its
officers, directors, employees or agents, to submit to examina tion
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or to comply with any reasonable written request of the Commissioner
shall be grounds for suspension or refusal of, or nonrenewal of any
license or authority held by the licensee to engage in the viatical
settlement business or other business subject to the Commissioner's
jurisdiction. Any proceedings for suspension, revocation or refusal
of any license or authority shall be conducted in accordance with
the Administrative Procedures Act.
3. The Commissioner shall have the power to issue subpoenas, to
administer oaths and to examine under oath any person as to any
matter pertinent to the examination. Upon the failure or refusal of
a person to obey a subpoena, the Commissioner may petition a court
of competent jurisdiction, and upon proper showing, the Court may
enter an order compelling the witness to appear and testify or
produce documentary evidence. Failure to obey the court order shall
be punishable as contempt of court.
4. When making an examination under the Viatical Settlements
Act of 2008, the Commissioner may retain attorneys, appraisers,
independent actuaries, independent certified public accountants or
other professionals and specialists as examiners, the reasonable
cost of which shall be borne by the licensee that is the subject of
the examination.
5. Nothing contained in the Viatical Settlements Act of 2008
shall be construed to limit the Commissioner 's authority to
terminate or suspend an examination in order to pursue other legal
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or regulatory action pursuant to the insurance laws of th is state.
Findings of fact and conclusions made pursuant to any examination
shall be prima facie evidence in any legal or regulatory action.
6. Nothing contained in the Viatical Settlements Act of 2008
shall be construed to limit the Commissioner 's authority to use and,
if appropriate, to make public any final or preliminary examination
report, any examiner or licensee workpapers or other documents, or
any other information discovered or developed during the course of
any examination in the furtherance of any legal or regulatory action
which the Commissioner may, in his or her sole discretion, deem
appropriate.
D. 1. Examination reports shall be comprised of only facts
appearing upon the books, records or other documents of the
licensee, its agents or ot her persons examined, or as ascertained
from the testimony of its officers or agents or other persons
examined concerning its affairs, and such conclusions and
recommendations as the examiners find reasonably warranted from the
facts.
2. No later than six ty (60) days following completion of the
examination, the examiner in charge shall file with the Commissioner
a verified written report of examination under oath. Upon receipt
of the verified report, the Commissioner shall transmit the report
to the licensee examined, together with a notice that shall afford
the licensee examined a reasonable opportunity of not more than
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thirty (30) days to make a written submission or rebuttal with
respect to any matters contained in the examination report.
3. In the event the Commissioner determines that regulatory
action is appropriate as a result of an examination, the
Commissioner may initiate any proceedings or actions provided by
law.
E. 1. Names and individual identification data for all viators
shall be considered private and confidential information and shall
not be disclosed by the Commissioner, unless required by law.
2. Except as otherwise provided in the Viatical Settlements Act
of 2008, all examination reports, working papers, recorded
information, documen ts and copies thereof produced by, obtained by
or disclosed to the Commissioner or any other person in the course
of an examination made under the Viatical Settlements Act of 2008,
or in the course of analysis or investigation by the Commissioner of
the financial condition or market conduct of a licensee shall be
confidential by law and privileged, shall not be subject to the
Oklahoma Open Records Act, shall not be subject to subpoena, and
shall not be subject to discovery or admissible in evidence in any
private civil action. The Commissioner is authorized to use the
documents, materials or other information in the furtherance of any
regulatory or legal action brought as part of the Commissioner 's
official duties.
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3. Documents, materials or other informat ion, including, but
not limited to, all working papers, and copies thereof, in the
possession or control of the NAIC and its affiliates and
subsidiaries shall be confidential by law and privileged, shall not
be subject to subpoena, and shall not be subject to discovery or
admissible in evidence in any private civil action if they are:
a. created, produced or obtained by or disclosed to the
NAIC and its affiliates and subsidiaries in the course
of assisting an examination made under this act, or
assisting a Commissioner in the analysis or
investigation of the financial condition or market
conduct of a licensee, or
b. disclosed to the NAIC and its affiliates and
subsidiaries under paragraph 4 of this subsection by a
Commissioner.
For the purposes of paragraph 2 of this subsection, "act" means
the law of another state or jurisdiction that is substantially
similar to the Viatical Settlements Act of 2008.
4. Neither the Commissioner nor any person that received the
documents, material or other information while a cting under the
authority of the Commissioner, including the NAIC and its affiliates
and subsidiaries, shall be permitted to testify in any private civil
action concerning any confidential documents, materials or
information subject to paragraph 1 of this subsection.
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5. In order to assist in the performance of the Commissioner 's
duties, the Commissioner:
a. may share documents, materials or other information,
including the confidential and privileged documents,
materials or information subject to paragraph 1 of
this subsection, with other state, federal and
international regulatory agencies, with the NAIC and
its affiliates and subsidiaries, and with state,
federal and international law enforcement authorities,
provided that the recipient agrees to maintain the
confidentiality and privileged status of the document,
material, communication or other information, and
b. may receive documents, materials, communications or
information, including otherwise confidential and
privileged documents, materials or inform ation, from
the NAIC and its affiliates and subsidiaries, and from
regulatory and law enforcement officials of other
foreign or domestic jurisdictions, and shall maintain
as confidential or privileged any document, material
or information received with not ice or the
understanding that it is confidential or privileged
under the laws of the jurisdiction that is the source
of the document, material or information.
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6. No waiver of any applicable privilege or claim of
confidentiality in the documents, materials or information shall
occur as a result of disclosure to the Commissioner under this
section or as a result of sharing as authorized in paragraph 5 of
this subsection.
7. A privilege established under the law of any state or
jurisdiction that is substanti ally similar to the privilege
established under this subsection shall be available and enforced in
any proceeding in, and in any court of, this state.
8. Nothing contained in the Viatical Settlements Act of 2008
shall prevent or be construed as prohibitin g the Commissioner from
disclosing the content of an examination report, preliminary
examination report or results, or any matter relating thereto, to
the Commissioner of any other state or country, or to law
enforcement officials of this or any other stat e or agency of the
federal government at any time or to the NAIC, so long as such
agency or office receiving the report or matters relating thereto
agrees in writing to hold it confidential and in a manner consistent
with the Viatical Settlements Act of 20 08.
F. 1. An examiner may not be appointed by the Commissioner if
the examiner, either directly or indirectly, has a conflict of
interest or is affiliated with the management of or owns a pecuniary
interest in any person subject to examination under the Viatical
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Settlements Act of 2008. This section shall not be construed to
automatically preclude an examiner from being:
a. a viator,
b. an insured in a viaticated insurance policy, or
c. a beneficiary in an insurance policy that is proposed
to be viaticated.
2. Notwithstanding the requirements of this paragraph, the
Commissioner may retain from time to time, on an individual basis,
qualified actuaries, certified public accountants, or other similar
individuals who are independently practicing their profes sions, even
though these persons may from time to time be similarly employed or
retained by persons subject to examination under the Viatical
Settlements Act of 2008.
G. 1. No cause of action shall arise nor shall any liability
be imposed against the Com missioner, the Commissioner 's authorized
representatives or any examiner appointed by the Commissioner for
any statements made or conduct performed in good faith while
carrying out the provisions of the Viatical Settlements Act of 2008.
2. No cause of action shall arise, nor shall any liability be
imposed against any person for the act of communicating or
delivering information or data to the Commissioner or the
Commissioner's authorized representative or examiner pursuant to an
examination made under the Viatical Settlements Act of 2008, if the
act of communication or delivery was performed in good faith and
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without fraudulent intent or the intent to deceive. This paragraph
does not abrogate or modify in any way any common law or statutory
privilege or immunity heretofore enjoyed by any person identified in
paragraph 1 of this subsection.
3. A person identified in paragraph 1 or 2 of this subsection
shall be entitled to an award of attorney fees and costs if he or
she is the prevailing party in a civil ca use of action for libel,
slander or any other relevant tort arising out of activities in
carrying out the provisions of this act and the party bringing the
action was not substantially justified in doing so. For purposes of
this section a proceeding is "substantially justified " if it had a
reasonable basis in law or fact at the time that it was initiated.
H. The Commissioner may investigate suspected fraudulent
viatical settlement acts and persons engaged in the business of
viatical settlements.
