Oklahoma 2024 Regular Session

Oklahoma Senate Bill SB1627 Compare Versions

Version 1 (Old)

Version 2 (New)

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4		-	An Act
5		-	ENROLLED SENATE
	29	+	HOUSE OF REPRESENTATIVES - FLOOR VERSION
	30	+
	31	+	STATE OF OKLAHOMA
	32	+
	33	+	2nd Session of the 59th Legislature (2024)
	34	+
	35	+	ENGROSSED SENATE
6	36		BILL NO. 1627 By: Seifried of the Senate
7	37
8	38		and
9	39
10	40		Cantrell of the House
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15	45		An Act relating to insurance; amending 36 O.S. 2021,
16	46		Section 3639, which relates to cancellation
17	47		requirements; providing for electronic delivery;
18	48		updating statutory language; amending 85A O.S. 2021,
19	49		Section 42, which relates to cancellation
20	50		requirements; conforming language; updating statutory
21	51		references; and providing an effective date .
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27		-	SUBJECT: Electronic delivery
28		-
29	57		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
30		-
31	58		SECTION 1. AMENDATORY 36 O.S. 2021, Section 3639, is
32	59		amended to read as follows:
33		-
34	60		Section 3639. A. The provisions of this section apply to
35	61		commercial marine policies, commercial automobile policies,
36	62		commercial property insurance policies, commerci al casualty
37	63		insurance policies, and commercial fire insurance policies.
38		-
39	64		B. As used in this section:
40		-
41	65		1. “Renewal” or “to renew” means the issuance or offer of
42	66		issuance by an insurer of a policy succeeding a policy previously
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	68	+	SB1627 HFLR Page 2
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43	94		issued and delivered by the sa me insurer or an insurer within the
44	95		same group of insurers, or the issuance of a certificate or notice
45	96		extending the term of an existing policy for a s pecified period
46	97		beyond its expiration date;
47		-
48		-	ENR. S. B. NO. 1627 Page 2
49		-
50	98		2. “Nonpayment of premium ” means the failure or inability of
51	99		the named insured to discharge any obligation in connection with the
52	100		payment of premiums on a policy of insurance subject to this
53	101		section, whether suc h payments are payable dire ctly to the insurer
54	102		or its agent or indirectly payable under a premium finance plan or
55	103		extension of credit;
56		-
57	104		3. “Cancellation” means termination of a policy at a date other
58	105		than its expiration date;
59		-
60	106		4. “Expiration date” means the date upon which coverage under a
61	107		policy ends. It also means, for a policy written for a term longer
62	108		than one (1) year or with no fixed expiration date, each annual
63	109		anniversary date of such policy; and
64		-
65	110		5. “Nonrenewal” or “refusal to renew” means termination of a
66	111		policy at its expiration date.
67		-
68	112		C. After coverage has been in effect for more than forty -five
69	113		(45) business days or after the effective date of the renewal of a
70	114		commercial marine, commercial automobile, commercial property,
71	115		commercial casualty or commercial fire insurance policy, a notice of
72	116		cancellation shall not be issued by any licensed insurer o r surplus
73	117		or excess lines insurer unless it is based on at least one of the
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	119	+	SB1627 HFLR Page 3
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74	145		following reasons with at least ten (10) days days’ notice to the
75	146		insured:
76		-
77	147		1. Nonpayment of premium;
78		-
79	148		2. Discovery of fraud or material misrepresentation in the
80	149		procurement of the insurance or with respect to any claims submitted
81	150		thereunder;
82		-
83	151		3. Discovery of willful or reckless acts or omissions on the
84	152		part of the named insured which increase any hazard insured against;
85		-
86	153		4. The occurrence of a change in the risk which substantially
87	154		increases any hazard insured against after insurance coverage has
88	155		been issued or renewed;
89		-
90		-
91		-	ENR. S. B. NO. 1627 Page 3
92	156		5. A violation of any local fire, health, safety, building, or
93	157		construction regulation or ordinance with respect to any insured
94	158		property or the occupancy thereof wh ich substantially increases any
95	159		hazard insured against;
96		-
97	160		6. A determination by the Commissioner that the continuation of
98	161		the policy would place the ins urer in violation of the insurance
99	162		laws of this state;
100		-
101	163		7. Conviction of the named insured of a crime hav ing as one of
102	164		its necessary elements an act increasing any hazard insured against;
103	165		or
104		-
105	166		8. Loss of or substantial changes in applicable reinsurance.
106		-
107	167		D. An insurer may refuse to r enew a policy if the insurer gives
108	168		to the first-named insured at the address s hown on the policy
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109	196		written notice that the insurer will not renew the policy. Such
110	197		notice shall be given at least forty -five (45) days before the
111	198		expiration date. Notice may be sent by electronic means if the
112	199		recipient consents to such method of delivery and the insurer is in
113	200		compliance with the provisions of the Uniform Electronic
114	201		Transactions Act. Electronic delivery is considered to be
115	202		equivalent to any delivery method requi red by law, including first-
116	203		class mail, postage prepaid, certified mail, certi ficate of mail, or
117	204		certificate of mailing. If notice is given by mail or sent by
118	205		electronic means, said such notice shall be deemed to have been
119	206		given on the day said the notice is mailed or sent electronically .
