Insurance Legislation Adopted by the 2012 Kentucky General Assembly (Regular Session)

COMMONWEALTH OF KENTUCKY

DEPARTMENT OF INSURANCE

Frankfort, Kentucky

BULLETIN 2012 - 02

INSURANCE LEGISLATION ADOPTED BY THE

2012 KENTUCKY GENERAL ASSEMBLY (REGULAR SESSION)

June 1, 2012

THIS BULLETIN IS FOR INFORMATION PURPOSES ONLY. IT DOES NOT AMEND

OR INTERPRET PROVISIONS OF THE KENTUCKY REVISED STATUTES OR THE

KENTUCKY

ADMINISTRATIVE

REGULATIONS.

THE

COMPLETE

AND

ACCURATE TEXT OF THE LAW CAN BE SECURED WHEN THE 2012 ACTS OF THE

KENTUCKY GENERAL ASSEMBLY ARE PUBLISHED IN THE SUMMER OF 2012.

UNLESS OTHERWISE NOTED, THE EFFECTIVE DATE OF THE LEGISLATION IS

JULY 12, 2012.

(Bills as enacted are available on the LRC website at www.lrc.ky.gov/record/12rs/record.htm)

Senate Bill 114 – Step Therapy

This bill creates a new statute in KRS Chapter 304, Subtitle 17A, to establish a process

for step therapy of fail-first protocols for medications used for the treatment of any

medical condition. If an insurer uses a step therapy or fail-first protocol to restrict

medications for use, the insurer must provide a prescribing practitioner access to a

“clear and convenient process” to request an override of the restriction. The insurer

must grant the override within forty-eight (48) hours if all necessary information to

review the request has been provided. The bill sets forth the information that must be

presented in the request for an override.

The bill prohibits any step therapy or fail-first protocol from being longer than thirty

(30) days. This period may be extended up to seven (7) additional days based on

documentation from the prescribing practitioner that the medication is likely to take

longer than thirty (30) days to provide relief to the insured.

The provisions of the bill apply to insurers and pharmacy benefit managers.

Contact:

Health and Life Division

fail-first protocol from being longer than thirty

(30) days. This period may be extended up to seven (7) additional days based on

documentation from the prescribing practitioner that the medication is likely to take

longer than thirty (30) days to provide relief to the insured.

The provisions of the bill apply to insurers and pharmacy benefit managers.

Contact:

Health and Life Division

(502) 564-6088

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Senate Resolution 48 – School-Located Influenza Programs

This resolution encourages school-located influenza programs to help increase school-

aged children’s access to immunization, protect them from influenza-related illness,

reduce school absenteeism due to influenza, and provide protection to the community

at large.

The resolution urges the Kentucky Department of Insurance and the Department of

Public Health to convene a meeting with private insurers, the public health community

and vaccine stakeholders to discuss ways to encourage private insurers to cover all

reasonable and customary expenses incurred when an influenza vaccine is

administered outside of the physician’s office in a school or other related setting.

Contact:

Health and Life Division

(502) 564-6088

House Bill 42 – Motor Vehicle Personal Injury Reparation Benefits

This bill amends KRS 304.39-241 to permit a claimant to direct personal injury

reparation benefits to reimburse:

 A health benefit plan;

 A limited health service benefit plan;

 Medicaid;

 Medicare; or

 A Medicare supplement provider.

Contact:

Property and Casualty Division

d Life Division

(502) 564-6088

House Bill 42 – Motor Vehicle Personal Injury Reparation Benefits

This bill amends KRS 304.39-241 to permit a claimant to direct personal injury

reparation benefits to reimburse:

 A health benefit plan;

 A limited health service benefit plan;

 Medicaid;

 Medicare; or

 A Medicare supplement provider.

Contact:

Property and Casualty Division

(502) 564-6046

House Bill 135 – Unclaimed Life Insurance Benefits

This bill creates a new statute in KRS Chapter 304, Subtitle 15 to require life insurance

companies to perform a quarterly comparison of its in-force life insurance policies and

retained asset accounts and the United States Social Security Administration’s Death

Master File or any other database that is at least as comprehensive as the Death Master

File to determine whether an insured is deceased.

If the comparison identifies a potential match, within ninety (90) days, the insurer is

required to:

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 Make a good faith, documented effort to confirm the death or the insured or

retained asset account holder against other available records and information;

 Determine whether benefits are due under the applicable policy or contract; and

 If benefits are due, provide appropriate claim forms or instructions to each

beneficiary to make a claim.

If a beneficiary or retained asset account holder cannot be found, the benefits shall

escheat to the state as unclaimed property pursuant to KRS 393.062.

