Policy Form Certification Privilege Program and Reference Filing Procedure

1 COMMONWEALTH OF KENTUCKY DEPARTMENT OF INSURANCE Frankfort, Kentucky BULLETIN 2011-05 The following Bulletin is to advise the reader of the current position of the Kentucky Department of Insurance (the “Department”) on the specified issue. The Bulletin is not legally binding on either the Department or the reader. TO: ALL INSURERS AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN KENTUCKY FROM: SHARON P. CLARK, COMMISSIONER KENTUCKY DEPARTMENT OF INSURANCE DATE: SEPTEMBER 19, 2011 RE: POLICY FORM CERTIFICATION PRIVILEGE PROGRAM AND REFERENCE FILING PROCEDURE ************************************* The commissioner of the Kentucky Department of Insurance is issuing this Bulletin to advise insurance companies on the Department’s current position with respect to the Policy Form Certification Privilege Program and the Reference Filing Procedure. By Order dated January 18, 1983, and effective as of February 14, 1983, Commissioner Daniel D. Briscoe established a “Policy Form Certification Privilege Program” exempting certain specified forms from the prior approval process. By Bulletin No. 83-DM-002 dated January 19, 1983, Commissioner Daniel D. Briscoe authorized an insurance company to adopt, by reference, a policy form of another company that has been filed with and approved by the Department. A review of current insurance company practices related to the Policy Form Certification Privilege Program and the Reference Filing Procedures has revealed several problems resulting in noncompliance with the 1983 Order and Bulletin No. 83-DM-002, as well as noncompliance 2 with provisions of the Kentucky Insurance Code. As a result, the commissioner has determined that it is in the best interests of the public to abolish the Policy Form Certification Privilege Program and to discontinue allowing insurance companies to adopt other company’s forms using the Reference Filing Procedure. In conjunction with this Bulletin, the commissioner has issued an Order rescinding the 1983 Order establishing the Policy Form Certification Privilege Program. In addition, the commissioner’s Order rescinds and withdraws Bulletin No. 83-DM-002 authorizing the Reference Filing Procedure. The effect of the order rescinding the 1983 Order and Bulletin No. 83-DM-002 is to require all insurance companies to comply with the filing and prior approval requirements in KRS 304.14-120 with respect to the forms specified in the statute. If you have any questions regarding this Bulletin, you may contact the Health and Life Division of the Department of Insurance at (502) 564-6088. /s/ Ray A. Perry (Deputy Commissioner) Sharon P. Clark, Commissioner Kentucky Department of Insurance On this 19th day of September, 2011 COMMONWEALTH OF KENTUCKY DEPARTMENT OF INSURANCE FRANKFORT, KENTUCKY IN THE MATTER OF: POLICY FORM CERTIFICATION PRIVILEGE PROGRAM and REFERENCE FILING PROCEDURE * * * * * * * * ORDER WHEREAS, KRS 304.14-120(1) provides, in pertinent part, as follows: No basic insurance policy or annuity contract form, or application form where written application is required and is to be made a part of the policy or contract, or printed rider or indorsement form or form of renewal certi- ficate, shall be delivered, or issued for delivery in this state, unless the form has been filed with and approved by the commissioner… WHEREAS, KRS 304.14-120(4) authorizes the commissioner, by order, to exempt from the requirements of KRS 304.14-120(1), for so long as the commissioner deems proper, any insurance document or form or type thereof as specified in such order to which, in the commissioner’s opinion, KRS 304.14-120(1) may not practicably be applied, or the filing and approval of which are, in the commissioner’s opinion, not desirable or necessary for the protection of the public. WHEREAS, by Order dated January 18, 1983, and effective as of February 14, 1983, Commissioner Daniel D. Briscoe established a “Policy Form Certification Privilege Program” exempting certain specified forms from the prior approval process. A copy of the 1983 Order is attached hereto and labeled Exhibit 1; WHEREAS, by Bulletin No. 83-DM-002 dated January 19, 1983, Commissioner Daniel D. Briscoe authorized an insurance company to adopt, by reference, a policy form of another company that has been filed with and approved by the Department. A copy of Bulletin No. 83- DM-002 is attached hereto and labeled Exhibit 2; WHEREAS, the commissioner has determined that: 1. All forms filed under the previously authorized certification privilege program are reviewed by the Department of Insurance for compliance with the Kentucky Insurance Code; 2. Notwithstanding the requirement in the 1983 Order requiring an insurance company to “certify” that a filing filed under the Certification Privilege Program complies with Kentucky statutes and regulations, the Department consistently identifies errors and statutory noncompliance in the filings, thereby making the certification statement inaccurate and irrelevant; and 3. Inaccuracies and statutory violations found in filings submitted under the Certification Privilege Program, in conjunction with the reference-filing authorization in Bulletin No. 83-DM-002 have led to difficulties in tracking forms that are in use by insurance companies in the Kentucky insurance marketplace; WHEREAS, based on the above determinations by the commissioner, the commissioner finds the exemption of form filings from prior approval based on the 1983 Order establishing the “Policy Form Certification Privilege Program” is no longer desirable and prior approval of these forms is necessary for the protection of the public; WHEREAS, based on the above determinations by the commissioner, the commissioner finds that the reference-filing procedure authorized by Bulletin No. 83-DM-002 is no longer desirable and the filing and prior approval of all insurance companies’ forms referenced in KRS 304.14-120 is necessary for the protection of the public; NOW THEREFORE, based on the above findings by the commissioner, it is hereby ORDERED that: 1. The Order of the commissioner effective February 14, 1983, establishing the “Policy Form Certification Privilege Program” is RESCINDED as of the effective date of this Order; 2. Bulletin No.83-DM-002 establishing a Reference Filing Procedure is RESCINDED and WITHDRAWN as of the effective date of this Order; and 3. All insurance companies shall comply with the provisions of KRS 304.14-120 requiring the filing and prior approval of the forms specified in KRS 304.14-120. NOTICE OF APPEAL RIGHTS Pursuant to KRS 304.2-310, please take notice that any person aggrieved by and desiring to appeal an order of the commissioner shall make application for a hearing with the Department within sixty (60) days after the aggrieved party knew, or reasonably should have known, of the order. The application for a hearing shall briefly state the respects in which the applicant is so aggrieved, together with the grounds to be relied upon as a basis for the relief to be sought at the hearing. Done and effective this 19th day of September 2011. /s/ Ray A. Perry (Deputy Commissioner) Sharon P. Clark Commissioner of Insurance Certificate of Service This is to certify that a copy of the foregoing Order was published on the Department’s Website in conjunction with Bulletin 2011-05. This 20th day of September 2011. /s/ Sharron S. Burton Sharron S. Burton, General Counsel Office of Legal Services c/o Kentucky Department of Insurance 215 West Main Street Frankfort, Kentucky 40601 PH: (502) 564-6032 FAX: (502) 564-1456