120	207		If the notice is mailed or sent electronically less than forty-five
121	208		(45) days before expiration, coverage shall remain in effect until
122	209		forty-five (45) days after notice is mailed or sent electronically.
123	210		Earned premium for any period of coverage that extends beyond the
124	211		expiration date shall be con sidered pro rata based upon the previous
125	212		year’s rate. For purposes of this section, the transfer of a
126	213		policyholder between companies within the same i nsurance group is
127	214		not a refusal to renew. In addition, changing deductibles, changes
128	215		in premium, changes in the amount of insurance, or reductions in
129	216		policy limits or coverage are not refusals to renew.
130		-
131	217		Notice of nonrenewal shall not be required if the in surer or a
132	218		company within the same insurance group has offered to issue a
133	219
134		-	ENR. S. B. NO. 1627 Page 4
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135	246		renewal policy, or, if the named insured has obtained replacement
136	247		coverage or has agreed in writing to obtain replacement coverage.
137		-
138	248		If an insurer provides the notice required by this subsection
139	249		and thereafter the insurer extends the policy for ninety (90) days
140	250		or less, an additional not ice of nonrenewal is not required with
141	251		respect to the extension.
142		-
143	252		E. An insurer shall give to the named insured at the mailing
144	253		address shown on the pol icy, written notice of prem ium increase,
145	254		change in deductible, reduction in limits or coverage at least
146	255		forty-five (45) days prior to the expiration date of the policy. If
147	256		the insurer fails to provide such notice, the premium, deductible,
148	257		limits and coverage provided to the named insured prior to the
149	258		change shall remain in effect until notice is given or unt il the
150	259		effective date of replacement coverage obtained by the named
151	260		insured, whichever first occurs. If notice is given by mail, said
152	261		such notice shall be deemed to have been gi ven on the day said the
153	262		notice is mailed. If the insured elects not to renew, any earned
154	263		premium for the period of extension of the terminated policy shall
155	264		be calculated pro rata at the lower of the current or previous
156	265		year’s rate. If the insured accepts the renewal, the premium
157	266		increase, if any, and other changes shall be effecti ve the day
158	267		following the prior policy ’s expiration or anniversary date.
	268	+	This subsection shall not apply to:
159	269
160		-	This subsection shall not apply to:
	270	+	SB1627 HFLR Page 6
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161	295
162	296		1. Changes in a rate or plan filed with or approved by the
163	297		Insurance Commissioner or filed pursuant to the Property and
164	298		Casualty Competitive Loss C ost Rating Act and applicable to an
165	299		entire class of business; or
166		-
167	300		2. Changes based upon the altered nature of extent of the risk
168	301		insured; or
169		-
170	302		3. Changes in policy forms filed with or approved by the
171	303		Insurance Commissioner and applicable to an entire class of
172	304		business.
173		-
174	305		F. Proof of mailing of notice of cancellation, or of nonrenewal
175	306		or of premium or coverage changes, to the named insured at the
176	307		address shown in the policy, shall be sufficient proof of notice.
177		-
178		-	ENR. S. B. NO. 1627 Page 5
179		-
180	308		SECTION 2. AMENDATORY 8 5A O.S. 2021, Section 42, is
181	309		amended to read as follows:
182		-
183	310		Section 42. A. Contents. Every policy or contract of
184	311		insurance issued by a carrier to an em ployer to secure the payment
185	312		of compensation under this act the Administrative Workers’
186	313		Compensation Act shall contain:
187		-
188	314		1. a. Provisions that identify the insured employer and
189	315		either identify each covered employee or describe
190	316		covered employees by class or type of labor performed
191	317		and the estimated number of employees of each such
192	318		class or type.
193	319
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194	346		b. No single policy of workers’ compensation insurance
195	347		may be issued to any group of employers who are
196	348		unaffiliated with one another in terms of ownership,
197	349		control, or right to participate in the profits of the
198	350		affiliated enterprises;
199		-
200	351		2. Provisions that insolvency or ba nkruptcy of the employer or
201	352		discharge therein shall not relieve the carrier from payment of
202	353		compensation for compensable injuries sustained by an emplo yee
203	354		during the term of the policy or contract;
204		-
205	355		3. a. The agreement of the carrier that it shall promptly
206	356		pay to the person entitled to compensation every
207	357		installment of compensation that may be awarded or
208	358		agreed on and that this obligation shall not be
209	359		affected by any default of the employer or by any
210	360		default in the giving of any notice required by the
211	361		policy or otherwise.
212		-
213	362		b. The agreement shall be construed to be a direct
214	363		obligation by the carrier to the person entitled to
215	364		compensation, enforceable in that person’s name; and
216		-
217	365		4. Such other provisions as the Insurance Department allows or
218	366		requires carriers to include in workers’ compensation policies.
219		-
220	367		B. Cancellation.