The following policies are exempt from these provisions:

 A policy or certificate of life insurance that provides a death benefit under:

o An employee benefit plan subject to ERISA;

o A government plan;

o A church plan; or

o Any federal employee benefit program;

 Preneed funeral contracts or prearrangements as defined in KRS 304.12-

240(1)(a);

 Credit life insurance or debtor life insurance; and

 Group life insurance if the insurers do not provide full record keeping services to

the group policyholder

h benefit under:

o An employee benefit plan subject to ERISA;

o A government plan;

o A church plan; or

o Any federal employee benefit program;

 Preneed funeral contracts or prearrangements as defined in KRS 304.12-

240(1)(a);

 Credit life insurance or debtor life insurance; and

 Group life insurance if the insurers do not provide full record keeping services to

the group policyholder.

Finally, the bill prohibits an insurer from charging insureds, account holders, or

beneficiaries for any fees or costs associated with a search of the Death Master file or

similar database or the verification of the death of the insured or account holder.

Contact:

Health and Life Division

(502) 564-6088

House Bill 207 – Loss Run Statements; Automobile Repair Notice

Loss Run Statements

This bill creates a new statute in KRS Chapter 304, Subtitle 20 to require an insurer to

provide a loss run statement for commercial property and casualty policies to an

insured or agent within twenty (20) calendar days of receipt of a written request. If the

agent receives the loss run statement, the agency must provide a copy to the insured

within five (5) calendar days. The loss run statement must include a five (5) year loss

run history or a complete loss run if the history with the insurer is less than five (5)

years. The insurer cannot impose a fee for providing one (1) loss run statement. The

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provisions of this bill apply to insurers, liability self-insurance group and workers’

compensation self-insured groups.

Automobile Repair Notice

This bill creates a new statute in KRS Chapter 304, Subtitle 12 to require an insurer that

receives notification of a motor vehicle damage claim to inform a claimant that he or she

has the right to choose the repair facility of his or her choice

provisions of this bill apply to insurers, liability self-insurance group and workers’

compensation self-insured groups.

Automobile Repair Notice

This bill creates a new statute in KRS Chapter 304, Subtitle 12 to require an insurer that

receives notification of a motor vehicle damage claim to inform a claimant that he or she

has the right to choose the repair facility of his or her choice.

Additionally, on and after July 12, 2012, all appraisals are required to include the

following notice in not less than ten (10) point boldfaced type:

“NOTICE: UNDER KENTUCKY LAW, THE CONSUMER AND/OR LESSEE HAS

THE RIGHT TO CHOOSE THE REPAIR FACILITY TO MAKE REPAIRS TO HIS

OR HER MOTOR VEHICLE.”

The notice provisions required by this bill do not apply to the replacement or repair of

automobile glass.

Contact:

Property and Casualty Division

(502) 564-6046

House Bill 265 – Insurance Coverage Affordability and Relief to Small Employers

Program (ICARE)

Part XII of HB 265 contains the language to continue the phase-out of the Insurance

Coverage Affordability and Relief to Small Employers (ICARE) Program, a 4-year pilot

program for small employer groups of 2 to 25 employees, including those who are

members of an employer-organized association. All insurers that issue health benefit

plans to small groups are deemed to be ICARE participating insurers.

The program was closed to new membership on June 15, 2010. Members who were

approved for participation in the program as of that date and maintain their eligibility

will receive a 4-year subsidy. The program will be completely phased out by June 30,

2014.

The ICARE Program provides the following premium subsidy to eligible employers for

qualified health benefit plans:

insurers.

The program was closed to new membership on June 15, 2010. Members who were

approved for participation in the program as of that date and maintain their eligibility

will receive a 4-year subsidy. The program will be completely phased out by June 30,

2014.

The ICARE Program provides the following premium subsidy to eligible employers for

qualified health benefit plans:

Page 5 of 19

 For employers who were previously uninsured

o Premium subsidy of $40 per employee per month (subsidy decreases by $10

per year over the 4-years of the pilot program)

o Qualified health benefit plans include a consumer-driven health benefit

plan (HRA or HSA) or a basic health benefit plan.

 For employer groups with a high cost individual

o Premium subsidy of $60 per employee per month (subsidy decreases by $15

per year over the 4-years of the pilot program)

o Qualified health plans include a consumer-driven health benefit plan (HRA

or HSA), a basic health benefit plan or a traditional health benefit plan.

A Health Risk Assessment is required to be completed for each employee participating in

ICARE to encourage prevention, early treatment and promotion of healthy behaviors.

Participating insurers are required to offer a premium rate that includes a healthy

lifestyle discount.

In addition to the ICARE Program, Part XII of HB 265 includes the following provisions:

 Medicaid related

o Health Insurance Premium Payment (HIPP) program disclosure

 Requires insurers to disclose to employers the availability of the HIPP

program. The HIPP program allows the State to purchase employer

sponsored commercial coverage on behalf of Medicaid eligible

employees when it is financially advantageous for the state.

o Medicaid coordination of benefits

 Requires insurers to provide eligibility information to Medicaid;

 Ensures that Medicaid is the payor of last resort; and

 Assesses a penalty for failing to provide information

e HIPP program allows the State to purchase employer

sponsored commercial coverage on behalf of Medicaid eligible

employees when it is financially advantageous for the state.

o Medicaid coordination of benefits

 Requires insurers to provide eligibility information to Medicaid;

 Ensures that Medicaid is the payor of last resort; and

 Assesses a penalty for failing to provide information.

