Explanation of agency authority
Section
631.20, Stats., requires an insurer to file forms with OCI and provide insureds with copies of their policies and applications for insurance. This proposed rule revises the requirements for the form filing submission, specifies notices and access to copies of policies and as such interprets the applicable statues listed above and also specifies the information required to be submitted pursuant to s.
601.42, Stats. Additionally s.
631.22 (2), Stats., requires insures to provide policies that are coherent, written in commonly understood language, legible, appropriately divided and captioned by its various sections and presented in a meaningful sequence. This proposed rule interprets this statute and by rule establishes standards for compliance.
Related statutes or rules
This proposed rule revises the current rules, ss.
Ins 6.05 and
6.07, Wis. Adm. Code, governing filing submissions and readability of policy forms.
Plain language analysis and summary of the proposed rule
The proposed rule was developed with the assistance of an advisory council charged with developing the reviewing and recommending modifications to the Flesch readability score for personal lines property and casualty insurance products and disability insurance products. Additionally the council was charged with determining how to best increase consumer access to complete in force copies of their insurance policies. The advisory council after its first meeting divided along product lines into subgroups and individually each subgroup met 4 times between October 2009 and April 2010. The council then met two more times as a complete council in April and May 2010. The council members included intermediaries, public members, consumer advocates and representatives from the insurance industry.
As charged, the council recommended the proposed changes to the Flesch readability score for consumer insurance policies except for product lines that are described in s.
601.58 (2) (k), Stats., the interstate insurance product regulation compact. Additionally, the council recommended providing notice to insureds instructing them on how to access a complete in force copy of their insurance policy.
Separately for the advisory council, this proposed rule also revises the current rules governing the form and content of form filing submissions. The following is a summary of the proposed changes in the proposed rule as follows:
1. It requires the insurer to submit forms using a transmittal document established by standards adopted by the National Association of Insurance Commissioners.
2. It requires an insurer to include in its form filing a final printed or electronic format copy of the form as it will be used with the public and deletes the option of filing a facsimile.
3. It makes it clear that an insurer may file a form electronically.
4. It makes it clear that an insurer must file the required transmittal document when it files a form.
5. It requires certain consumer insurance policies to increase the readability score, Flesch or equivalent, from a score of 40 to 50.
6. It requires an insurer offering consumer insurance policies or certificates except town mutuals, and policies or certificates in the product lines that are described in s.
601.58 (2) (k), Stats., and property and casualty products that are other than personal lines to have on its' website information on how an insured may obtain an electronic or paper copy of their in force policy and the timeframe within which to provide the information. The product lines described in s.
601.58 (2) (k), Stats., are individual or group annuity, life insurance, disability income or long-term care insurance. This exception applies regardless of whether the policy is subject to or filed with the Interstate Compact.
7. It excepts product lines that are described s.
601.58 (2) (k), Stats., property and casualty products that are other than personal lines and insurers subject to ch.
618, Stats., from the website notice requirements but retains other statutory requirements for providing copies of in force policies upon request to insureds.
Comparison with federal regulations
There are no existing or proposed federal regulations that address the topic of this proposed rule.
Comparison of similar rules in adjacent states
Illinois:
NAIC transmittal form required as of February 1, 2006. May file either printed or electronic forms and may file electronically with SERFF or by CD Rom sent to the insurance department. Illinois requires products to be readable but does not set a score. Illinois is pending legislative changes to participate in the interstate insurance product regulation compact and for those product lines subject to the compact the Flesch required is 50. Illinois does not have a website notice provision for insureds to access a complete copy of their policy.
Iowa:
NAIC transmittal form required as of December 1, 2005. May file either printed or electronic forms and may file electronically with SERFF or by CD Rom sent to the insurance department. Iowa requires products to be readable but does not set a score. Iowa participates in the interstate insurance product regulation compact and for those product lines subject to the compact the Flesch required is 50. Iowa does not have a website notice provision for insureds to access a complete copy of their policy.
Michigan:
NAIC transmittal form required as of January 1, 2006. May file either printed or electronic forms and may file electronically with SERFF or by CD Rom sent to the insurance department. Michigan requires forms to achieve a Flesch score of not less than 45 under Mich. Admin. Code s.
500.2236 r. 2003 (1956). Michigan participates in the interstate insurance product regulation compact and for those product lines subject to the compact the Flesch required is 50. Michigan does not have a website notice provision for insureds to access a complete copy of their policy.