221	368
222		-	ENR. S. B. NO. 1627 Page 6
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223	394
224	395		1. An employer may cancel coverage with a carrier by giving the
225	396		carrier at least thirty ( 30) days’ notice, unless a shorter period
226	397		is permitted under subparagraph b of this paragraph.
227		-
228	398		a. Cancellation of coverage is effective at 12:01 a.m.
229	399		thirty (30) days after the date the cancellation
230	400		notice is received by the carrier, unless a later date
231	401		is specified in the notice to the carrier.
232		-
233	402		b. (1) An employer may cancel coverage effective less
234	403		than thirty (30) days after written notice is
235	404		received by the carrier where the employer
236	405		obtains other coverage or becomes a self -insurer.
237	406		Notice may be sent by electronic means if the
238	407		recipient consents to such method of delivery and
239	408		the insurer is in compliance w ith the provisions
240	409		of the Uniform Electronic Transaction s Act.
241	410		Electronic delivery is considered to be
242	411		equivalent to any delivery method required by
243	412		law, including first-class mail, postage prepaid,
244	413		certified mail, certificate of mail, or
245	414		certificate of mailing.
246		-
247	415		(2) A cancellation under this subsection is effective
248	416		immediately on the effective date of the other
249	417		coverage or on authorization as a self -insurer.
250	418
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251	445		2. a. A notice of cancellation from the carrier shall state
252	446		the hour and date that cancellation is effective.
253		-
254	447		b. A carrier shall not cancel coverage issued to an
255	448		employer under this act the Administrative Workers’
256	449		Compensation Act before the date specified for
257	450		expiration in the policy or contract or until at least
258	451		thirty (30) days have elapsed after a n otice of
259	452		cancellation has been mailed or sent electronically to
260	453		the Commission and to the employer, or until ten (10)
261	454		days have elapsed after the notic e has been mailed or
262	455		sent electronically to the employer and to the
263	456		Commission if the cancellation is for nonpayment of
264	457		premium.
265		-
266		-	ENR. S. B. NO. 1627 Page 7
267		-
268	458		c. If the employer procures other insurance within the
269	459		notice period, the effective date of the new policy
270	460		shall be the cancell ation date of the old polic y.
271		-
272	461		3. Cancellation of coverage by an employer or a carrier shall
273	462		in no way limit liability that was incurred under the policy or
274	463		contract before the effective date of cancellation.
275		-
276	464		C. Coverage.
277		-
278	465		1. No policy or contract of insu rance shall be issued against
279	466		liability under this act the Administrative Workers’ Compensation
280	467		Act unless the policy or contract covers the entire liability of the
281	468		employer. Split coverage whereby some employees of an employer are
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282	496		insured by one carrier and other employees are ins ured by another
283	497		carrier, or a plan of self -insurance, is expressly prohibited except
284	498		for a policy issued covering the liability of an employer or of
285	499		multiple employers as to specific jobs, ventures, contracts, or
286	500		undertakings, but only if the policy meets with the reasonable
287	501		satisfaction and approval of the Insurance Commissioner th at the
288	502		policy is in the best interest of the employers and the employees
289	503		concerned and does not unduly or improperly affect the continuity of
290	504		workers’ compensation coverage by se riously and negatively affecting
291	505		other carriers and agents with outstanding po licies issued to any of
292	506		the employers in issue.
293		-
294	507		2. The terms of the policy or contract shall govern any
295	508		questions of liability between the employer an d the carrier.
296		-
297	509		D. Under such rules as may be adopted by the Insurance
298	510		Commissioner, and notwithstanding other provisions of this act the
299	511		Administrative Workers’ Compensation Act , he or she may certify five
300	512		or more employers as an insurance group which sha ll be considered an
301	513		employer for the purposes of this act the Administrative Workers’
302	514		Compensation Act.
303		-
304	515		SECTION 3. This act shall become effective November 1, 2024.
305	516
306		-
307		-	ENR. S. B. NO. 1627 Page 8
308		-	Passed the Senate the 29th day of February, 2024.
309		-
310		-
311		-
312		-	Presiding Officer of the Senate
313		-
314		-
315		-	Passed the House of Representatives the 17th day of April, 2024.
316		-
317		-
318		-
319		-	Presiding Officer of the House
320		-	of Representatives
321		-
322		-	OFFICE OF THE GOVERNOR
323		-	Received by the Office of the Governor this _______ _____________
324		-	day of _________________ __, 20_______, at _______ o'clock _______ M.
325		-	By: _________________________________
326		-	Approved by the Governor of the State of Oklahoma this _______ __
327		-	day of _________________ __, 20_______, at _______ o'clock _______ M.
328		-
329		-	_________________________________
330		-	Governor of the State of Oklahoma
331		-
332		-
333		-	OFFICE OF THE SECRETARY OF STATE
334		-	Received by the Office of the Secretary of State this _______ ___
335		-	day of _________________ _, 20 _______, at _______ o'clock _______ M.
336		-	By: _________________________________
	517	+	COMMITTEE REPORT BY: COMMITTEE ON RULES, dated 04/09/2024 - DO PASS.