 Interstate Reciprocal Health Benefit Plan Compact

o Provides enabling language to explore the creation of an interstate compact

with neighboring states for health benefit plan product and rate approval.

 Transparency

o Amends existing statute in order to promote timely, electronically accessible

information available to consumers related to health care cost, quality and

outcomes;

Page 6 of 19

o Provides better direction and better defined access as to what information is

made available to consumers via the Cabinet for Health and Family Services,

regarding:

 Cost;

 Quality; and

 Outcomes for hospitals and ambulatory surgery centers;

o Requires use of nationally endorsed quality indicators for purposes of

making comparative information available between hospitals in both urban

and rural areas;

o Enhances the data reporting requirements of hospitals and ambulatory care

centers; and

o Sets forth requirements for standards for protection of information (HIPAA).

 Prompt pay

o Amends the interest rate for payment of late claims to 12% annually for

claims paid between one (1) and 30 days late and 14% annually for claims

over 31 days late; and

o Updates requirement for acknowledgement to allow reasonableness for

determination of claims status.

Contact:

ICARE Program

(502) 573-1026

Health and Life Division

n of information (HIPAA).

 Prompt pay

o Amends the interest rate for payment of late claims to 12% annually for

claims paid between one (1) and 30 days late and 14% annually for claims

over 31 days late; and

o Updates requirement for acknowledgement to allow reasonableness for

determination of claims status.

Contact:

ICARE Program

(502) 573-1026

Health and Life Division

(502) 564-6088

House Bill 282 – Home Medical Equipment

This bill creates new sections of KRS Chapter 315 to establish definitions and licensure

requirements for home medical equipment and service providers under the Kentucky

Board of Pharmacy.

The bill also amends KRS 304.17A-005 to include home medical equipment and service

providers in the definition of “health care provider.”

Contact:

Health and Life Division

(502) 564-6088

Page 7 of 19

HB 295 – Administrative Streamlining

This bill amends various statutes and creates new statutes within the Insurance Code to

address:

 Expiration of certificate of authority;

 Filing of proof of financial responsibility for licensed insurance agents,

consultants, adjusters, surplus lines brokers and life settlement brokers;

 Provisions with the surplus lines law to conform to the Nonadmitted and

Reinsurance Reform Act and to address penalties for the failure to affidavits and

quarterly statements;

 Requirements for industrial insured captive insurers;

 Adopt the provisions of the NAIC Holding Company Act related to enterprise

risk.

Expiration of Certificate of Authority

This bill amends KRS 304.3-180 to change the date that a certificate of authority expires

from June 30 to April 30. The bill also creates a new statute in KRS 304, Subtitle 99 to

create a fine of $1,000 that must be paid to reinstate a certificate of authority within

three (3) months after expiration

Holding Company Act related to enterprise

risk.

Expiration of Certificate of Authority

This bill amends KRS 304.3-180 to change the date that a certificate of authority expires

from June 30 to April 30. The bill also creates a new statute in KRS 304, Subtitle 99 to

create a fine of $1,000 that must be paid to reinstate a certificate of authority within

three (3) months after expiration.

Filing of Proof of Financial Responsibility

The bill amends the following statutes related to the filing of proof of financial

responsibility:

 KRS 304.9-105 to remove the requirement of agents to file proof of financial

responsibility with the department;

 KRS 304.9-320 and 304.9-330 to remove the requirement of consultants to file

proof of financial responsibility with the department, and to remove the

authority of the commissioner to license consultants based on other special

experience or education;

 KRS 304.9-430 to remove the requirement of adjusters to file proof of financial

responsibility with the department;

 KRS 304.10-140 to remove the requirement that a surplus lines broker file proof

of financial responsibility with the department; and

 KRS 304.15-700 to remove the requirement of life settlement brokers to file proof

of financial responsibility with the department.

Surplus Lines

The bill includes the following amendments to the surplus lines law:

 KRS 304.10-030 is amended to include definitions from the Nonadmitted and

Reinsurance Reform Act (within the Dodd Frank Wall Street Reform Act);

ity with the department; and

 KRS 304.15-700 to remove the requirement of life settlement brokers to file proof

of financial responsibility with the department.

Surplus Lines

The bill includes the following amendments to the surplus lines law:

 KRS 304.10-030 is amended to include definitions from the Nonadmitted and

Reinsurance Reform Act (within the Dodd Frank Wall Street Reform Act);

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 KRS 304.10-040 is amended to clarify that the diligent search must be performed

by a licensed agent with a property and casualty line of authority; and to clarify

that a diligent search is not required for an exempt commercial purchaser;

 KRS 304.10-070 is amended to clarify the eligibility requirements for surplus lines

insurers;

 KRS 304.10-120 is amended to clarify that an agent license with a property and

casualty line of authority is not a requirement for licensure as a surplus lines

broker; and

 KRS 304.99-085 is amended to create a penalty of:

o $100 for failure to file an affidavit in accordance with KRS 304.10-050;

o $1,000 to $5,000 for a broker who exhibits a pattern of failing to file

affidavits in accordance with KRS 304.10-050; and

o $500 for failing to file a quarterly statement in accordance with KRS

304.10-170.

