S.C. Code Regs. § § 69-34.2

Current through Register Vol. 48, No. 10, October 25, 2024

Section 69-34.2 - Replacement of Accident and Health Insurance

A. Table of Contents:	B .......	Purpose
C .......	Applicability and Scope
D .......	Definitions
E .......	Replacement
F .......	Replace After Indication of No Replacement
G .......	Severability
H .......	Effective Date

B. Purpose: The purpose of this regulation is to eliminate unfair and deceptive practices in the replacement of individual accident and health insurance policies that insure persons who are eligible for Medicare by reason of age and to persons who have a current medicaid eligibility card. medicaid eligibility card.

C. Applicability and Scope: This Regulation shall apply only to solicitations and sale of individual accident and health insurance policies to persons who are eligible for Medicare by reason of age or to persons who have a current medicaid eligibility card. This Regulation shall not apply 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) "Licensee" means any person licensed as an agent, broker, or solicitor pursuant to South Carolina law.

(3) "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.

(4) "Replacement" means a transaction wherein individual 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 previously existing accident and health insurance has been, or will be, lapsed, cancelled or otherwise terminated as a result.

(5) "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. Replacement:

(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 inquire as to whether any such insurance will be replaced by the insurance to be issued.

(2) Upon determining that a sale will involve replacement, a licensee or insurer other than a direct response insurer shall at the time of the application furnish the applicant with the notice described in (3) below. One copy of such notice shall be delivered to the applicant and an additional copy signed by the applicant shall be submitted with the application and retained by the insurer.

In addition, the licensee shall furnish the applicant with a complete comparison in writing of the benefits afforded by the new policy and the policy to be replaced. Such comparison shall include but not be limited to the benefits contained in the two policies, the renewability provisions of the two policies, and the respective definitions of pre-existing illnesses or diseases.

A direct response insurer shall, upon issuance of the policy, deliver to the applicant the notice described in (4) below. The comparison statement and the notice will not be required if the insurance to be replaced is accident only or a single premium nonrenewable policy.

(3) The notice required by (2) above for a licensee or insurer other than a direct response insurer shall be as follows:

NOTICE TO APPLICANT REGARDING REPLACEMENT

OF ACCIDENT AND HEALTH INSURANCE

According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing accident and health insurance and replace it with a policy issued by (insert Company Name) Insurance Company. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy. In particular, study the comparison statement which your agent is required to furnish you upon taking your application.

(1) Health conditions which you may presently have, (pre-existing conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy.

(2) You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interests to make sure you understand all the relevant factors involved in replacing your present coverage.

(3) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical/health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims. After the application has been completed and before you sign it, re-read it carefully to be certain that all information has been properly recorded.

The above "Notice to Applicant" was delivered to me on:

____________________________________

(Date)

____________________________________

(Applicant's Signature)

(4) The notice required by (3) above for a direct response insurer shall be as follows:

NOTICE TO APPLICANT REGARDING REPLACEMENT

OF ACCIDENT AND HEALTH INSURANCE

According to (your application) (information you have furnished) you intend to lapse or otherwise terminate existing accident and health insurance and replace it with the policy delivered herewith issued by (insert Company Name) Insurance Company. Your new policy provides 10 days within which you may decide without cost whether you desire to keep the policy. For your own information and protection you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

(3) (To be included only if the application is attached to the policy.) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. You should carefully check the application and write the company immediately if any information is not correct, or if any past medical history has been left out of the application before letting your other policy lapse.

____________________________________

(Company Name)

F. Replacement After Indication of No Replacement.

Policyholders have the right to replace existing accident and health insurance after indicating in or as a part of applications for new insurance that such is not their intention; however, patterns of such action by policyholders on the same agent shall be evidence of the agent's knowledge that replacement was intended in connection with such transactions and indicate that the agent intended to violate the statute.

G. 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.

H. 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. § 69-34.2