SECTION 26. AMENDATORY 36 O.S. 2011, Section 4055.9, is
amended to read as follows:
Section 4055.9. A. 1. A viatical settlement provider entering
into a viatical settlement contract shall first obtain:
a. if the viator is the insured, a written statement from
a licensed attending physician that the viator is of
sound mind and under no constraint or undue influence
to enter into a viatical settlement contract, and
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b. a document in which the insured consents to the
release of his or her med ical records to a licensed
viatical settlement provider, viatical settlement
broker and the insurance company that issued the life
insurance policy covering the life of the insured.
2. Within twenty (20) days after a viator executes documents
necessary to transfer any rights under an insurance policy or within
twenty (20) days of entering any agreement, option, promise or any
other form of understanding, expressed or implied, to viaticate the
policy, the viatical settlement provider shall give written noti ce
to the insurer that issued that insurance policy that the policy has
or will become a viaticated policy. The notice shall be accompanied
by the documents required by paragraph 3 of this subsection.
3. Within twenty (20) days after a viator executes do cuments
necessary to transfer any rights under an insurance policy or within
twenty (20) days of entering any agreement, option, promise or any
other form of understanding, expressed or implied, to viaticate the
policy, the viatical provider shall deliver a copy of the medical
release required under subparagraph b of paragraph 1 of this
subsection, a copy of the viator 's application for the viatical
settlement contract, the notice required under paragraph 2 of this
subsection and a request for verification of coverage to the insurer
that issued the life policy that is the subject of the viatical
transaction. The National Association of Insurance Commissioner 's
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(NAIC's) form for verification of coverage shall be used unless
another form is developed and appr oved by the Insurance
Commissioner.
4. The insurer shall respond to a request for verification of
coverage submitted on an approved form by a viatical settlement
provider or viatical settlement broker within thirty (30) calendar
days of the date the reque st is received and shall indicate whether,
based on the medical evidence and documents provided, the insurer
intends to pursue an investigation at this time regarding the
validity of the insurance contract or possible fraud. The insurer
shall accept a request for verification of coverage made on an NAIC
form, any form agreed upon by the insurer and the requestor, or any
other form approved by the Commissioner. The insurer shall accept
an original or facsimile or electronic copy of such request and any
accompanying authorization signed by the viator. Failure by the
insurer to meet its obligations under this subsection shall be a
violation of subsection C of Section 10 and Section 15 of Enrolled
Senate Bill No. 1980 of the 2nd Session of the 51st Oklahoma
Legislature.
5. Prior to or at the time of execution of the viatical
settlement contract, the viatical settlement provider shall obtain a
witnessed document in which the viator consents to the viatical
settlement contract, represents that the viator has a full and
complete understanding of the viatical settlement contract, that he
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or she has a full and complete understanding of the benefits of the
life insurance policy, acknowledges that he or she is entering into
the viatical settlement contract freely and voluntarily and, for
persons with a terminal or chronic illness or condition,
acknowledges that the insured has a terminal or chronic illness and
that the terminal or chronic illness or condition was diagnosed
after the life insurance policy was issued.
6. The insurer shall not unreasonably delay effecting change of
ownership or beneficiary with any life settlement contract entered
into in this state or with a resident of this state.
7. If a viatical settlement broker performs any of these
activities required of the viatical settlement provider, the
provider is deemed to have fulfilled the requirements of this
section.
B. All medical information solicited or obtained by any
licensee shall be subject to the applicable provisions of state law
relating to confidentiality of medical information.
C. All viatical settlement contracts entered into in this state
shall provide the viator with an absolute right to rescind the
contract before the earlier of thirty (30) calendar days after the
date upon which the vi atical settlement contract is executed by all
parties or fifteen (15) calendar days after the viatical settlement
proceeds have been sent to the viator. Rescission by the viator may
be conditioned upon the viator both giving notice and repaying to
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the viatical settlement provider within the rescission period all
proceeds of the settlement and any premiums, loans and loan interest
paid by or on behalf of the viatical settlement provider in
connection with or as a consequence of the viatical settlement. If
the insured dies during the rescission period, the viatical
settlement contract shall be deemed to have been rescinded, subject
to repayment to the viatical settlement provider or purchaser of all
viatical settlement proceeds, and any premiums, loans and l oan
interest that have been paid by the viatical settlement provider or
purchaser, which shall be paid within sixty (60) calendar days of
the death of the insured. In the event of any rescission, if the
viatical settlement provider has paid commissions or other
compensation to a viatical settlement broker in connection with the
rescinded transaction, the viatical settlement broker shall refund
all such commissions and compensation to the viatical settlement
provider within five (5) business days following receipt of written
demand from the viatical settlement provider, which demand shall be
accompanied by either the viator 's notice of rescission if rescinded
at the election of the viator, or notice of the death of the insured
if rescinded by reason of the d eath of the insured within the
applicable rescission period.
D. The viatical settlement provider shall instruct the viator
to send the executed documents required to effect the change in
ownership, assignment or change in beneficiary directly to the
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independent escrow agent. Within three (3) business days after the
date the escrow agent receives the document or from the date the
viatical settlement provider receives the documents, if the viator
erroneously provides the documents directly to the provider, the
provider shall pay or transfer the proceeds of the viatical
settlement into an escrow or trust account maintained in a state - or
federally-chartered financial institution whose deposits are insured
by the Federal Deposit Insurance Corporation (FDIC). Upon payment
of the settlement proceeds into the escrow account, the escrow agent
shall deliver the original change in ownership, assignment or change
in beneficiary forms to the viatical settlement provider or related
provider trust or other designated re presentative of the viatical
settlement provider. Upon the escrow agent 's receipt of the
acknowledgment of the properly completed transfer of ownership,
assignment or designation of beneficiary from the insurance company,
the escrow agent shall pay the se ttlement proceeds to the viator.
E. Failure to tender consideration to the viator for the
viatical settlement contract within the time set forth in the
disclosure pursuant to paragraph 7 of subsection A of Section 8 of
Enrolled Senate Bill No. 1980 of the 2nd Session of the 51st
Oklahoma Legislature renders the viatical settlement contract
voidable by the viator for lack of consideration until the time
consideration is tendered to and accepted by the viator. Funds
shall be deemed sent by a viatical settle ment provider to a viator
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as of the date that the escrow agent either releases funds for wire
transfer to the viator or, places a check for delivery to the viator
via United States Postal Service or other nationally recognized
delivery service or make an electronic payment to the viator .
F. In order to assure that a viator, at the time of the
viatical settlement has a life expectancy of less than two (2)
years, receives reasonable return for viaticating an insurance
policy, the following shall be minimum d iscounts:
Minimum Percentage of Face
Insured's Life Value Less Outstanding Loans
Expectancy Received By Viator
Less than six (6) months 80%
At least six (6) but less than
twelve (12) months 70%
At least twelve (12) but less
than eighteen (18) months 65%
At least eighteen (18) months but
less than twenty-four (24) months 60%
G. Contacts with the insured for the purpose of determining the
health status of the insured by the viatical settlement provider or
viatical settlement broker after the viatical set tlement has
occurred shall only be made by a viatical settlement provider or
broker licensed in this state or its authorized representatives and
shall be limited to once every three (3) months for insureds with a
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life expectancy of more than one (1) year, and to no more than once
per month for insureds with a life expectancy of one (1) year or
less. The provider or broker shall explain the procedure for these
contacts at the time the viatical settlement contract is entered
into. The limitations set forth in this subsection shall not apply
to any contacts with an insured for reasons other than determining
the insured's health status. Viatical settlement providers and
viatical settlement brokers shall be responsible for the actions of
their authorized repre sentatives.
SECTION 27. AMENDATORY 36 O.S. 2011, Section 4103, is
amended to read as follows:
Section 4103. A. No policy of group life insurance shall be
delivered in this state unless a schedule of the premium rates
pertaining to the form thereof is filed with the Insurance
Commissioner and unless it contains in substance the following
provisions, or provisions which are more favorable to the persons
insured, or at least as favorable to the persons insured and more
favorable to the policyholder,; provided, however, (a) that
provisions six (6) to ten (10) inclusive :
1. Paragraphs 6 through 10 of this section shall not apply to
policies issued to a creditor to insure debtors of such creditor;
(b) that
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2. That the standard provisio ns required for individual life
insurance policies shall not apply to group life insurance policies;
and
(c) that
3. That if the group life insurance policy is on a plan of
insurance other than the term plan, it shall contain a nonforfeiture
provision or provisions which is or are equitable to the insured
persons and to the policyholder, but nothing herein shall be
construed to require that group life insurance policies contain the
same nonforfeiture provisions as are required for individual life
insurance policies:
1. B. A provision that the policyholder is entitled to a grace
period of thirty-one (31) days for the payment of any premium due
except the first, during which grace period the death benefit
coverage shall continue in force, unless the policyho lder shall have
given the insurer written notice of discontinuance in advance of the
date of discontinuance and in accordance with the terms of the
policy. The policy may provide that the policyholder shall be
liable to the insurer for the payment of a pr o rata premium for the
time the policy was in force during such grace period.
