Chapter 13-021

Chapter 021

2013 -- S 0597

Enacted 05/20/13

A N A C T

RELATING TO INSURANCE -- LONG-TERM CARE INSURANCE

Introduced By: Senators Cote, and Cool Rumsey

Date Introduced: March 06, 2013

It is enacted by the General Assembly as follows:

SECTION 1. Section 27-34.2-14 of the General Laws in Chapter 27-34.2 entitled "Long-

Term Care Insurance" is hereby amended to read as follows:

27-34.2-14. Standards for marketing. -- (a) Every insurer, health care services plan, or

other entity marketing long term care insurance coverage in this state, directly or through its

producers, shall:

(1) Establish marketing procedures to assure that any comparison of policies by its

agents or other insurance producers and agent training requirements will be fair and accurate;

(2) Establish marketing procedures to assure excessive insurance is not sold or issued;

(3) Display prominently by type, stamp or other appropriate means, on the first page of

the outline of coverage and policy the following:

"Notice to buyer: This policy may not cover all of the costs associated with long term

care incurred by the buyer during the period of coverage. The buyer is advised to carefully review

all policy limitations."

(4) Inquire and make every reasonable effort to identify whether a prospective applicant

or enrollee for long term care insurance already has long term care insurance and the types and

amounts of any insurance; and

(5) Every insurer or entity marketing long term care insurance shall establish auditable

procedures for verifying compliance with this subsection.

(6) If the state in which the policy or certificate is to be delivered or issued for delivery

has a senior insurance counseling program approved by the commissioner, the insurer shall, at

solicitation, provide written notice to the prospective policyholder and certificateholder that the

program is available and the name, address and telephone number of the program.

(7) For long-term care health insurance policies and certificates, use the terms

"noncancellable" or "level premium" only when the policy or certificate ~~conforms to section~~

~~6A(3) of this regulation~~ provides that the insured has the right to continue the long-term care

insurance in force by the timely payment of premiums during which period the insurer has no

right to unilaterally make any change in any provision of the insurance or in the premium rate.

(8) Provide an explanation of contingent benefit upon lapse and, if applicable, the

additional contingent benefit upon lapse provided to policies with fixed or limited premium

paying periods.

(b) In addition to the practices prohibited in chapter 29 of this title, the following acts

and practices are prohibited:

(1) Twisting. - Knowingly making any misleading representation or incomplete or

fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or

tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow

on or convert any insurance policy or to take out a policy of insurance with another insurer;

(2) High pressure tactics. - Employing any method of marketing having the effect of or

tending to induce the purchase of insurance through force, fright, threat, whether explicit or

implied, or undue pressure to purchase or recommend the purchase of insurance; and

(3) Cold lead advertising. - Making use directly or indirectly of any method of marketing

which fails to disclose in a conspicuous manner that a purpose of the method of marketing is

solicitation of insurance and that contact will be made by an insurance producer or insurance

company.

(4) Misrepresentation of a material fact when selling or offering to sell a long-term care

insurance policy.

an association as described in section 27-34.2-4(4)(ii), when endorsing or selling long term care

insurance shall be to educate its members concerning long term care issued in general so that its

members can make informed decisions. Associations shall provide objective information

regarding long term care insurance policies or certificates endorsed or sold by those associations

to ensure that members of the associations are fully informed of the benefits and limitations in the

policies or certificates that are being endorsed or sold.

(d) The insurer shall file with the insurance department the following material:

(1) The policy and certificate;

(2) A corresponding outline of coverage; and

(3) All advertisements requested by the insurance department.

(e) The association shall disclose in any long term care insurance solicitation:

(1) The specific nature and amount of the compensation arrangements, including all fees,

commissions, administrative fees and other forms of financial support, that the association

receives from endorsement or sale of the policy or certificate to its members; and

(2) A brief description or outline of the process under which the policies and the insurer

issuing the policies were selected.

(f) If the association and the insurer have interlocking directories or trustee

arrangements, the association shall disclose that fact to its members.

(g) The board of directors of associations selling or endorsing long term care insurance

policies or certificates shall review and approve the insurance policies as well as the

compensation arrangements made with the insurer.

(h) The association shall also:

(1) At the time of the association's decision to endorse, engage the services of a person

with expertise in long term care insurance not affiliated with the insurer to conduct an

examination of the policies, including benefits, features, and rates and update the examination

thereafter in the event of material change.

(2) Actively monitor the marketing efforts of the insurer and its insurance producers; and

(3) Review and approve all marketing materials or other insurance communications used

to promote sales or sent to members regarding the policies or certificates.

(4) Subdivisions (h)(1), (h)(2) and (h)(3) shall not apply to qualified long-term care

insurance contracts.

(i) No group long term care insurance policy or certificate may be issued to an

association unless the insurer files with the director the information required in this section.

(j) The insurer shall not issue a long term care policy or certificate to an association or

continue to market the policy or certificate unless the insurer certifies annually that the

association has complied with the requirements set forth in this section.

SECTION 2. Section 27-35-3 of the General Laws in Chapter 27-35 entitled "Insurance

Holding Company Systems" is hereby amended to read as follows:

27-35-3. Registration of insurers. -- (a) Registration. - Every insurer which is

authorized to do business in this state and which is a member of an insurance holding company

system shall register with the commissioner, except a foreign insurer subject to registration

requirements and standards adopted by statute or regulation in the jurisdiction of its domicile

which are substantially similar to those contained in:

(1) this section;

(2) section 27-35-4(a)(1), (b) and (d) and

(3) Either subdivision 27-35-4(a)(2) or a provision such as the following: Each registered

insurer shall keep current the information required to be disclosed in its registration statement by

reporting all material changes or additions within fifteen (15) days after the end of the month in

which it learns of each change or addition.