NAIC Holding Company Act, Enterprise Risk Provisions

The bill includes the following revisions related to the NAIC Holding Company Act:

 Creates a new statute within KRS 304, Subtitle 37 to allow the department to

participate in a supervisory college to assess the financial condition of insurers

and other entities within a holding company system. (This provision has a

delayed effective date of July 15, 2014.)

 Amends KRS 304.37-010, 304.37-020, 304.37-030, 304.37-040, 304.37-120, and

304.37-565 to adopt the updates to the NAIC Holding Company Act primarily

related to enterprise risk

the department to

participate in a supervisory college to assess the financial condition of insurers

and other entities within a holding company system. (This provision has a

delayed effective date of July 15, 2014.)

 Amends KRS 304.37-010, 304.37-020, 304.37-030, 304.37-040, 304.37-120, and

304.37-565 to adopt the updates to the NAIC Holding Company Act primarily

related to enterprise risk. (The provisions include a delayed effective date of July

15, 2014 for the submission of an enterprise risk report.)

 Amends KRS 304.99-152 to allow the commissioner to disapprove a dividend or

distribution or place an insurer under supervision in accordance with KRS 304.33

if a person takes steps to prevent the DOI’s understanding of an enterprise risk.

Industrial Insured Captive Insurer

The bill amends the following statutes related to industrial insured captive insurers:

 KRS 304.49-150 to clarify the provisions of the insurance code that are applicable

to industrial insured captive insurers; and

 KRS 304.49-170 to allow a captive insurer not to file an actuarial opinion

summary if a certification of loss and loss expense reserves and opinion of

reserve adequacy has been filed by the captive insurer with the department.

Contact:

Financial Standards and Examination Division

(502) 564-6082

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Agent Licensing Division

(502) 564-6004

Property and Casualty Division

(502) 564-6046

House Bill 338 – Insurance Premium Surcharge

This bill amends KRS 136.392 to require that any future changes to the insurance

premium surcharge rates take effect no earlier than six (6) months from the date that the

Commissioner of Insurance notifies insurers of the new rate.

Contact:

Property and Casualty Division

02) 564-6004

Property and Casualty Division

(502) 564-6046

House Bill 338 – Insurance Premium Surcharge

This bill amends KRS 136.392 to require that any future changes to the insurance

premium surcharge rates take effect no earlier than six (6) months from the date that the

Commissioner of Insurance notifies insurers of the new rate.

Contact:

Property and Casualty Division

(502) 564-6046

House Bill 349 – Pharmacy Audits

This bill amends KRS 304.17A-741 related to pharmacy audits.

The bill prohibits an auditing entity from:

 Requiring a pharmacy to keep records longer than two (2) years or as required

by state or federal law or regulation; and

 Receiving payment based on the total amount recovered in an audit.

If an audit results in the identification of a clerical or recordkeeping error:

 An auditing entity can only recoup funds if:

o The auditing entity can provide proof of intent to commit fraud;

o The error results in an actual overpayment to the pharmacy; or

o The error results in the wrong medication being dispensed to the patient.

 A pharmacy is permitted to file an amended claim to correct clerical or

recordkeeping errors within thirty (30) days if the prescription was dispensed

according to state and federal law.

A refund or recoupment of overpayment must be made in accordance with KRS

304.17A-712 and is limited to the amount paid to the pharmacy less the amount that

should have been paid to the pharmacy and the dispensing fee (if the correct

medication was dispensed to the patient.)

Page 10 of 19

The bill also creates a new statute in KRS Chapter 205 to specifically subject Medicaid

managed care organizations to the pharmacy audit provisions in KRS 304.17A-740 to

304.17A-743.

Contact:

Health and Life Division

he pharmacy less the amount that

should have been paid to the pharmacy and the dispensing fee (if the correct

medication was dispensed to the patient.)

Page 10 of 19

The bill also creates a new statute in KRS Chapter 205 to specifically subject Medicaid

managed care organizations to the pharmacy audit provisions in KRS 304.17A-740 to

304.17A-743.

Contact:

Health and Life Division

(502) 564-6088

House Bill 392 – Sale of Travel Insurance and Portable Electronics Insurance

This bill creates two distinct licensure schemes related to the sale of insurance for travel

and portable consumer electronics.

Travel Insurance

The bill defines a limited lines travel insurance producer to mean:

 A licensed managing general agent;

 A licensed agent; or

 A limited lines travel insurance agent.

