S.C. Code Regs. § § 69-34.1

Current through Register Vol. 48, No. 11, November 22, 2024

Section 69-34.1 - Accident and Health Insurance Solicitation

A. Table of Contents:	B .......	Purpose
C .......	Applicability and Scope
D .......	Definitions
E .......	Unfair and Deceptive Acts
F .......	Duplication of Insurance
G .......	Record Maintenance, Licensee Accountability and General Requirements
H .......	Severability
I .......	Effective Date

B. Purpose: The purpose of this regulation is to eliminate unfair and deceptive practices in the promotion, solicitation and sale of individual accident and health insurance policies to persons who are qualified for Medicare by reason of age and to persons who have a current Medicaid eligibility card.

C. Applicability and Scope: This Regulation shall apply only to promotions, solicitations, offers or sales of individual accident and health insurance policies to persons who are qualified for Medicare by reason of age or to persons who have a current Medicaid eligibility card. This Regulation shall not apply to conversion policies issued pursuant to a contractual conversion privilege, or to credit health insurance. This Regulation shall be in addition to any other applicable regulations previously adopted.

D. Definitions: As used in this Regulation, the following terms shall have the meanings indicated:

(1) "Agent" means any person licensed by the South Carolina Department of Insurance as an agent to sell accident and health insurance.

(2) "Duplication of insurance" means a transaction wherein new accident and health insurance is to be purchased and it is known or should be known to the licensee or the insurer, in the case of a direct response solicitation, that the new insurance will provide some of the benefits or coverages which the proposed insured already has under existing accident and health insurance.

(3) "Over-insurance" means "duplication" of insurance to such extent that the combination of the existing insurance and the proposed insurance would substantially exceed any loss reasonably expected to be incurred.

(4) "Licensee" means any person licensed as an agent, broker, or solicitor pursuant to South Carolina law.

(5) "Policy" means the entire contract between the insurer and the insured, including, but not limited to, the policy, certificate, riders, endorsements, amendments and the application which are required to be filed pursuant to Section 38-71-310.

(6) "Sales materials" means any and all promotional materials, policy applications, replacement forms, duplication forms, outline of coverage forms, or any other forms or informational material used in connection with the promotion, solicitation, or sale of accident and health insurance.

E. Unfair and Deceptive Acts:

(1) No person shall engage in any unfair, deceptive, misleading, or unreasonably confusing practice in the promotion, solicitation or sale of individual accident and health insurance.

(2) The following acts and practices shall be deemed prima facie evidence of a violation of this Regulation:

(a) Any act tending to induce an applicant or other person to over-insure;

(b) Encouraging an applicant to omit pertinent underwriting information from an application for accident and health insurance;

(c) Any act tending to induce a prospective insured to sign a blank or incomplete application or form;

(d) Failure to disclose upon initial contact with a prospective applicant the licensee's affiliation with an insurance company;

(e) Any representations, expressed or implied, unless the licensee has been specifically authorized in writing by the organization, that the licensee is affiliated with or authorized by any civic, social, or other non-governmental organization;

(f) Any representation, expressed or implied, that the licensee is affiliated with or authorized by any governmental agency or that he has access to any information from any such agency that is not generally available to the public;

(g) Making any false or misleading statements as to the length of time an insurance product may or may not be available;

(h) The sale of any policy that has not been submitted to and approved by the Commissioner;

(i) The sale of Medicare supplement insurance to any person not eligible for Medicare;

(j) The sale of any accident and health insurance to any person without asking if the person has a current Medicaid eligibility card;

(k) The sale of any accident and health insurance to any person who indicates he has a current Medicaid eligibility card;

(l) Falsely answering any question or signing any certification in an application or in any other form required to be completed by the licensee;

(m) Failure to report, within seven business days, the full amount of any premium or partial premium collected from an applicant;

(n) Failure to deliver, within seven business days, any policy sent to him for delivery to an applicant;

(o) The taking of an application without inquiring and recording the reply as to whether the proposed insurance will duplicate any insurance then in force;

(p) Making any inquiry in such manner as to invite a response contrary to fact; or

(q) The taking of an application for duplicate insurance without a full disclosure of the effect that each policy will have on the other with respect to the amount payable in the event of a claim covered by both policies.

F. Duplication of Insurance:

(1) All applications involved in the sale of individual accident and health insurance shall include a question designed to elicit information regarding the existence of any accident and health insurance on any proposed insured and shall obtain a statement, dated and signed by the applicant, indicating whether any accident and health insurance is presently in force, the type and amount of the insurance, the names of the companies which issued the insurance and, where possible, the policy number.

(2) No individual accident and health insurance which duplicates coverage shall be issued to an applicant unless a signed and dated "Duplication of Insurance Form" is submitted with the application.

(3) The "Duplication of Insurance Form" shall comply with the following form and be separate and apart from all other forms:

I understand that the insurance I am applying for will duplicate coverage I already have. Even so, I still believe I need this new insurance

____________________________________ ____________________________________

(Witness) (Signature of Applicant)

____________________________________

(Date)

(4) In the case of direct response insurance, the following statement, separate and apart from all other statements, shall be mailed to the insured with the new policy:

"This policy duplicates coverage you already have."

(5) A copy of the "Duplication of Insurance Form" shall be retained by the insurer.

G. Record Maintenance, Licensee Accountability, and General Requirements:

(1) Any and all materials used in connection with the promotion, solicitation, or sale of individual accident and health insurance shall be maintained on file by the insurer for a period of three years following the date of its last authorized use.

(2) No licensee or insurer shall use any sales and promotional material not issued or approved by and on file with the insurer.

(3) Copies of all sales and promotional material shown to the applicant shall be left by the licensee with any person who purchases accident and health insurance from the licensee. If an audio-visual presentation is made, a copy of the script left with the applicant will be deemed to satisfy this requirement.

(4) Insurers shall maintain records relating to agents involved in the sale of accident and health insurance so as to permit retrieval of the following information in a reasonable period of time:

(a) Number, type, and nature of consumer complaints, on each agent including those received over the telephone;

(b) Number, type, and nature of forms and applications completed with improper or inaccurate underwriting information;

(c) Number, type, and nature of all policies which lapse within five years of issue showing total period of coverage; and

(d) All policy applications rejected showing the reason for rejection.

H. Severability: Each provision of this Regulation is deemed to be severable and the determination that any provision is invalid for any reason shall not invalidate the remaining provisions of the Regulation.

I. Effective Date: This Regulation shall become effective six months after adoption by the General Assembly and final publication in the State Register.

S.C. Code Regs. § 69-34.1