Any insurer which is subject to registration under this section shall register fifteen (15)

days after it becomes subject to registration, and annually thereafter by ~~March~~ May 1 of each year

for the previous calendar year, unless the commissioner for good cause shown extends the time

for registration, and then within the extended time. The commissioner may require any insurer

authorized to do business in the state which is a member of an insurance holding company system

and which is not subject to registration under this section to furnish a copy of the registration

statement, the summary specified in subsection (c) of this section or other information filed by the

insurance company with the insurance regulatory authority of domiciliary jurisdiction.

(b) Information and form required. - Every insurer subject to registration shall file a

registration statement with the commissioner on a form and in a format prescribed by the NAIC,

which shall contain the following current information:

(1) The capital structure, general financial condition, ownership, and management of the

insurer and any person controlling the insurer;

(2) The identity and relationship of every member of the insurance holding company

system;

(3) The following agreements in force and transactions currently outstanding or which

have occurred during the last calendar year between the insurer and its affiliates:

(i) Loans, other investments or purchases, sales or exchanges of securities of the

affiliates by the insurer or of the insurer by its affiliates;

(ii) Purchases, sales, or exchanges of assets;

(iii) Transactions not in the ordinary course of business;

(iv) Guarantees or undertakings for the benefit of an affiliate which result in an actual

contingent exposure of the insurer's assets to liability, other than insurance contracts entered into

in the ordinary course of the insurer's business;

(v) All management service contracts, service contracts and all cost sharing

arrangements;

(vi) Reinsurance agreements;

(vii) Dividends and other distributions to shareholders; and

(viii) Consolidated tax allocation agreements;

(4) Any pledge of the insurer's stock, including stock of any subsidiary or controlling

affiliate, for a loan made to any member of the insurance holding company system;

(5) If requested by the commissioner, the insurer shall include financial statements of or

within an insurance holding company system, including all affiliates. Financial statements may

include, but are not limited to, annual audited financial statements filed with the U.S. Securities

and Exchange Commission (SEC) pursuant to the Securities Act of 1933, as amended, or the

Securities Exchange Act of 1934, as amended. An insurer required to file financial statements

pursuant to this paragraph may satisfy the request by providing the commissioner with the most

recently filed parent corporation financial statements that have been filed with the SEC;

(6) Other matters concerning transactions between registered insurers and any affiliates

as may be included from time to time in any registration forms adopted or approved by the

commissioner;

(7) Statements that the insurer's board of directors oversees corporate governance and

internal controls and that the insurer's officers or senior management have approved,

implemented, and continue to maintain and monitor corporate governance and internal control

procedures; and

(8) Any other information required by the commissioner by rule or regulation.

contain a summary outlining all items in the current registration statement representing changes

from the prior registration statement.

(d) Materiality. - No information need be disclosed on the registration statement filed

pursuant to subsection (b) of this section if that information is not material for the purposes of this

section. Unless the commissioner by rule, regulation, or order provides otherwise, sales,

purchases, exchanges, loans, or extensions of credit, investments or guarantees involving one-half

of one percent (.5%) or less of an insurer's admitted assets as of the 31st day of December next

preceding shall not be deemed material for purposes of this section.

(e) Reporting of Dividends to Shareholders. - Subject to subsection 27-35-4(b), each

registered insurer shall report to the commissioner all dividends and other distributions to

shareholders within fifteen (15) business days following the declaration thereof.

(f) Information of Insurers. - Any person within an insurance holding company system

subject to registration shall be required to provide complete and accurate information to an

insurer, where the information is reasonably necessary to enable the insurer to comply with the

provisions of this act.

(g) Termination of registration. - The commissioner shall terminate the registration of

any insurer that demonstrates that it no longer is a member of an insurance holding company

system.

(h) Consolidated filing. - The commissioner may require or allow two (2) or more

affiliated insurers subject to registration to file a consolidated registration statement.

(i) Alternative registration. - The commissioner may allow an insurer that is authorized

to do business in this state and which is part of an insurance holding company system to register

on behalf of any affiliated insurer which is required to register under subsection (a) and to file all

information and material required to be filed under this section.

(j) Exemptions. - The provisions of this section shall not apply to any insurer,

information, or transaction if and to the extent that the commissioner by rule, regulation, or order

shall exempt from the provisions of this section.

(k) Disclaimer. - Any person may file with commissioner a disclaimer of affiliation with

any authorized insurer or a disclaimer may be filed by the insurer or any member of an insurance

holding company system. The disclaimer shall fully disclose all material relationships and bases

for affiliation between the person and the insurer as well as the basis for disclaiming the

affiliation.

A disclaimer of affiliation shall be deemed to have been granted unless the

commissioner, within thirty (30) days following receipt of a complete disclaimer, notifies the

filing party that the disclaimer is disallowed. In the event of disallowance, the disclaiming party

may request an administrative hearing, which shall be granted. The disclaiming party shall be

relieved of its duty to register under this section if approval of the disclaimer has been granted by

the commissioner, or if the disclaimer is deemed to have been approved.

(l) Enterprise Risk Filing. - The ultimate controlling person of every insurer subject to

registration shall also file an annual enterprise risk report. The report shall, to the best of the

ultimate controlling person's knowledge and belief, identify the material risks within the

insurance holding company system that could pose enterprise risk to the insurer. The report shall

be filed with the lead state commissioner of the insurance holding company system as determined

by the procedures within the financial analysis handbook adopted by the national association of

insurance commissioners.

(m) Violations. - The failure to file a registration statement or any summary of the

registration statement or enterprise risk filing required by this section within the time specified for

the filing shall be a violation of this section.

SECTION 3. This act shall take effect upon passage.

=======

LC01418

=======