Brief Summary Of Significant Insurance Enacted During The 1985 Regular Session Of The WV Legislature

WEST VIRGINIA INFORMATIONAL LETTER

N0. 33

May, 1985

TO:

All Insurance Companies Licensed To Do Business In The State Of West

Virginia, Insurance Trade Associations, Insurance Media Publications And All

Other Interested Persons

The purpose of this Information Letter is to briefly summarize the most

significant insurance legislation which was enacted during the 1985 regular session of the

West Virginia Legislature. This Letter is not to be construed as inclusive of all legislation

which may affect the insurance industry or insurance consumers, but rather, is intended

merely to highlight some of the more important bills.

Persons seeking a copy of particular legislation should contact West Virginia

Legislature, Senate Clerks Office, Main Unit, State Capitol, Charleston, West Virginia

25305, telephone 304/357-7800 or House Clerks Office telephone 304/340-3200.

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Informational Letter No. 33

May, 1985

INSURANCE LEGISLATION ENACTED

S.B. 118

- Group Credit Life Insurance -- This bill amends Section 33-14-3

(d) to provide that the amount of insurance on the life of a debtor

under a group policy issued to a creditor may be in an amount up

to the amount of the indebtedness. Previously, the statute restricted

the amount of insurance on the life of a debtor under a group

policy to a maximum of twenty thousand dollars ($20,000.00). The

effective date of this legislation is June 19, 1985.

S.B. 213 - Continuum Of Care -- This bill changes the date on which insurers

must make available coverage for continuum of care services from

July 1, 1983 to July 1, 1986. The bill provides, however, that

insurers shall not be required to extend funds for underwriting

continuum of care coverage until the Continuum of Care Board, in

cooperation with the Insurance Commissioner, has completed a

written master plan which establishes specific standards and

coverages to be provided in such supplement coverage

inuum of care services from

July 1, 1983 to July 1, 1986. The bill provides, however, that

insurers shall not be required to extend funds for underwriting

continuum of care coverage until the Continuum of Care Board, in

cooperation with the Insurance Commissioner, has completed a

written master plan which establishes specific standards and

coverages to be provided in such supplement coverage.

Additionally, the bill requires that rates for continuum of care

coverage accurately reflect the cost of such coverage and not be

subsidized by the rate structure of any other coverage. Finally, the

bill amends various articles of the Insurance Code in order to

clarify the policies and insurers which are subject to the continuum

of care requirements. The effective date of this legislation is July

10, 1985.

H.B. 1290 - Fleet Liability Insurance For Transit Authorities -- This bill adds

new Section 29-12-5b which requires the State Board of Risk and

Insurance Management to assist state transit authorities in

procurement of fleet liability insurance for vehicles operated by the

authorities. The cost of the insurance coverage must be borne by

the authorities. The effective date of this legislation is July 15,

1985.

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Informational Letter No. 33

May, 1985

H.B. 1334 - Mine Subsidence Insurance -- This bill makes a number of changes

in Chapter 33, Article 30, concerning mine subsidence insurance.

The definition of a covered structure is amended by including as

covered structures basements, footings, foundations, septic systems

and underground pipes directly servicing a covered dwelling or

building. Driveways, sidewalks and parking lots are specifically

excluded from coverage. Additionally, the previous exclusion from

coverage for industrial and commercial buildings is removed. The

State Board is permitted to invest the funds in the mine subsidence

insurance fund and use the interest therefrom for claim payments

and administrative expenses of the program

a covered dwelling or

building. Driveways, sidewalks and parking lots are specifically

excluded from coverage. Additionally, the previous exclusion from

coverage for industrial and commercial buildings is removed. The

State Board is permitted to invest the funds in the mine subsidence

insurance fund and use the interest therefrom for claim payments

and administrative expenses of the program. The bill also provides

that mine subsidence coverage is mandatory unless waived by the

insured. However, in the following specified counties, coverage is

optional and is to be provided only upon the request of the insured:

