Okla. Admin. Code § 365:10-5-70

Current through Vol. 42, No. 7, December 16, 2024

Section 365:10-5-70 - Responsibilities and obligations of insurance companies and their agents and representatives

(a)Purpose. The purpose of this section is:

(1) Establish the responsibility of insurers;

(2) Provide for the delegation by insurer of responsibilities of policy issuance and premium collection;

(3) Establish restrictions on interest of creditors under group and individual policies;

(4) Provide for the delegation by insurer of certain claims responsibilities;

(5) Provide for the establishment of claim payment, and to impose additional restrictions on settlement and adjustment of claims;

(6) Provide for the supervision by each insurer of its credit insurance operations within this state; and

(7) Require each insurer to keep and make available certain records.

(b)Responsibilities of insurers.

(1) Each insurer transacting credit insurance business in this State shall, in compliance with the laws of this State and the Regulations promulgated thereunder, be responsible for:

(A) the approval, production, reproduction, amendment, and modification of its policies, certificates of insurance, and other insurance forms including rate schedules, and for the issuance, cancellation, or termination of such policies, certificates or forms;

(B) the selection and appointment of its agents and representatives;

(C) the proper charge, collection, remittance, of credit insurance premiums;

(D) the receipt of copies of all certificates of insurance, and other insurance forms issued in its name by its agents or representatives, or the receipt of electronic or other data therefore which can be substantiated by certificates of insurance or other insurance forms.

(E) the computation and maintenance of policyholder and claims reserves in accordance with 365:10-5-71; and

(F) the investigation of claims filed against the insurer and the payment, adjustment, settlement, or denial of such claims.

(G) requiring all policies, certificates and applications be negotiated or solicited by licensed and appointed agents or limited insurance representatives.

(H) if a claim is denied, or in the event of rescission, based upon material misrepresentation, providing the insured with a written notice containing the grounds relied upon, including:

(i) reference to the alleged misrepresentation, including a copy of the document(s) in which the alleged misrepresentation was made; and

(ii) copies of the medical records, unless prohibited by law, and other documents relied upon as support for the alleged misrepresentation; and

(iii) a copy of the underwriting criteria or, if not in written form, a description of said criteria pertinent to the alleged misrepresentation and acceptance of the risk by the insurer.

(2) None of the foregoing ultimate responsibilities of the insurer may be delegated to any other person, nor may the performance of such responsibilities be assigned to any creditor or to any agent or representative selected and appointed by the insurer, except as provided in this Part.

(c)Delegation by insurer of responsibilities of policy issuance and premium collection.

(1) The insurer, by its group policy, may authorize the group policyholder-creditor to issue certificates of group insurance or may authorize a legally appointed insurance agent of the insurer to issue certificates of insurance or policies of insurance and, respectively, to collect the insurance charge under the group policy, or the premium therefore under an individual policy, provided that the master group insurance policy with the creditor or the Agent's Agreement with the agent under which such authority is granted shall require that:

(A) the creditor issue such group certificate, or the agent issue such certificate of insurance or insurance policy in the name of the insurer, and payment of the respective policy premium shall be by a check payable to the insurer or by deposit to an account of the insurer under the sole control of the insurer.

(B) a "home office" copy of each certificate or policy so issued, together with a premium therefore, shall be delivered to the insurer within thirty (30) days after the close of the calendar month in which the certificate or policy is issued. In lieu of the deliver of a copy of each certificate or policy so issued, an insurer shall obtain from each creditor or agent and thereafter maintain in its files substantially equivalent information.

(C) refunds of unearned premium shall be made in accordance with 365:10-5-69; and

(D) no creditor or creditor agent may knowingly issue any policy or group certificate or insurance which, alone, or in conjunction with other policies or group certificates issued on the same risk, will in the aggregate exceed the group credit life insurance limits of this State.

(E) no creditor or creditor agent may remit to any insurer, premiums received from any debtor in a payment mode which differs from that payment mode prescribed in the group policy issued to such creditor or creditor agent.

(2) No insurer may authorize, and no insurance agent, or group policyholder within their respective capacities may issue any policy or certificate of insurance or collect any premium or insurance charge therefore or make any refund of premium, except only pursuant to and in accordance with either a master group insurance policy or an Agent's Agreement in compliance with this Part.

(d)Restrictions on interest of creditors under group and individual policies. No group policy may be issued to other than a bona fide creditor. No first beneficiary may be designated except a creditor. No creditor may be designated as owner of the individual policy, nor have any rights thereunder other than that of first beneficiary except as specifically authorized by law.

(e)Delegation by insurer of certain claims responsibilities. The insurer may designate or engage one or more representatives for the purpose of investigating or settling claims, processing production reports, calculating reserves, printing of approved forms, and performing other administrative services authorized by the law, provided:

(1) such services are performed under the supervision and direction of the insurer and the insurer shall remain responsible for their proper performance;

(2) the work product of representatives of the insurer is the property of the insurer and is retained in the possession of the insurer, together with the supporting data and information used in its preparation; and,

(3) all claims shall be promptly reported to the insurance company or its designated claim's representative, and all claims shall be settled as soon as reasonably possible and in accordance with the terms of the insurance contract.

(f)Claim files maintained by the insurer. The insurance company shall establish and maintain an adequate claim register and claim file, to include, inter alia, all denied, resisted or compromised claims, which may be reviewed and examined by the Commissioner.

(g)Proofs of loss. Adequate proofs of loss must be in the possession of the insurance company at the time its funds are disbursed in payment of claims, except as provided in (i) of this section. Such proofs of loss shall include documentary evidence for the insurer to determine proper amounts of any excess benefit payable to a beneficiary other than the creditor.

(h)Method of claims payment. All claims shall be paid either by draft drawn upon the insurance company or by check of the insurance company to the order of the specific beneficiary to whom payment of the claim is due.

(i)Additional restrictions on settlement and adjustment of claims. No plan or arrangement shall be used whereby any person, firm, or corporation other than the insurer or its designated claims representative shall be authorized to settle or adjust claims. The creditor shall not be designated as claims representative for the insurer in settling or adjusting claims; however, a group policyholder may, by arrangement with the group insurer, draw drafts or checks in payment of claims due only to the group policyholder, subject to audit and review by the insurer. Nothing herein may be construed to relieve the insurance company from the responsibility for the proper settlement, adjustment and payment of all claims to proper beneficiaries in accordance with the terms of the insurance contract.

(j)Supervision of credit insurance operations. Each insurer transacting credit insurance in this State shall be responsible to conduct a thorough review of each creditor, general agent and other persons providing administrative services, with respect to its credit insurance business with such person to assure compliance with the insurance laws of this State and the regulations promulgated thereunder. Such review shall be conducted at least annually and shall include, but not be limited to a determination that:

(1) the proper charges to debtors are being made by the creditor;

(2) the proper refunds are being made by the creditor;

(3) all claims are being filed and properly handled;

(4) amounts of insurance payable on death in excess of the amounts necessary to extinguish the indebtedness are properly calculated and reported to the insurer in proofs of loss;

(5) the creditor is promptly and fairly processing complaints concerning its credit insurance operations and is maintaining proper procedures for and records of the complaints processed; and,

(6) authorized certificate and policy forms are being used and delivered to insured debtors.

(k)Availability of source documents. Upon request by the Commissioner, the insurer shall make available at its home office legally acceptable copies of all source documents relating to any of its credit insurance transactions.

Okla. Admin. Code § 365:10-5-70

Amended at 10 Ok Reg 3049, eff 10-1-93