The bill also defines a travel retailer as an entity that makes, arranges, or offers travel

services. Travel retailers are unlicensed entities that are permitted to offer and

disseminate travel insurance under the direction of a licensed limited lines travel

insurance producer.

A limited lines travel insurance producer must:

 Be clearly identified on marketing materials and fulfillment packages distributed

by travel retailers to customers;

 Establish, maintain, and update annually a register of each travel retailer that

offers travel insurance on its behalf;

 Submit the register to the commissioner upon request;

 Certify that it complies with 18 U.S.C. sec. 1033;

 Designate one of its employees as a licensed individual responsible for

compliance with the travel insurance laws and regulations in Kentucky; and

 Require each employee of the travel retailer whose duties include offering and

disseminating travel insurance to receive a program of instruction or training

regarding the types of insurance offered, ethical sales practices and required

disclosures to prospective consumers.

ensed individual responsible for

compliance with the travel insurance laws and regulations in Kentucky; and

 Require each employee of the travel retailer whose duties include offering and

disseminating travel insurance to receive a program of instruction or training

regarding the types of insurance offered, ethical sales practices and required

disclosures to prospective consumers.

Page 11 of 19

Portable Electronics

The bill defines a portable electronics insurance supervising entity to mean a business

entity that supervises the administration of a portable electronics insurance program.

The supervising entity can be:

 A licensed insurer; or

 An insurance agent appointed by an insurer.

The bill also defines a portable electronics retailer as a licensed business entity that:

 Offers and sells portable electronic devices; and

 Offers and disseminates portable electronics insurance on behalf of and under

the direction of a portable electronics insurance supervising entity.

A portable electronics insurance supervising entity must:

 Maintain a register of each separate business location where a portable

electronics retailer and its employees or authorized representatives offer and

disseminate portable electronics insurance;

 Make the register open to inspection and examination by the commissioner upon

request;

 Oversee the administration of a portable electronics retailer’s insurance program

supervising entity must:

 Maintain a register of each separate business location where a portable

electronics retailer and its employees or authorized representatives offer and

disseminate portable electronics insurance;

 Make the register open to inspection and examination by the commissioner upon

request;

 Oversee the administration of a portable electronics retailer’s insurance program.

A business entity can apply for a portable electronics insurance retailer license by

submitting the following to the commissioner:

 A written application including:

o Information solely related to an employee or officer of the portable

electronics retailer designated by the applicant as a person responsible for

compliance; and

o If the portable electronics retailer derives more than fifty percent (50%) of

its revenue from the sale of portable electronics insurance, information for

all officers, directors, and shareholders of record that have beneficial

ownership of 10 percent (10%) or more of any class of securities, who are

subject to 15 U.S.C. sec. 78p; and

 The application fee.

A licensed portable electronics retailer shall authorize an employee or authorized

representative to offer and disseminate portable electronics insurance without being

licensed, registered or otherwise individually identified if:

 The employee or authorized representative operates with permission from the

portable electronics retailer;

 The portable electronics retailer assumes responsibility for the insurance

activities of its unlicensed employees;

ployee or authorized

representative to offer and disseminate portable electronics insurance without being

licensed, registered or otherwise individually identified if:

 The employee or authorized representative operates with permission from the

portable electronics retailer;

 The portable electronics retailer assumes responsibility for the insurance

activities of its unlicensed employees;

Page 12 of 19

 The employee or authorized representative operates under the supervision of a

portable electronics supervising entity who is available for consultation and

supervision of the sale, solicitation, or negotiation of portable electronics

insurance; and

 The employee or authorized representative is not primarily compensated based

on the amount of insurance sold, although compensation may be received for

activities incidental to the employee or authorized representative’s overall

compensation.

At each location where portable electronics insurance is offered to a customer,

brochures or other written materials shall be made available to a customer which:

 Disclose that portable electronics insurance may provide a duplication of

coverage already provided by a customer’s homeowner’s insurance policy,

renter’s insurance policy, or other source of coverage;

 State that the enrollment by the customer in a portable electronics insurance

policy is not required in order to purchase or lease portable electronics or

services;

 Summarize the material terms of the insurance coverage including:

o The identity of the insurer;

o The identity of the portable electronics insurance supervising entity;

o The amount of any applicable deductible and how it is to be paid;

o Benefits of the coverage; and

o Key terms and conditions of coverage including but not limited to

whether portable electronics may be repaired with nonoriginal

manufacturer parts or equipment or replaced with a similar make and

model that is reconditioned;

 Summarize the process for filing a claim, including a description of

he amount of any applicable deductible and how it is to be paid;

o Benefits of the coverage; and

o Key terms and conditions of coverage including but not limited to

whether portable electronics may be repaired with nonoriginal

manufacturer parts or equipment or replaced with a similar make and

model that is reconditioned;

 Summarize the process for filing a claim, including a description of how to

return portable electronics and the maximum fee applicable if the customer fails

to comply with any equipment return requirements; and

 State that an enrolled customer may cancel enrollment for coverage under a

portable electronics insurance policy at any time and the person paying the

premium shall receive a refund of any applicable unearned premium.