2. C. A provision that the validity of the policy shall not be
contested, except for nonpayment of premiums, after it has been in
force for two (2) years from its date of issue ;, and that no
statement made by any person insured under the policy relating to
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his or her insurability shall be used in contesting the validity of
the insurance with respect to which such statement was made after
such insurance has been in force prior to the contest for a period
of two (2) years during such person 's lifetime nor unless it is
contained in a written instrument signed by him or her.
3. D. A provision that a copy of the application, if any, of
the policyholder shall be attached to the policy when issued, that
all statements made by the policyholder or by the persons insured
shall be deemed representations and not warranties, and that no
statement made by any person insured shall be used in any contest
unless a copy of the instrument containing the statement is or has
been furnished to such person or to his or her beneficiary.
4. E. A provision setting forth the conditions, if any, under
which the insurer reserves the right to require a person eligible
for insurance to furnish evidence of indiv idual insurability
satisfactory to the insurer as a condition to part or all of his or
her coverage.
5. F. A provision specifying an equitable adjustment of
premiums or of benefits or of both to be made in the event the age
of a person insured has been mi sstated, such provision to contain a
clear statement of the method of adjustment to be used.
6. G. A provision that any sum becoming due by reason of the
death of the person insured shall be payable to the beneficiary
designated by the person insured, sub ject to the provisions of the
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policy in the event there is no designated beneficiary as to all or
any part of such sum, living at the death of the person insured, and
subject to any right reserved by the insurer in the policy and set
forth in the certifica te to pay at its option a part of such sum not
exceeding Five Hundred Dollars ($500.00) to any person appearing to
the insurer to be equitably entitled thereto by reason of having
incurred funeral or other expenses incident to the last illness or
death of the person insured.
7. H. A provision that the insurer will issue to the
policyholder for delivery to each person insured an individual
certificate setting forth a statement as to the insurance protection
to which he is entitled, to whom the insurance ben efits are payable,
and the rights and conditions set forth in paragraphs (8), (9) and
(10) of this section:.
8. I. A provision that if the insurance, or any portion of it,
on a person covered under the policy ceases because of termination
of employment or of membership in the class or classes eligible for
coverage under the policy, such person shall be entitled to have
issued to him or her by the insurer, without evidence of
insurability, an individual policy of life insurance without
disability or other s upplementary benefits, provided an application
for the individual policy shall be made, and the first premium paid
to the insurer, within thirty -one (31) days after such termination,
and provided further that:
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(a)
a. the individual policy shall, at the opt ion of such
person, be on any one of the forms, except term
insurance, then customarily issued by the insurer at
the age and for the amount applied for ;,
(b)
b. the individual policy shall be in an amount not in
excess of the amount of life insurance which ceases
because of such termination, less, in the case of a
person whose membership in the class or classes
eligible for coverage terminates but who continues in
employment in another class, the amount of any life
insurance for which such person is or beco mes eligible
within thirty-one (31) days after such termination
under any other group policy; provided that any amount
of insurance which shall have matured on or before the
date of such termination as an endowment payable to
the person insured, whether in one sum or in
installments or in the form of an annuity, shall not,
for the purposes of this provision subparagraph, be
included in the amount which is considered to cease
because of such termination ;, and
(c)
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c. the premium on the individual policy shall be at the
insurer's then customary rate applicable to the form
and amount of the individual policy, to the class of
risk to which such person then belongs, and to his or
her age attained on the effective date of the
individual policy.
9. J. A provision that if the group policy terminates or is
amended so as to terminate the insurance of any class of insured
persons, every person insured thereunder at the date of such
termination whose insurance terminates and who has been so insured
for at least five (5) years prior to such termination date shall be
entitled to have issued to him or her by the insurer an individual
policy of life insurance, subject to the same conditions and
limitations as are provided by paragraph (8) 8 of this section,
except that the group policy may provide that the amount of such
individual policy shall not exceed the smaller of (a):
a. the amount of the person 's life insurance protection
ceasing because of the termination or amendment of the
group policy, less the amount of any life i nsurance
for which he or she is or becomes eligible under any
group policy issued or reinstated by the same or
another insurer within thirty -one (31) days after such
termination, and (b)
b. Ten Thousand Dollars ($10,000.00).
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10. K. A provision that if a p erson insured under the group
policy dies during the period within which he or she would have been
entitled to have an individual policy issued to him or her in
accordance with paragraph (8) I or (9) J of this section and before
such an individual policy s hall have become effective, the amount of
life insurance which he or she would have been entitled to have
issued to him or her under such individual policy shall be payable
as a claim under the group policy, whether or not application for
the individual policy or the payment of the first premium therefor
has been made.
11. L. In the case of a policy issued to a creditor to insure
debtors of such creditor, a provision that the insurer will furnish
to the policyholder for delivery to each debtor insured unde r the
policy a form which shall contain a statement that the life of the
debtor is insured under the policy and that any death benefit paid
thereunder by reason of his or her death shall be applied to reduce
or extinguish the indebtedness.
SECTION 28. AMENDATORY 36 O.S. 2011, Section 4112, is
amended to read as follows:
Section 4112. An insurer shall pay the proceeds of any benefits
under group life insurance policy not more than thirty (30) days
after the insurer has received proo f of death of the insured. If
the proceeds are not paid within this period, the insurer shall pay
interest on the proceeds, at a rate which is not less than the
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current rate of interest on death proceeds on deposit with the
insurer, from the date of death of the insured to the date when the
proceeds are paid. Payment shall be deemed to have been made on the
date an electronic payment is made or a check, draft or other valid
instrument which is equivalent to payment was placed in the U.S.
mails in a properly addressed, postpaid envelope; or, if not so
posted, on the date of delivery of such instrument to the
beneficiary.
SECTION 29. AMENDATORY 36 O.S. 2011, Section 6060.11, as
amended by Section 2, Chapter 75, O.S.L. 2020 (36 O.S. Sup p. 2020,
Section 6060.11), is amended to read as follows:
Section 6060.11. A. Subject to the limitations set forth in
this section and Sections 6060.12 and 6060.13 of this title, any
health benefit plan that is offered, issued, or renewed in this
state on or after the effective date of this act shall provide
benefits for treatment of mental health and substance use disorders.
B. 1. Benefits for mental health and substance use disorders
shall be equal to benefits for treatment of and shall be subject to
the same preauthorization and utilization review mechanisms and
other terms and conditions as all other physical diseases and
disorders including, but not limited to:
a. coverage of inpatient hospital services for either
twenty-six (26) days or the limit f or other covered
illnesses, whichever is greater,
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b. coverage of outpatient services,
c. coverage of medication,
d. maximum lifetime benefits,
e. copayments,
f. coverage of home health visits,
g. individual and family deductibles, and
h. coinsurance.
2. Treatment limitations applicable to mental health or
substance use disorder benefits shall be no more restrictive than
the predominant treatment limitations applied to substantially all
medical and surgical benefits covered by the plan. There shall be
no separate treatment limitations that are applicable only with
respect to mental health or substance abuse disorder benefits.
C. A health benefit plan shall not impose a nonquantitative
treatment limitation with respect to mental health and substance use
disorders in any classification of benefits unless, under the terms
of the health benefit plan as written and in operation, any
processes, strategies, evidentiary standards or other factors used
in applying the nonquantitative treatment limitation to mental
health disorders in the classification are comparable to and applied
no more stringently than to medical and surgical benefits in the
same classification.
D. All health benefit plans must meet the requirements of the
federal Paul Wellstone and Pete Domenic i Mental Health Parity and
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Addiction Equity Act of 2008, as amended, and federal guidance or
regulations issued under these acts including 45 CFR 146.136, 45 CFR
147.160 and 45 CFR 156.115(a)(3).