Minnesota:
NAIC transmittal form required as of February 1, 2006. May file either printed or electronic forms and may file electronically with SERFF or by CD Rom sent to the insurance department. Minnesota requires under Minn. Stat. Ch.
72C, a Flesch score of more than 40 for life and health forms. Minnesota participates in the interstate insurance product regulation compact and for those product lines subject to the compact the Flesch required is 50. Minnesota does not have a website notice provision for insureds to access a complete copy of their policy.
Summary of factual data and analytical methodologies
OCI proposes this rule based on its experience with administration of form filings and based on the activities of the NAIC which include development of uniform form filing submission standards. This rule is also reflective of changes in technology for both the insurers and consumers as acknowledged in the electronic access to policies. Finally the rule increases readability scores for disability consumer insurance policies not otherwise excepted to make the policies more easily readable to the general public.
Analysis and supporting documentation used to determine effect on small businesses
The effect of the proposed rule on small business is determined by the substantive changes included in the proposal. These changes will allow use of nationally uniform, electronic, transmittal documents and will not increase and are likely to decrease costs of form filings. The proposed changes to the readability scores may increase costs during implementation of the higher score but will not be a significant financial impact. There may be expense for adding information to an insurer's website for how an insured may request copies of their policy but this too should not be a significant financial impact and may be offset by the savings they may experience by being allowed to provide copies of in force policies electronically. Additionally, most small businesses regulated by the office have been excepted from these requirements to minimize the impact to small businesses.
Small Business Impact
This rule will have little or no effect on small businesses.
Initial regulatory flexibility analysis
Pursuant to s.
227.114, Stats., the proposed rule may have an effect on small businesses. The initial regulatory flexibility analysis is as follows:
Types of small businesses affected:
Insurance agents, LSHO, Town Mutuals, Small Insurers.
Description of reporting and bookkeeping procedures required:
Adds the option of electronically filing forms to the OCI and requires attestation of the Flesch score and tool used to determine the Flesch score. No other bookkeeping or reporting requirements other than are currently required.
Description of professional skills required:
Some small businesses, not otherwise exempted by rule, will need to update the website to include information on how to request or access the insured's policy. Other than creating the notice, no other professional skills other than are currently required.
Small business regulatory coordinator
The OCI small business coordinator is Eileen Mallow and may be reached at phone number (608) 266-7843 or at email address
eileen.mallow@wisconsin.gov.
Fiscal Estimate
State fiscal effect
None.
Local government fiscal effect
None.
Private sector fiscal effect
This rule change will have no significant effect on the private sector regulated by OCI.
Long-range fiscal implications
None.
Agency Contact Person
Inger Williams
OCI Services Section
Phone: (608) 264-8110
Address: 125 South Webster Street, 2nd Floor
Madison WI 53703-3474
Notice of Hearing
Insurance
NOTICE IS HEREBY GIVEN That pursuant to the authority granted under s.
601.41 (3), Stats., and the procedures set forth under s.
227.18, Stats., the Office of the Commissioner of Insurance (OCI) will hold a public hearing to consider the adoption of a proposed rule revising section
Ins 51.01, Wis. Adm. Code, relating to the risk-based capital of health insurers, property and casualty insurers and fraternal insurers.
Hearing Information
Date: August 3, 2010
Time: 10:00 a.m., or as soon thereafter as
the matter may be reached
Location: OCI, Room 227, 2nd Floor
125 South Webster Street
Madison, WI
Submittal of Written Comments
Written comments can be mailed to:
James W. Harris
Legal Unit - OCI Rule Comment for Rule Ins 5101
Office of the Commissioner of Insurance
PO Box 7873
Madison WI 53707-7873
Written comments can be hand delivered to:
James W. Harris
Legal Unit - OCI Rule Comment for Rule Ins 5101
Office of the Commissioner of Insurance
125 South Webster St – 2nd Floor
Madison WI 53703-3474
Comments can be emailed to:
James W. Harris
The deadline for submitting comments is 4:00 p.m. on the 7th day after the date for the hearing stated in this Notice of Hearing.
Copies of Proposed Rule
A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the OCI internet Web site at
http://oci.wi.gov/ocirules.htm or by contacting Inger Williams, Public Information and Communications, OCI, at:
inger.williams@wisconsin.gov, (608) 264-8110, 125 South Webster Street – 2
nd Floor, Madison WI or PO Box 7873, Madison WI 53707-7873.
Analysis Prepared by the Office of the Commissioner of Insurance
Statutes interpreted