The bill sets forth the following requirements for the sale of portable electronics

insurance:

 Insurance may be offered on a month-to-month basis or another period basis as a

group or master commercial inland marine policy;

 Eligibility and underwriting standards for each portable electronics insurance

policy are required to be established;

Page 13 of 19

 The charges for coverage may be billed and collected by the portable electronics

retailer.

o Charges to a customer that are not included in the cost associated with the

purchase or lease of portable electronics must be separately itemized on

the customer’s bill.

o When charges to a customer are included in the cost associated with the

purchase or lease of portable electronics, the portable electronics retailer

must clearly and conspicuously disclose to the customer that the charge

for coverage is included

t are not included in the cost associated with the

purchase or lease of portable electronics must be separately itemized on

the customer’s bill.

o When charges to a customer are included in the cost associated with the

purchase or lease of portable electronics, the portable electronics retailer

must clearly and conspicuously disclose to the customer that the charge

for coverage is included.

 A portable electronics retailer is not required to maintain the funds for portable

electronics insurance in a segregated account if:

o The insurer authorizes the retailer to hold the funds in an alternative

manner;

o The retailer remits the funds to the portable electronics insurance

supervising entity within sixty (60) days of receipt; and

o The retailer holds the funds in a fiduciary capacity for the benefit of the

insurer.

 Required notices or correspondence concerning a policy of portable electronics

insurance shall be sent in the following manner:

o If mailed, to the portable electronics retailer at the retailer’s mailing

address and each affected enrolled customer at the last known mailing

address of the customer on file with the insurer; or

o If sent by electronic means, to the portable electronics retailer at the

retailer’s electronic mail address and to each affected enrolled customer at

the last known electronic mail address provided by the enrolled customer

to the insurer or portable electronics retailer.

Contact:

Agent Licensing Division

mer at the last known mailing

address of the customer on file with the insurer; or

o If sent by electronic means, to the portable electronics retailer at the

retailer’s electronic mail address and to each affected enrolled customer at

the last known electronic mail address provided by the enrolled customer

to the insurer or portable electronics retailer.

Contact:

Agent Licensing Division

(502) 564-6004

House Bill 417 – Automobile Guaranty

With regard to service contracts and insurance products, this bill amends KRS 190.090

to allow the cash sale price of a motor vehicle to include the charges for a service

contract, mechanical breakdown insurance, a maintenance agreement, a vehicle

protection product and any other goods or services related to the sale that the buyer

agrees to purchase from the seller.

The bill specifically states that the following shall not be considered a contract of, or for,

insurance:

Page 14 of 19

 A maintenance agreement;

 A service contract; and

 A vehicle protection product.

The definition of automobile guaranty insurance in KRS 304.5-070(1)(p) is amended to

reference these exclusions.

Contact:

Property and Casualty Division

(502) 564-6046

House Bill 497 – Insurance Consumer Protections

This bill amends various provisions within the Insurance Code related to:

 Group life insurance policies;

 Exceptions to rating, underwriting, cancellation, and nonrenewal for an

applicant or insured whose credit information has been directly influenced by an

extraordinary life event;

 Restrictions on cancellation or nonrenewal of automobile or homeowner’s

insurance related to coverage inquiries;

 Timeframes for providing information of the cancellation of an automobile

insurance policy; and

 Provisions in provider agreements with a doctor of chiropractic and provider

agreements related to limited health service benefit plans

nfluenced by an

extraordinary life event;

 Restrictions on cancellation or nonrenewal of automobile or homeowner’s

insurance related to coverage inquiries;

 Timeframes for providing information of the cancellation of an automobile

insurance policy; and

 Provisions in provider agreements with a doctor of chiropractic and provider

agreements related to limited health service benefit plans.

Group Life Insurance

This bill amends KRS 304.16-030(2) and KRS 304.16-090(2) to allow insureds to

contribute to the cost of their group life insurance.

The definition of “dependent” in KRS 304.16-085 is amended to include a dependent

child who is unmarried and incapable of self-sustaining employment because of a

mental or physical condition if:

 The child was incapacitated prior to attainment of the age at which dependent

coverage would otherwise terminate;

 The child is chiefly dependent upon the employee or member for support and

maintenance;

 The insurance of the employee or member remains in force;

 The dependent child remains incapable of self-sustaining employment; and

 The employee or member submits proof of the dependent child’s incapacity

within thirty-one (31) days of the dependent’s attainment of the termination age.

Page 15 of 19

Finally, the bill creates a new statute in KRS 304, Subtitle 16 to allow for discretionary

groups upon a finding of the commissioner that:

 The issuance of the group policy is not contrary to the best interests of the public;

 The issuance of the group policy would result in economies of acquisition or

administration; and

 The benefits of the group policy are reasonable in relation to the premiums

charged

reates a new statute in KRS 304, Subtitle 16 to allow for discretionary

groups upon a finding of the commissioner that:

 The issuance of the group policy is not contrary to the best interests of the public;

 The issuance of the group policy would result in economies of acquisition or

administration; and

 The benefits of the group policy are reasonable in relation to the premiums

charged.