E. Beginning on or after the effective date of this act, ea ch
insurer that offers, issues or renews any individual or group health
benefit plan providing mental health or substance use disorder
benefits shall submit an annual report to the Insurance Commissioner
on or before April 1 of each year that contains the following:
1. A description of the process used to develop or select the
medical necessity criteria for mental health and substance use
disorder benefits and the process used to develop or select the
medical necessity criteria for medical and surgical ben efits;
2. Identification of all nonquantitative treatment limitations
applied to both mental health and substance use disorder benefits
and medical and surgical benefits within each classification of
benefits; and
3. The results of an analysis that demon strates that for the
medical necessity criteria described in paragraph 1 of this
subsection and for each nonquantitative treatment limitation
identified in paragraph 2 of this subsection, as written and in
operation, the processes, strategies, evidentiary standards or other
factors used in applying the medical necessity criteria and each
nonquantitative treatment limitation to mental health and substance
use disorder benefits within each classification of benefits are
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comparable to and are applied no more s tringently than to medical
and surgical in the same classification of benefits. At a minimum,
the results of the analysis shall:
a. identify the factors used to determine that a
nonquantitative treatment limitation will apply to a
benefit including factor s that were considered but
rejected,
b. identify and define the specific evidentiary standards
used to define the factors and any other evidence
relied upon in designing each nonquantitative
treatment limitation,
c. provide the comparative analyses includi ng the results
of the analyses performed to determine that the
processes and strategies used to design each
nonquantitative treatment limitation, as written, and
the as written processes and strategies used to apply
the nonquantitative treatment limitation to mental
health and substance use disorder benefits are
comparable to and applied no more stringently than the
processes and strategies used to design each
nonquantitative treatment limitation, as written, and
the as written processes and strategies used to apply
the nonquantitative treatment limitation to medical
and surgical benefits,
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d. provide the comparative analyses including the results
of the analyses performed to determine that the
processes and strategies used to apply each
nonquantitative treat ment limitation, in operation,
for mental health and substance use disorder benefits
are comparable to and applied no more stringently than
the processes or strategies used to apply each
nonquantitative treatment limitation for medical and
surgical benefits in the same classification of
benefits, and
e. disclose the specific findings and conclusions reached
by the insurer that the results of the analyses
required by this subsection indicate that the insurer
is in compliance with this section and the Paul
Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008, as amended, and its
implementing and related regulations including 45 CFR
146.136, 45 CFR 147.160 and 45 CFR 156.115(a)(3).
F. The Commissioner shall implement and enforce an y applicable
provisions of the Paul Wellstone and Pete Domenici Mental Health
Parity and Addiction Equity Act of 2008, as amended, and federal
guidance or regulations issued under these acts including 45 CFR
146.136, 45 CFR 147.136, 45 CFR 147.160 and 45 C FR 156.115(a)(3).
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G. No later than June 1, 2021 December 31, 2021, and by June 1
December 31 of each year thereafter, the Commissioner shall make
available to the public the reports submitted by insurers, as
required in subsection E of this section, durin g the most recent
annual cycle; provided, however, that any information that is
confidential or a trade secret shall be redacted.
1. The Commissioner shall identify insurers that have failed in
whole or in part to comply with the full extent of reporting
required in this section and shall make a reasonable attempt to
obtain missing reports or information by June 1 of the following
year.
2. The reports submitted by insurers and the identification by
the Commissioner of noncompliant insurers shall be made a vailable to
the public by posting on the Internet website of the Insurance
Department.
H. The Commissioner shall promulgate rules pursuant to the
provisions of this section and any provisions of the Paul Wellstone
and Pete Domenici Mental Health Parity an d Addiction Equity Act of
2008, as amended, that relate to the business of insurance.
SECTION 30. AMENDATORY 36 O.S. 2011, Section 6060.12, as
amended by Section 3, Chapter 75, O.S.L. 2020 (36 O.S. Supp. 2020,
Section 6060.12), is amended to read as follows:
Section 6060.12. 1. A health benefit plan that, at the end of
its base period, experiences a greater than two percent (2%)
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increase in premium costs pursuant to providing benefits for
treatment of mental health and substance u se disorders shall be
exempt from the provisions of Section 6060.11 of this title.
2. To calculate base -period-premium costs, the health benefit
plan shall subtract from premium costs incurred during the base
period, both the premium costs incurred during the period
immediately preceding the base period and any premium cost increases
attributable to factors unrelated to benefits for treatment of
mental health and substance use disorders.
3. a. To claim the exemption provided for in subsection A
paragraph 1 of this section a health benefit plan
shall provide to the Insurance Commissioner a written
request signed by an actuary stating the reasons and
actuarial assumptions upon which the request is based.
b. The Commissioner shall verify the information provid ed
and shall approve or disapprove the request within
thirty (30) days of receipt.
c. If, upon investigation, the Commissioner finds that
any statement of fact in the request is found to be
knowingly false, the health benefit plan may be
subject to suspension or loss of license or any other
penalty as determined by the Commissioner , or the
State Commissioner of Health with regard to health
maintenance organizations.
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SECTION 31. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6124.2 of Title 36, unless there
is created a duplication in numbering, reads as follows:
A. No prepaid funeral benefit permit holder shall change the
name under which the permit holder operates except as provided in
this section. The prepaid funeral benefit permit holder shall
obtain approval from the Insurance Commissioner at least thirty (30)
days prior to changing the name of the permit holder. The
application for change of name of a prepaid funeral benefit permit
holder shall be in a form provided by the Insurance Commissioner and
shall contain, at a minimum, the following information:
1. The name of the permit holder;
2. The proposed new name of the permit holder; and
3. The date the name change will become effective.
B. The Insurance Commissioner may waive the approval
requirement provided for in subsection A of this section upon good
cause shown.
C. The Insurance Commissioner may deny the change of name of
the prepaid funeral benefit permit holder upon good cause shown.
D. Upon approval of a change of name, the Insurance
Commissioner shall issue a prepaid funeral benefit permit with the
new name. The prepaid funeral benefit permit holder shall display
in a conspicuous place at all times on the premises of the
organization all permits issued pursuant to the provisions of this
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section. No organization may consent to or allow the use or display
of the permit by a person other than the persons authorized to
represent the organization in contracting prepaid funeral benefits.
E. The Insurance Commissioner may prescribe rules concerning
matters incidental to this section.
SECTION 32. AMENDATORY 36 O.S. 2011, Section 6216.1, is
amended to read as follows:
Section 6216.1. No insurance company authorized to transact
insurance in this state shall make payment of any insurance claim,
or any portion of a claim, to a public adjuster on account of
services rendered by a public adjuster to an insured unless the name
of the insured is added as a joint payee on a ny claim check or,
draft or electronic payment . The payment, whether by check, draft ,
electronic payment or otherwise, shall be sent to the address or
electronic mail address designated by the insured.
SECTION 33. AMENDATORY 36 O. S. 2011, Section 6217, as
last amended by Section 14, Chapter 269, O.S.L. 2013 (36 O.S. Supp.
2020, Section 6217), is amended to read as follows:
Section 6217. A. All licenses issued pursuant to the
provisions of the Insurance Adjusters Licensing Act sha ll continue
in force not longer than twenty -four (24) months. The renewal dates
for the licenses may be staggered throughout the year by notifying
licensees in writing of the expiration and renewal date being
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assigned to the licensees by the Insurance Com missioner and by
making appropriate adjustments in the biennial licensing fee.
B. Any licensee applying for renewal of a license as an
adjuster shall have completed not less than twenty -four (24) clock
hours of continuing insurance education, of which thr ee (3) hours
shall be in ethics, within the previous twenty -four (24) months
prior to renewal of the license. The Insurance Commissioner shall
approve courses and providers of continuing education for insurance
adjusters as required by this section.
The Insurance Department may use one or more of the following to
review and provide a nonbinding recommendation to the Insurance
Commissioner on approval or disapproval of courses and providers of
continuing education:
1. Employees of the Insurance Commissione r;
2. A continuing education advisory committee . The continuing
education advisory committee is separate and distinct from the
Advisory Board established by Section 6221 of this title ;
3. An independent service whose normal business activities
include the review and approval of continuing education courses and
providers. The Commissioner may negotiate agreements with such
independent service to review documents and other materials
submitted for approval of courses and providers and present the
Commissioner with its nonbinding recommendation. The Commissioner
may require such independent service to collect the fee charged by
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the independent service for reviewing materials provided for review
directly from the course providers.
C. An adjuster who, during the time period prior to renewal,
participates in an approved professional designation program shall
be deemed to have met the biennial requirement for continuing
education. Each course in the curriculum for the program shall
total a minimum of twenty -four (24) hours. Each approved
professional designation program included in this section shall be
reviewed for quality and compliance every three (3) years in
accordance with standardized criteria promulgated by rule.
Continuation of approved status is con tingent upon the findings of
the review. The list of professional designation programs approved
under this subsection shall be made available to producers and
providers annually.