Berkeley, Cabell Calhoun, Hampshire, Hardy, Jackson, Jefferson,

Monroe, Morgan, Pendleton, Pleasants, Richie, Roane, Wirt and

Wood. The bill provides that the effective date of coverage shall be

the thirtieth (30th) calendar day following application. A new

provision is added to the effect that the amount of mine subsidence

coverage cannot exceed the amount of fire insurance coverage on

the covered structure. The bill also permits an insurer to refuse

coverage on structures which evidence a loss or damage in

progress. The legislation increases the State Boards reinsurance

liability from fifty thousand dollars ($50,000.00) to seventy-five

thousand dollars ($75,000.00). The bill also deletes the existing

requirement that insurers remit to the board all monies recovered

as a consequence of subrogation. This bill becomes effective on

July 1, 1985.

H.B. 1763 - Rehabilitation And Liquidation -- This legislation makes certain

changes in the rehabilitation and Property and Casualty Guaranty

Fund statutes. New Section 33-10-19a establishes the priority of

distribution of claims from the estate of an insolvent insurer. The

legislation also clarifies the definition of covered claims.

ogation. This bill becomes effective on

July 1, 1985.

H.B. 1763 - Rehabilitation And Liquidation -- This legislation makes certain

changes in the rehabilitation and Property and Casualty Guaranty

Fund statutes. New Section 33-10-19a establishes the priority of

distribution of claims from the estate of an insolvent insurer. The

legislation also clarifies the definition of covered claims.

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Informational Letter No. 33

May, 1985

Specifically, the bill provides that covered claims do not include:

retroactive premiums or premiums subject to adjustment after the

date of liquidation; amounts due as subrogation recoveries from

the insolvent insurer or an insured of the insolvent insurer; and,

claims filed after the date established by the court for filing of

claims against a liquidator or receiver. The act further provides that

default judgments and stipulated judgments are not binding against

the Guaranty Association. Additionally, the Property and Casualty

Guaranty Association is now triggered upon an order of

liquidation, as opposed to the present language which triggers the

Guaranty Association upon a finding of insolvency. Finally, the

automatic stay provision of Section 33-26-18 is extended from

sixty (60) days to six (6) months, which time begins from the date

the liquidator receives the claim in question. This bill becomes

effective July 1, 1985.

H.B. 1851 - Claim Settlement Practices -- This bill adds a new sub-section (o)

to Section 33-11-4 (9) concerning those activities which constitute

unfair claim settlement practices. This new sub-section imposes

certain notification requirements upon accident and sickness

insurers in regard to acceptance or denial of claims and the status

of claim investigations

s

effective July 1, 1985.

H.B. 1851 - Claim Settlement Practices -- This bill adds a new sub-section (o)

to Section 33-11-4 (9) concerning those activities which constitute

unfair claim settlement practices. This new sub-section imposes

certain notification requirements upon accident and sickness

insurers in regard to acceptance or denial of claims and the status

of claim investigations. The sub-section also provides that accident

and sickness claims must be paid within ninety (90) days of filing

of proof of loss unless the Insurance Commissioner determines that

a legitimate dispute exists as to coverage, liability or damages or

that the claimant has fraudulently caused or contributed to the loss.

If the insurer fails to pay the claim within the ninety (90) day

limitation, absent the two exemptions noted above, the insurer

must pay to the claimant a penalty at the current prime rate plus

one percent (1%). Any penalty paid by an insurer may not be a

consideration in any rate filing made by the insurer. This bill

becomes effective on July 15, 1985.

H.B. 1861 - Waiver of Immunity Defense -- This bill provides that any public

liability insurance policy issued to a charitable association or

governmental unit shall be read so as to contain a provision

whereby the company issuing such policy waives, or agrees not to

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Informational Letter No. 33

May, 1985

assert as a defense, on behalf of the policyholder or beneficiary

thereto, the immunity from liability of the insured by reason of the

insureds charitable or governmental status. Present law requires

that such public liability policies contain specific endorsement or

provision waiving the immunity defense. This bill becomes

effective on July 15, 1985.

Fred E. Wright

Insurance Commissioner