Extraordinary Life Events

The bill creates a new section of KRS 304, Subtitle 13 to require an insurer that uses

credit information to provide reasonable exceptions to rates, rating classifications,

company or tier placement or underwriting rules or guidelines for an applicant whose

credit information has been directly influenced by an extraordinary life event. An

insurer is required to provide an applicant or an insured with a notice that reasonable

exceptions are available and information on how to inquire further.

An extraordinary life event is identified in the bill as:

 Catastrophic event, as declared by the federal or state government;

 Serious illness or injury to the insured, or serious illness or injury to an

immediate family member;

 Death of a spouse, child, or parent;

 Divorce or involuntary interruption of legally owed alimony or support

payments;

 Identity theft;

 Temporary loss of employment for a period of three (3) months or more, if it

results from involuntary termination;

 Military deployment overseas; or

 Other events, as determined by the insurer.

The applicant is required to submit a written request to the insurer for an exception

rent;

 Divorce or involuntary interruption of legally owed alimony or support

payments;

 Identity theft;

 Temporary loss of employment for a period of three (3) months or more, if it

results from involuntary termination;

 Military deployment overseas; or

 Other events, as determined by the insurer.

The applicant is required to submit a written request to the insurer for an exception.

Upon receipt of the request, an insurer may:

 Require the applicant or insured to provide reasonable written and

independently verifiable documentation of the event;

 Require the applicant or insured to demonstrate that the event had direct and

meaningful impact on his or her credit information;

 Require that the request be made no more than sixty (60) days from the date of

the application for insurance or the policy renewal;

Page 16 of 19

 Grant an exception despite the applicant or insured not providing the initial

request for an exception in writing; or

 Grant an exception where the applicant or insured asks for consideration of

repeated events or the insurer has considered this event previously.

Within thirty (30) days of receipt of sufficient documentation the insurer must provide

the insured or applicant of the outcome.

Additionally, the bill amends KRS 304.20-040 and KRS 304.20-042 to prohibit an insurer

from declining, nonrenewing or cancelling an insurance policy for personal risks solely

because of an extraordinary life circumstance that directly influences the credit history

of an applicant or insured.

Coverage Inquiries

This bill creates a new statute in KRS 304, Subtitle 20 to prohibit an insurer from

cancelling, nonrenewing or increasing the premium for personal motor vehicle

insurance or homeowner’s insurance solely as the result of an inquiry related to an

insured’s coverage which does not reasonably apprise the insurer of a claim

nces the credit history

of an applicant or insured.

Coverage Inquiries

This bill creates a new statute in KRS 304, Subtitle 20 to prohibit an insurer from

cancelling, nonrenewing or increasing the premium for personal motor vehicle

insurance or homeowner’s insurance solely as the result of an inquiry related to an

insured’s coverage which does not reasonably apprise the insurer of a claim.

Cancellation of Automobile Insurance Policies

This bill amends KRS 304.20-040, related to nonrenewal and cancellation of automobile

insurance policies, to:

 Remove from the exceptions to the definition of “policy” a policy insuring more

than four (4) automobiles;

 Require at least 14 days’ notice before canceling a policy that has been in effect

for less than sixty (60) days;

 Remove policies that have been in effect for less than sixty (60) days from the

reasons for cancellation listed in KRS 304.20-040(2)(b); and

 Require insurers to respond for a request for information from the commissioner

within seven (7) days from receipt of the request.

Provider Agreements

The bill amends KRS 304.17A-150, related to unfair trade practices in the marketing and

selling of health benefit plans, to prohibit an insurer from imposing requirements in a

provider agreement with a doctor of chiropractic that restrict, reduce or negate the

benefits that are otherwise provided to an insured under a health benefit plan. Insurers

are specifically permitted to perform a utilization review in accordance with KRS

304.17A-600 to 304.17A-633.

Page 17 of 19

The bill creates a new statute in KRS 304 Subtitle 17C, related to limited health service

benefit plans, to prohibit terms in a provider agreement that require a health care

provider to provide services at a fee set by or subject to approval by an insurance

company unless the services are covered services.

Contact:

Property and Casualty Division

(502) 564-6046

Health and Life Division

creates a new statute in KRS 304 Subtitle 17C, related to limited health service

benefit plans, to prohibit terms in a provider agreement that require a health care

provider to provide services at a fee set by or subject to approval by an insurance

company unless the services are covered services.