D. The Insurance Department may promulgate rules providing that
courses or programs offered by professional associations shall
qualify for presumptive continuing education credit approval. The
rules shall include standardized criteria for reviewing the
professional associations ' mission, membership, and other relevant
information, and shall provide a procedure for the Department to
disallow a presumptively approved course. Professional association
courses approved in accordance with this subsection shall be
reviewed every three (3) years to determine whether they continue to
qualify for continuing education credit.
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E. The active service of a licensed adjuster as a member of a
continuing education advisory committee, as described in paragraph 2
of subsection B of this section, shall be deemed to qualify for
continuing education c redit on an hour-for-hour basis.
F. 1. Each provider of continuing education shall, after
approval by the Commissioner, submit an annual fee. A fee may be
assessed for each course submission at the time it is first
submitted for review and upon submissi on for renewal at expiration.
Annual fees and course submission fees shall be set forth as a rule
by the Commissioner. The fees are payable to the Insurance
Commissioner and shall be deposited in the State Insurance
Commissioner Revolving Fund, created i n Section 307.3 of this title,
for the purposes of fulfilling and accomplishing the conditions and
purposes of the Oklahoma Producer Licensing Act and the Insurance
Adjusters Licensing Act. Public -funded educational institutions,
federal agencies, nonprof it organizations, not -for-profit
organizations and Oklahoma state agencies shall be exempt from this
subsection.
2. The Commissioner may assess a civil penalty, after notice
and opportunity for hearing, against a continuing education provider
who fails to comply with the requirements of the Insurance Adjusters
Licensing Act, of not less than One Hundred Dollars ($100.00) nor
more than Five Hundred Dollars ($500.00), for each occurrence. The
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civil penalty may be enforced in the same manner in which civil
judgments may be enforced.
G. Subject to the right of the Commissioner to suspend, revoke,
or refuse to renew a license of an adjuster, any such license may be
renewed by filing on the form prescribed by the Commissioner on or
before the expiration date a written request by or on behalf of the
licensee for such renewal and proof of completion of the continuing
education requirement set forth in subsection B of this section,
accompanied by payment of the renewal fee.
H. If the request, proof of compliance w ith the continuing
education requirement and fee for renewal of a license as an
adjuster are filed with the Commissioner prior to the expiration of
the existing license, the licensee may continue to act pursuant to
said license, unless revoked or suspended prior to the expiration
date, until the issuance of a renewal license or until the
expiration of ten (10) days after the Commissioner has refused to
renew the license and has mailed notice of said refusal to the
licensee. Any request for renewal filed af ter the date of
expiration may be considered by the Commissioner as an application
for a new license.
SECTION 34. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.35 of Title 36, unless
there is created a duplication in numbering, reads as follows:
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A. As used in this section, "dormant captive insurance company "
means a captive insurance company that has:
1. Ceased transacting the business of insurance, including the
issuance of insurance policies; and
2. No remaining liabilities associated with insurance business
transactions or insurance policies issued prior to the filing of its
application for a certificate of dormancy under this section.
B. A dormant captive insurance company domiciled in thi s state
that meets the criteria of subsection A of this section may apply to
the Insurance Commissioner for a certificate of dormancy. The
certificate of dormancy shall be subject to renewal every five (5)
years and shall be forfeited if not renewed withi n such time.
C. A dormant captive insurance company that has been issued a
certificate of dormancy shall:
1. Possess and thereafter maintain unimpaired, paid -in capital
and surplus of not less than Twenty -five Thousand Dollars
($25,000.00);
2. Submit on or before March 1 of each year to the Insurance
Commissioner a report of its financial condition, verified by an
oath of two of its executive officers, in a form prescribed by the
Insurance Commissioner; and
3. Pay a nonrefundable renewal fee of Five Hun dred Dollars
($500.00).
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D. A dormant captive insurance company shall not be subject to
or liable for the payment of any tax under Section 6753 of Title 36
of the Oklahoma Statutes.
E. A dormant captive insurance company shall apply to the
Insurance Commissioner for approval to surrender its certificate of
dormancy and resume conducting the business of insurance prior to
issuing any insurance policies.
F. A certificate of dormancy shall be revoked if a dormant
captive insurance company no longer meets the criteria of subsection
A of this section.
G. A dormant captive insurance company may be subject to
examination under Section 6470.13 of Title 36 of the Oklahoma
Statutes for any year when it did not qualify as a dormant captive
insurance company. The In surance Commissioner may examine a dormant
captive insurance company pursuant to Section 6470.13 of Title 36 of
the Oklahoma Statutes.
H. The Insurance Commissioner may promulgate and adopt rules
and regulations implementing the provisions of this section .
SECTION 35. AMENDATORY 36 O.S. 2011, Section 6552, is
amended to read as follows:
Section 6552. As used in the Hospital and Medical Services
Utilization Review Act:
1. "Utilization review" means a system for prospectively,
concurrently and retrospectively reviewing the appropriate and
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efficient allocation of hospital resources and medical services
given or proposed to be given to a patient or group of patients. It
does not include an insurer 's normal claim review process to
determine compliance with the specific terms and conditions of the
insurance policy;
2. "Private review agent " means a person or entity who performs
utilization review on behalf of:
a. an employer in this state, or
b. a third party that provides or administe rs hospital
and medical benefits to citizens of this state,
including, but not limited to:
(1) a health maintenance organization issued a
license pursuant to Section 2501 et seq. of Title
63 of the Oklahoma Statutes, unless the health
maintenance organizat ion is federally regulated
and licensed and has on file with the Insurance
Commissioner of Health a plan of utilization
review carried out by health care professionals
and providing for complaint and appellate
procedures for claims, or
(2) a health insurer, not-for-profit hospital service
or medical plan, health insurance service
organization, or preferred provider organization
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or other entity offering health insurance
policies, contracts or benefits in this state;
3. "Utilization review plan " means a description of utilization
review procedures;
4. "Commissioner" means the Insurance Commissioner;
5. "Certificate" means a certificate of registration granted by
the Insurance Commissioner to a private review agent; and
6. "Health care provider " means any person, firm, corporation
or other legal entity that is licensed, certified, or otherwise
authorized by the laws of this state to provide health care
services, procedures or supplies in the ordinary course of business
or practice of a profession.
SECTION 36. AMENDATORY 36 O.S. 2011, Section 6753, as
amended by Section 38, Chapter 150, O.S.L. 2012 (36 O.S. Supp. 2020,
Section 6753), is amended to read as follows:
Section 6753. A. Home service contracts shall not be issued,
sold or offered for sale in this state unless the provider has:
1. Provided a receipt for, or other written evidence of, the
purchase of the home service contract to the contract holder; and
2. Provided a copy of the home service contract to the service
contract holder within a reasonable period of time from the date of
purchase.
B. Each provider of home service contracts sold in this state
shall file a registration with, and on a form prescribed by, the
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Insurance Commissioner consisting of their name, full corpo rate
physical street address, telephone number, contact person and a
designated person in this state for service of process. Each
provider shall pay to the Commissioner a fee in the amount of One
Thousand Two Hundred Dollars ($1,200.00) upon initial regis tration
and every three (3) years thereafter. Each provider shall pay to
the Commissioner an Antifraud Assessment Fee of Two Thousand Two
Hundred Fifty Dollars ($2,250.00) upon initial registration and
every three (3) years thereafter. The registration n eed only be
updated by written notification to the Commissioner if material
changes occur in the registration on file. A proper registration is
de facto a license to conduct business in Oklahoma and may be
suspended as provided in Section 6755 of this tit le. Fees received
from home service contract providers shall not be subject to any
premium tax, but shall be subject to an administrative fee equal to
two percent (2%) of the gross fees received on the sale of all home
service contracts issued in this sta te during the preceding calendar
quarter. The fees shall be paid quarterly to the Commissioner and
submitted along with a report on a form prescribed by the
Commissioner. However, service contract providers may elect to pay
an annual administrative fee o f Three Thousand Dollars ($3,000.00)
in lieu of the two-percent administrative fee, if the provider
maintains an insurance policy as provided in paragraph 3 of
subsection C of this section.
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C. In order to assure the faithful performance of a provider 's
obligations to its contract holders, each provider shall be
responsible for complying with the requirements of paragraph 1, 2 or
3 of this subsection:
1. a. maintain a funded reserve account for its obligations
under its contracts issued and outstanding in t his
state. The reserves shall not be less than forty
percent (40%) of gross consideration received, less
claims paid, on the sale of the service contract for
all in-force contracts. The reserve account shall be
subject to examination and review by the Co mmissioner,
and
b. place in trust with the Commissioner a financial
security deposit, having a value of not less than five
percent (5%) of the gross consideration received, less
claims paid, on the sale of the service contract for
all service contracts iss ued and in force, but not
less than Twenty-five Thousand Dollars ($25,000.00),
consisting of one of the following:
(1) a surety bond issued by an authorized surety,
(2) securities of the type eligible for deposit by
authorized insurers in this state,
(3) cash,
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(4) a letter of credit issued by a qualified
financial institution, or
(5)
(4) another form of security prescribed by rule
promulgated by the Commissioner;
2. a. maintain, or together with its parent company
maintain, a net worth or stockholders ' equity of
Twenty-five Million Dollars ($25,000,000.00),
excluding goodwill, intangible assets, customer lists
and affiliated receivables, and
b. upon request, provide the Commissioner with a copy of
the provider's or the provider's parent company's most
recent Form 10-K or Form 20-F filed with the
Securities and Exchange Commission (SEC) within the
last calendar year, or if the company does not file
with the SEC, a copy of the company 's financial
statements, which shows a net worth of the provider or
its parent company of at least Twenty -five Million
Dollars ($25,000,000.00) based upon Generally Accepted
Accounting Principles (GAAP) accounting standards. If
the provider's parent company's Form 10-K, Form 20-F,
or financial statements are filed to meet the
provider's financial stability requirement, then the
parent company shall agree to guarantee the
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obligations of the provider relating to service
contracts sold by the provider in this state; or
3. Purchase an insurance policy which demonstrates to the
satisfaction of the Insurance Commissioner that one hundred percent
(100%) of its claim exposure is covered by such policy. The
insurance shall be obtained from an insurer that is licensed,
registered, or otherwise authorized to do business in this state,
that is rated B++ or better by A.M. Best Company, Inc., and that
meets the requirements of subsection D of this section. For the
purposes of this paragraph, the insurance policy shall contain the
following provisions:
a. in the event that the provider is unable to fulfill
its obligation under contracts issued in this state
for any reason, including insolvency, bankruptcy, or
dissolution, the insurer shall pay losses and unearned
premiums under such plans directly to the person
making the claim under the contract,
b. the insurer issuing the insurance policy shall assume
full responsibility for the administration of claims
in the event of the inability of the provider to do
so, and
c. the policy shall not be canceled or not renewed by
either the insurer or the provi der unless sixty (60)
days' written notice thereof has been given to the
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Commissioner by the insurer before the date of such
cancellation or nonrenewal.
D. The insurer providing the insurance policy used to satisfy
the financial responsibility requirement s of paragraph 3 of
subsection C of this section shall meet one of the following
standards:
1. The insurer shall, at the time the policy is filed with the
Commissioner, and continuously thereafter:
a. maintain surplus as to policyholders and paid -in
capital of at least Fifteen Million Dollars
($15,000,000.00), and
b. annually file copies of the audited financial
statements of the insurer, its National Association of
Insurance Commissioners (NAIC) Annual Statement, and
the actuarial certification required b y and filed in
the state of domicile of the insurer; or
2. The insurer shall, at the time the policy is filed with the
Commissioner, and continuously thereafter:
a. maintain surplus as to policyholders and paid -in
capital of less than Fifteen Million Doll ars
($15,000,000.00),
b. demonstrate to the satisfaction of the Commissioner
that the company maintains a ratio of net written
premiums, wherever written, to surplus as to
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policyholders and paid -in capital of not greater than
three to one, and
c. annually file copies of the audited financial
statements of the insurer, its NAIC Annual Statement,
and the actuarial certification required by and filed
in the state of domicile of the insurer.
E. Except for the registration requirements in subsection B of
this section, providers, administrators and other persons marketing,
selling or offering to sell home service contracts are exempt from
any licensing requirements of this state and shall not be subject to
other registration information or security requirements. Home
service contract providers as defined in Section 6752 of this title
and properly registered under this law are exempt from any treatment
pursuant to the Service Warranty Act. Home service contract
providers applying for registration under the Oklaho ma Home Service
Contract Act that have not been registered in the preceding twelve
(12) months under the Oklahoma Home Service Contract Act may be
subject to a thirty-day prior review before their registration is
deemed complete. Said applications shall b e deemed complete after
thirty (30) days unless the Commissioner takes action in that period
under Section 6755 of this title, for cause shown, to suspend their
registration.
F. The marketing, sale, offering for sale, issuance, making,
proposing to make and administration of home service contracts by
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providers and related service contract sellers, administrators, and
other persons, including but not limited to real estate licensees,
shall be exempt from all other provisions of the Insurance Code.
SECTION 37. AMENDATORY 36 O.S. 2011, Section 6904, is
amended to read as follows:
Section 6904. A. 1. Upon receipt of an application for
issuance of a certificate of authority, the Insurance Commissioner
shall forthwith transmit copies o f such application and accompanying
documents to the State Commissioner of Health.
2. The State Commissioner of Health shall within forty-five
(45) days determine whether the applicant for a certificate of
authority, with respect to health care services t o be furnished, has
complied with the provisions of Section 7 6907 of this act title.
3. Within forty-five (45) days of receipt of an application for
issuance of a certificate of authority from the Insurance
Commissioner, the State Commissioner of Health shall certify to the
Insurance Commissioner that the proposed health maintenance
organization meets the requirements of Section 7 of this act, or
shall notify the Insurance Commissioner that the proposed health
maintenance organization does not meet such r equirements and shall
specify in what respects the applicant is deficient.
B. The Insurance Commissioner shall, within forty -five (45)
days of receipt of a certification of determining compliance or
notice of deficiency from the State Commissioner of Heal th, issue a
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certificate of authority to a person filing a completed application
upon receipt of the prescribed fees and upon the Insurance
Commissioner's being satisfied that:
1. The persons responsible for the conduct of the affairs of
the applicant are competent and trustworthy, and possess good
reputations;
2. Any deficiency identified by the State Commissioner of
Health has been corrected and the State Commissioner of Health has
certified to the Insurance Commissioner has determined that the
health maintenance organization 's proposed plan of operation meets
the requirements of Section 7 6907 of this act title;
3. The health maintenance organization will effectively provide
or arrange for the provision of basic health care services on a
prepaid basis, through insurance or otherwise, except to the extent
of reasonable requirements for copayments or deductibles, or both;
and
4. The health maintenance organization is in compliance with
the provisions of Sections 13 6913 and 15 6915 of this act title.
C. A certificate of authority shall be denied only after the
Insurance Commissioner complies with the requirements of Section 20
6920 of this act title. No other criteria may be used to deny a
certificate of authority.
SECTION 38. AMENDATORY 36 O.S. 2011, Section 6907, is
amended to read as follows:
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Section 6907. A. Every health maintenance organization shall
establish procedures that ensure that health care services provided
to enrollees shall be rendered under reasonable standards of quality
of care consistent with prevailing professionally recognized
standards of medical practice. The procedures shall include
mechanisms to assure availability, accessibility and continuity of
care.
B. The health maintenance organization shall hav e an ongoing
internal quality assurance program to monitor and evaluate its
health care services, including primary and specialist physician
services and ancillary and preventive health care services across
all institutional and noninstitutional settings. The program shall
include, but need not be limited to, the following:
1. A written statement of goals and objectives that emphasizes
improved health status in evaluating the quality of care rendered to
enrollees;
2. A written quality assurance plan that describes the
following:
a. the health maintenance organization 's scope and
purpose in quality assurance,
b. the organizational structure responsible for quality
assurance activities,
c. contractual arrangements, where appropriate, for
delegation of quality assurance activities,
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d. confidentiality policies and procedures,
e. a system of ongoing evaluation activities,
f. a system of focused evaluation activities,
g. a system for credentialing and recredentialing
providers, and performing peer review activit ies, and
h. duties and responsibilities of the designated
physician responsible for the quality assurance
activities;
3. A written statement describing the system of ongoing quality
assurance activities including:
a. problem assessment, identification, se lection and
study,
b. corrective action, monitoring, evaluation and
reassessment, and
c. interpretation and analysis of patterns of care
rendered to individual patients by individual
providers;
4. A written statement describing the system of focused quali ty
assurance activities based on representative samples of the enrolled
population that identifies method of topic selection, study, data
collection, analysis, interpretation and report format; and
5. Written plans for taking appropriate corrective action
whenever, as determined by the quality assurance program,
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inappropriate or substandard services have been provided or services
that should have been furnished have not been provided.
C. The organization shall record proceedings of formal quality
assurance program activities and maintain documentation in a
confidential manner. Quality assurance program minutes shall be
available to the State Insurance Commissioner of Health.