Contact:

Property and Casualty Division

(502) 564-6046

Health and Life Division

(502) 564-6088

House Bill 499 – Local Government Premium Tax Exemption

The bill includes non-codified language to exempt from local government premium

taxes premiums paid by non-profit self-insurance groups whose membership consists

of cities, counties, charter county governments, urban-county governments,

consolidated local governments, school districts, or any other political subdivisions of

the Commonwealth. This exemption is applicable for the fiscal year beginning July 1,

2012 and expires June 30, 2014.

Contact:

Consumer Protection Division

(502) 564-6034

Additional Legislation of Interest

Senate Bill 3 – Drugs Containing Ephedrine, Pseudoephedrine, or

Phenylpropanolamine

This bill amends KRS 218A.1446 to address requirements for the sale of drugs

containing ephedrine, pseudoephedrine or phenylpropanolamine including

requirements for electronic logging and dispensing limitations.

Senate Bill 89 – Seat Belts

This bill amends KRS 189.125 to apply seat belt requirements to vehicles designed to

carry fifteen (15) or fewer passengers.

Senate Bill 110 – Community Use of School Facilities and Property

This bill creates a new statute in KRS Chapter 162 to permit a local school board to

authorize the use of school property by the community during non-school hours for the

Senate Bill 89 – Seat Belts

This bill amends KRS 189.125 to apply seat belt requirements to vehicles designed to

carry fifteen (15) or fewer passengers.

Senate Bill 110 – Community Use of School Facilities and Property

This bill creates a new statute in KRS Chapter 162 to permit a local school board to

authorize the use of school property by the community during non-school hours for the

Page 18 of 19

purpose of recreation, sport, academic, literary, artistic, or community uses. The bill

specifically addresses liability protections related to the use of the facility and property.

Senate Bill 144 – Electronic Prescribing

This bill creates a new statute in KRS 217.005 to 217.215 and a new statute in KRS 218A

to address issues related to electronic prescribing including a patient’s freedom to select

a pharmacy, software design and consideration of the national standards for electronic

prior authorization developed by the National Council for Prescription Drug Programs.

House Bill 358 – Boiler External Piping Inspections

This bill amends various statutes in KRS Chapter 236 related to boiler inspectors. In

part, the bill permits an owner facility subject to piping inspection to apply for a license

to allow the facility to conduct its own site piping inspections. The application requires

the owner facility to provide evidence that the facility has general liability insurance

through a company permitted to transact insurance in Kentucky.

House Bill 409 – Property Forfeitures in the Case of Unlawful Deaths

This bill, in part, amends KRS 381.280 to remove the requirement that insurance

professionals make reasonable efforts to advise clients of the provisions of the law

related to property forfeiture in the case of an unlawful death prior to the sale of an

insurance policy

company permitted to transact insurance in Kentucky.

House Bill 409 – Property Forfeitures in the Case of Unlawful Deaths

This bill, in part, amends KRS 381.280 to remove the requirement that insurance

professionals make reasonable efforts to advise clients of the provisions of the law

related to property forfeiture in the case of an unlawful death prior to the sale of an

insurance policy.

House Bill 433 – Condominiums

This bill, in part, amends KRS 381.9187 to remove the requirement that an insurer issue

certificates or memoranda of insurance to the condominium association and, upon

written request, to any unit owner or mortgagee. It also removes the requirement that

the insurer not cancel or nonrenew the policy until thirty (30) days after notice has been

mailed to the association, each unit owner and each mortgagee who has been issued a

certificate or memorandum of insurance.

House Bill 328 – Operation of a Motorcycle

This bill amends KRS 186.450 related to the issuance of a motorcycle permit or

operator’s license. The bill allows a person who has received an intermediate operator’s

license to apply for a motorcycle instruction permit and makes the permit good for one

(1) year, with the ability for one (1) renewal. A person whose permit has expired is

permitted to apply for a motorcycle operator’s license if the person can present proof of

successful completion of a motorcycle safety education course.

ill allows a person who has received an intermediate operator’s

license to apply for a motorcycle instruction permit and makes the permit good for one

(1) year, with the ability for one (1) renewal. A person whose permit has expired is

permitted to apply for a motorcycle operator’s license if the person can present proof of

successful completion of a motorcycle safety education course.

Page 19 of 19

House Bill 341 – Business Organizations

This bill creates KRS Chapter 386A to adopt the Kentucky Uniform Statutory Trust Act

to permit a business trust to be used as an allowable form of business organization in

Kentucky. The bill also addresses other requirements for the formation, operation and

dissolution of businesses in Kentucky.

House Bill 421 – Insurance Claims for Residential Roof Repairs

This bill creates a new statute in KRS Chapter 367 to permit a person to cancel a contract

with a roofing contractor related to residential roof repairs within five (5) business days

after the person has received written notice from the insurer that all or part of the claim

is not covered under the person’s property and casualty insurance policy.

The bill sets forth terms for cancellation, notice requirements, refund of payments

made, payment for services necessary to prevent further damage, and activities of a

roofing contractor.

/s/ Sharon P. Clark

June 4, 2012 _

Sharon P. Clark

Date

Commissioner

Kentucky Department of Insurance