D. The organization shall ensure the use and maintenance of an
adequate patient record system which will facilitate documentation
and retrieval of clinical information for the purpose of the health
maintenance organization 's evaluating continuity and coordination of
patient care and assessing the quality of health and medical care
provided to enrollees.
E. Enrollee clinical records shall be available to the State
Insurance Commissioner of Health or an authorized designee for
examination and review to ascertain compliance with this section, or
as deemed necessary by the State Insurance Commissioner of Health.
F. The organization shall establish a mechanism for periodic
reporting of quality assurance program activities to the governing
body, providers and appropriate organization staff.
G. The organization shall be required to establis h a mechanism
under which physicians participating in the plan may provide input
into the plan's medical policy including, but not limited to,
coverage of new technology and procedures, utilization review
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criteria and procedures, quality, credentialing and recredentialing
criteria, and medical management procedures.
H. As used in this section "credentialing" or
"recredentialing", as applied to physicians and other health care
providers, means the process of accessing and validating the
qualifications of su ch persons to provide health care services to
the beneficiaries of a health maintenance organization.
"Credentialing" or "recredentialing" may include, but need not be
limited to, an evaluation of licensure status, education, training,
experience, competence and professional judgment. Credentialing or
recredentialing is a prerequisite to the final decision of a health
maintenance organization to permit initial or continued
participation by a physician or other health care provider.
1. Physician credentia ling and recredentialing shall be based
on criteria as provided in the uniform credentialing application
required by Section 1 -106.2 of Title 63 of the Oklahoma Statutes,
with input from physicians and other health care providers.
2. Organizations shall m ake information on credentialing and
recredentialing criteria available to physician applicants and other
health care providers, participating physicians, and other
participating health care providers and shall provide applicants
with a checklist of materi als required in the application process.
3. When economic considerations are part of the credentialing
and recredentialing decision, objective criteria shall be used and
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shall be available to physician applicants and participating
physicians. When gradua te medical education is a consideration in
the credentialing and recredentialing process, equal recognition
shall be given to training programs accredited by the Accrediting
Council on Graduate Medical Education and by the American
Osteopathic Association. When graduate medical education is
considered for optometric physicians, consideration shall be given
for educational accreditation by the Council on Optometric
Education.
4. Physicians or other health care providers under
consideration to provide healt h care services under a managed care
plan in this state shall apply for credentialing and recredentialing
on the uniform credentialing application and provide the
documentation as outlined by the plan 's checklist of materials
required in the application pr ocess.
5. A health maintenance organization (HMO) shall determine
whether a credentialing or recredentialing application is complete.
If an application is determined to be incomplete, the plan shall
notify the applicant in writing within ten (10) calenda r days of
receipt of the application. The written notice shall specify the
portion of the application that is causing a delay in processing and
explain any additional information or corrections needed.
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6. In reviewing the application, the health maintena nce
organization (HMO) shall evaluate each application according to the
plan's checklist of materials required in the application process.
7. When an application is deemed complete, the HMO shall
initiate requests for primary source verification and malpr actice
history within seven (7) calendar days.
8. A malpractice carrier shall have twenty -one (21) calendar
days within which to respond after receipt of an inquiry from a
health maintenance organization (HMO). Any malpractice carrier that
fails to respond to an inquiry within the allotted time frame may be
assessed an administrative penalty by the State Insurance
Commissioner of Health.
9. Upon receipt of primary source verification and malpractice
history by the HMO, the HMO shall determine if the appl ication is a
clean application. If the application is deemed clean, the HMO
shall have forty-five (45) calendar days within which to credential
or recredential a physician or other health care provider. As used
in this paragraph, "clean application" means an application that has
no defect, misstatement of facts, improprieties, including a lack of
any required substantiating documentation, or particular
circumstance requiring special treatment that impedes prompt
credentialing or recredentialing.
10. If a health maintenance organization is unable to
credential or recredential a physician or other health care provider
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due to an application 's not being clean, the HMO may extend the
credentialing or recredentialing process for sixty (60) calendar
days. At the end of sixty (60) calendar days, if the HMO is
awaiting documentation to complete the application, the physician or
other health care provider shall be notified of the delay by
certified mail. The physician or other health care provider may
extend the sixty-day period upon written notice to the HMO within
ten (10) calendar days; otherwise the application shall be deemed
withdrawn.
11. In no event shall the entire credentialing or
recredentialing process exceed one hundred eighty (180) calendar
days.
12. A health maintenance organization shall be prohibited from
solely basing a denial of an application for credentialing or
recredentialing on the lack of board certification or board
eligibility and from adding new requirements solely for the purpose
of delaying an application.
13. Any HMO that violates the provisions of this subsection may
be assessed an administrative penalty by the State Insurance
Commissioner of Health.
I. Health maintenance organizations shall not discriminate
against enrollees with expensive medical conditions by excluding
practitioners with practices containing a substantial number of
these patients.
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J. Health maintenance organizations shall, upon request,
provide to a physician whose contract is terminated or not renewed
for cause the reasons for termination or nonrenewal. Health
maintenance organizations shall not contractually prohibit such
requests.
K. No HMO shall engage in the practice of medicine or any other
profession except as provided by law nor shall an HMO include any
provision in a provider contract that precludes or discourages a
health maintenance organization 's providers from:
1. Informing a patient of the care the patient requires,
including treatments or services not provided or reimbursed under
the patient's HMO; or
2. Advocating on behalf of a patient before the HMO.
L. Decisions by a health maintenance organization to authorize
or deny coverage for an emergency service shall be based on the
patient presenting symptoms arising from any injury, illness, or
condition manifesting itself by acute symptoms of sufficient
severity, including severe pain, such that a reasonable and prudent
layperson could expect the absence of medical attention to result in
serious:
1. Jeopardy to the health of the patient;
2. Impairment of bodily function; or
3. Dysfunction of any bodily organ or part.
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M. Health maintenance organizations shall not deny an otherwise
covered emergency service based solely upon lack of notification to
the HMO.
N. Health maintenance organizations sha ll compensate a provider
for patient screening, evaluation, and examination services that are
reasonably calculated to assist the provider in determining whether
the condition of the patient requires emergency service. If the
provider determines that the patient does not require emergency
service, coverage for services rendered subsequent to that
determination shall be governed by the HMO contract.
O. If within a period of thirty (30) minutes after receiving a
request from a hospital emergency department for a specialty
consultation, a health maintenance organization fails to identify an
appropriate specialist who is available and willing to assume the
care of the enrollee, the emergency department may arrange for
emergency services by an appropriate speci alist that are medically
necessary to attain stabilization of an emergency medical condition,
and the HMO shall not deny coverage for the services due to lack of
prior authorization.
P. The reimbursement policies and patient transfer requirements
of a health maintenance organization shall not, directly or
indirectly, require a hospital emergency department or provider to
violate the federal Emergency Medical Treatment and Active Labor
Act. If a member of an HMO is transferred from a hospital emergency
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department facility to another medical facility, the HMO shall
reimburse the transferring facility and provider for services
provided to attain stabilization of the emergency medical condition
of the member in accordance with the federal Emergency Medical
Treatment and Active Labor Act.
SECTION 39. AMENDATORY 36 O.S. 2011, Section 6911, is
amended to read as follows:
Section 6911. A. Every health maintenance organization shall
establish and maintain a grievance procedure that has bee n approved
by the Insurance Commissioner , after consultation with the State
Commissioner of Health, to provide for the resolution of grievances
initiated by enrollees. Such grievance procedure shall be approved
by the Insurance Commissioner within thirty (30) days of submission.
The health maintenance organization shall maintain a record of
grievances received since the date of its last examination of
grievances.
B. The Insurance Commissioner or the State Commissioner of
Health may examine the grievance procedures.
C. Health maintenance organizations shall comply with the
requirements of an insurer as set out in Sections 1250.1 through
1250.16 of Title 36 of the Oklahoma Statutes this title.
SECTION 40. AMENDATORY 36 O.S. 2011, S ection 6919, is
amended to read as follows:
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Section 6919. A. The Insurance Commissioner may make an
examination of the affairs of any health maintenance organization,
producers and providers with whom the organization has contracts,
agreements or other a rrangements pursuant to the provisions of
Sections 309.1 through 309.7 of Title 36 of the Oklahoma Statutes
this title.
B. The State Insurance Commissioner of Health may require a
health maintenance organization to contract for an examination
concerning the quality assurance program of the health maintenance
organization and of any providers with whom the organization has
contracts, agreements or other arrangements as often as is
reasonably necessary for the protection of the interests of the
people of this state, but not less frequently than once every three
(3) years.
C. Every health maintenance organization and provider shall
submit its books and records for examination and in every way
facilitate the completion of an examination. For the purpose of an
examination, the Insurance Commissioner and the State Commissioner
of Health may administer oaths to, and examine the officers and
agents of the health maintenance organization and the principals of
the providers concerning their business.
D. Any health maintenance organization examined shall pay the
proper charges incurred in such examination, including the actual
expense of the Insurance Commissioner or State Commissioner of
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Health or the expenses and compensation of any authorized
representative and th e expense and compensation of assistants and
examiners employed therein. All expenses incurred in such
examination shall be verified by affidavit and a copy shall be filed
in the office of the Insurance Commissioner or the State
Commissioner of Health .
E. In lieu of an examination, the Insurance Commissioner or
State Commissioner of Health may accept the report of an examination
made by the health maintenance organization regulatory entity of
another state.
SECTION 41. AMENDATORY 36 O.S. 2011, Section 6920, is
amended to read as follows:
Section 6920. A. A certificate of authority issued under the
Health Maintenance Organization Act of 2003 may be suspended or
revoked, and an application for a certificate of authority may be
denied, if the Insurance Commissioner finds that any of the
following conditions exist:
1. The health maintenance organization (HMO) is operating
significantly in contravention of its basic organizational document
or in a manner contrary to that described in any other information
submitted under Section 3 6903 of this act title, unless amendments
to those submissions have been filed with and approved by the
Insurance Commissioner;
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2. The health maintenance organization issues an evidence of
coverage or uses a schedule of charges for health care services that
does not comply with the requirements of Sections 8 6908 and 16 6916
of this act title;
3. The health maintenance organization does not provide or
arrange for basic health care services;
4. The State Commissioner of Health certifies to the Insurance
Commissioner determines that:
a. the health maintenance organization does not meet the
requirements of Section 7 6907 of this act title, or
b. the health maintenance organization is unable to
fulfill its obligations to furnish health care
services;
5. The health maintenance organization is no longer financially
responsible and may reasonably be expected to be unable to meet its
obligations to enrollees or prospective enrollees;
6. The health maintenance organ ization has failed to correct,
within the time frame prescribed by subsection C of this section,
any deficiency occurring due to the health maintenance
organization's prescribed minimum net worth being impaired;
7. The health maintenance organization has failed to implement
the grievance procedures required by Section 11 6911 of this act
title in a reasonable manner to resolve valid complaints;
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8. The health maintenance organization, or any person on its
behalf, has advertised or merchandised its services in an untrue,
misrepresentative, misleading, deceptive or unfair manner;
9. The continued operation of the health maintenance
organization would be hazardous to its enrollees or to the public;
or
10. The health maintenance organization has otherwise fai led to
comply with the provisions of the Health Maintenance Organization
Act of 2003, or applicable rules promulgated by the Insurance
Commissioner pursuant thereto , or rules promulgated by the State
Board of Health pursuant to the provisions of Section 7 of the
Health Maintenance Organization Act of 2003 .
B. In addition to or in lieu of suspension or revocation of a
certificate of authority pursuant to the provisions of this section,
an applicant or health maintenance organization who knowingly
violates the provisions of this section may be subject to an
administrative penalty of Five Thousand Dollars ($5,000.00) for each
occurrence.
C. The following shall apply when insufficient net worth is
maintained:
1. Whenever the Insurance Commissioner finds that the net worth
maintained by any health maintenance organization subject to the
provisions of this act is less than the minimum net worth required
to be maintained by Section 13 6913 of this act title, the Insurance
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Commissioner shall give written notice to the health maintenance
organization of the amount of the deficiency and require filing with
the Insurance Commissioner a plan for correction of the deficiency
that is acceptable to the Insurance Commissioner, and correction of
the deficiency within a reas onable time, not to exceed sixty (60)
days, unless an extension of time, not to exceed sixty (60)
additional days, is granted by the Insurance Commissioner. A
deficiency shall be deemed an impairment, and failure to correct the
impairment in the prescribe d time shall be grounds for suspension or
revocation of the certificate of authority or for placing the health
maintenance organization in conservation, rehabilitation or
liquidation; or
2. Unless allowed by the Insurance Commissioner, no health
maintenance organization or person acting on its behalf may,
directly or indirectly, renew, issue or deliver any certificate,
agreement or contract of coverage in this state, for which a premium
is charged or collected, when the health maintenance organization
writing the coverage is impaired, and the fact of impairment is
known to the health maintenance organization or to the person;
provided, however, the existence of an impairment shall not prevent
the issuance or renewal of a certificate, agreement or contract w hen
the enrollee exercises an option granted under the plan to obtain a
new, renewed or converted coverage.
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D. A certificate of authority shall be suspended or revoked or
an application or a certificate of authority denied or an
administrative penalty imp osed only after compliance with the
requirements of this section.
1. Suspension or revocation of a certificate of authority,
denial of an application, or imposition of an administrative penalty
by the Insurance Commissioner, pursuant to the provisions of this
section, shall be by written order and shall be sent to the health
maintenance organization or applicant by certified or registered
mail and to the State Commissioner of Health . The written order
shall state the grounds, charges or conduct on which t he suspension,
revocation or denial or administrative penalty is based. The health
maintenance organization or applicant may, in writing, request a
hearing within thirty (30) days from the date of mailing of the
order. If no written request is made, the order shall be final upon
the expiration of thirty (30) days.
2. If the health maintenance organization or applicant requests
a hearing pursuant to the provisions of this section, the Insurance
Commissioner shall issue a written notice of hearing and send such
notice to the health maintenance organization or applicant by
certified or registered mail and to the State Commissioner of Health
stating:
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a. a specific time for the hearing, which may not be less
than twenty (20) nor more than thirty (30) days afte r
mailing of the notice of hearing, and
b. that any hearing shall be held at the office of the
Insurance Commissioner.
If a hearing is requested, the State Commissioner of Health or a
designee shall be in attendance and shall participate in the
proceedings. The recommendations and findings of the State
Commissioner of Health with respect to matters relating to the
quality of health care services provided in connection with any
decision regarding denial, suspension or revocation of a certificate
of authority, shall be conclusive and binding upon the Insurance
Commissioner. After the hearing, or upon failure of the health
maintenance organization to appear at the hearing, the Insurance
Commissioner shall take whatever action is deemed necessary based on
written findings. The Insurance Commissioner shall mail the
decision to the health maintenance organization or applicant and a
copy to the State Commissioner of Health .
E. The provisions of the Administrative Procedures Act shall
apply to proceedings under t his section to the extent they are not
in conflict with the provisions of Section 313 of Title 36 of the
Oklahoma Statutes this title.
F. If the certificate of authority of a health maintenance
organization is suspended, the health maintenance organizatio n shall
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not, during the period of suspension, enroll any additional
enrollees except newborn children or other newly acquired dependents
of existing enrollees, and shall not engage in any advertising or
solicitation whatsoever.
G. If the certificate of au thority of a health maintenance
organization is revoked, the HMO shall proceed, immediately
following the effective date of the order of revocation, to wind up
its affairs and shall conduct no further business except as may be
essential to the orderly conc lusion of the affairs of the
organization. The HMO shall engage in no further advertising or
solicitation whatsoever. The Insurance Commissioner may, by written
order, permit further operation of the HMO if found to be in the
best interests of enrollees, to the end that enrollees will be
afforded the greatest practical opportunity to obtain continuing
health care coverage.
SECTION 42. AMENDATORY 36 O.S. 2011, Section 6929, is
amended to read as follows:
Section 6929. The State Insurance Commissioner of Health, in
carrying out his or her obligations under the Health Maintenance
Organization Act of 2003, may contract with qualified persons to
make recommendations concerning the determinations required to be
made by the State Insurance Commissioner of Health. The
recommendations may be accepted in full or in part by the State
Insurance Commissioner of Health. The State Insurance Commissioner
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of Health shall adopt procedures to ensure that such persons are not
subject to a conflict o f interest that would impair their ability to
make recommendations in an impartial manner.
SECTION 43. REPEALER 36 O.S. 2011, Sections 1435.40, as
amended by Section 1, Chapter 23, O.S.L. 2016 (36 O.S. Supp. 2020,
Sections 1435.40), 1612.1, 6221 and 6522, are hereby repealed.
SECTION 44. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
COMMITTEE REPORT BY: COMMITTEE ON INSURANCE, dated 04/07/2021 - DO
PASS.