Rescission of Bulletins 2007-3, 2009-08, 2009-09, 2010-01

ODI Ohio Department of Insurance John R. Kasich, Governor Marv Taylor, Lt. Governor/Director # BULLETIN 2017-01 # RESCISSION OF BULLETINS 2007-3, 2009-08, 2009-09, 2010-01 # Effective February 1, 2017 The purpose of this bulletin is to rescind the following attached Ohio Department of Insurance Bulletins that are outdated or are covered by subsequent statutes or rules: 1. Bulletin 2007-3 – Terrorism Risk Insurance Program Reauthorization Extension Act of 2007. The Terrorism Risk Insurance Act Extension Act of 2007 expired December 31, 2014. On January 12, 2015, the Terrorism Risk Insurance Act Extension Act of 2015 was signed into law. Bulletin 2015-02, effective April 8, 2015, pertains to the Terrorism Risk Insurance Act Extension Act of 2015. Accordingly, this bulletin is no longer applicable. 2. Bulletin 2009-08 – Certificates of Insurance. The Certificates of Insurance Act enacted in March 2016 and enumerated by Ohio Revised Code Chapter 3938 clearly defines the scope, purpose and prohibited actions related to certificates of insurance. As a result, this bulletin is no longer applicable. 3. Bulletin 2009-09 – The Ohio Annuity Disclosure Pilot Program for Fixed and Indexed Annuities. This pilot program expired April 1, 2010. This bulletin is no longer applicable. 4. Bulletin 2010-01 – Temporary Extension of State Continuation Coverage to Take Advantage of Federal Premium Subsidy. Ohio HB 300, enacted February 25, 2010, temporarily amended sections 1751.53 and 3923.38 of the Ohio Revised Code to extend the period an eligible employee could continue their health insurance coverage. This extension was contingent upon an employee’s eligibility for continuation coverage premium subsidies under the American Reinvestment and Recovery Act of 2009 (“ARRA”). Employees terminated after May 31, 2010 are not eligible for continuation coverage premium subsidies under ARRA. As a result, this bulletin is no longer applicable. Mary Taylor Lt. Governor/Director 50 W. Town Street, 3rd Floor, Suite 300 Columbus, Ohio 43215 # BULLETIN NO. 2010-01 ## TEMPORARY EXTENSION OF STATE CONTINUATION COVERAGE TO TAKE ADVANTAGE OF FEDERAL PREMIUM SUBSIDY (Effective February 26, 2010) On February 25, 2010, Ohio HB 300 was enacted into law. HB 300 included provisions to amend sections 3923.38 and 1751.53 of the Ohio Revised Code on a temporary basis. These sections deal with state continuation (mini-COBRA) coverage for employees who involuntarily lose their jobs with small businesses. HB 300 included an emergency clause with respect to the mini-COBRA amendment and, consequently, these amendments take effect immediately. In summary, the provisions in HB 300 that deal with mini-COBRA coverage under Ohio law do the following: - Effective immediately for employer sponsored group insurance policies issued, delivered or renewed on or after February 25, 2010, continuation coverage under sections 3923.38 and 1751.53 of the Revised Code shall be 15 months of coverage, instead of 12 months of coverage. - H.B. 300 affects only the duration of continuation coverage provided by Revised Code sections 3923.38 and 1751.53. All other provisions of these statutes remain in effect. - The extension of mini-COBRA coverage to 15 months is temporary and lasts only as long as newly terminated employees are eligible for federal premium subsidies for COBRA and mini-COBRA coverage. When those federal subsidies are no longer available to newly terminated employees, the temporary law will end, and the Ohio law will return to 12 months of continuation coverage. Currently, the mini-COBRA subsidy provided by the federal government provides premium assistance for 15 months for individuals who lost employment through February 28, 2010. It is likely that the federal government will extend the qualifying period beyond February 28, 2010. If the federal eligibility period for the subsidy is extended, which is anticipated to occur, the extended 15 months of mini-COBRA coverage will be available for as long as newly terminated employees are offered the federal subsidy. A former employee who has already elected state continuation coverage and is eligible for the federal subsidy is entitled to up to 15 months of continuation coverage when the employer's policy renews. Pursuant to federal law, former employees should have received notice of the premium assistance extension by February 17, 2010 and should be allowed to pay past due premiums retroactively and maintain mini-Cobra coverage if they meet the federal requirements. A beneficiary covered under state continuation coverage prior to December 19, 2009 who lost coverage because his or her premium assistance expired, can resume the coverage by paying 35 percent of the premium for the prior months by no later than 60 days after December 19, 2009 or, if later, 30 days after receiving notice regarding the right to resume premium assistance coverage from the issuer or employer. Because the change in duration of state continuation coverage from 12 to 15 months will be temporary and will affect policies issued, delivered or renewed on or after February 25, 2010, insurers will not be required to re-file continuation coverage policy language prior to use. However, carriers must file appropriate policy forms with the Department by March 25, 2010, such as policy riders or amendments that will be used to notify policyholders of the 15 months of mini-COBRA coverage resulting from this statutory change. Contact the Product Regulation Division of the Department of Insurance at (614) 644-2644 for further information. If an employer has fewer than 20 employees, those employees receive continuation coverage under the state continuation law rather than the federal law. The state mini-COBRA law also applies to non-ERISA private and public employer self-insurance plans in Ohio. Mary Jo Hudson Mary Jo Hudson Superintendent of Insurance 2 BULLETIN No. 2009-09 Effective Date: April 1, 2009 # The Ohio Annuity Disclosure Pilot Program for Fixed and Indexed Annuities This Bulletin is to provide notice to all life insurance companies selling fixed or indexed annuities in Ohio that The Ohio Department of Insurance (Department) is launching an Annuity Disclosure Pilot Program (ADP Program), beginning April 1, 2009, and continuing for one year. The ADP Program is the result of discussions among the Department, the American Council of Life Insurers (ACLI), and the Association of Ohio Life Insurance Companies (AOLIC), beginning in the early fall of last year. The pilot program will use annuity disclosure templates and instructions for their use developed by the ACLI in partnership with the Association of Insured Retirement Solutions (NAVA) and the National Association of Insurance and Financial Advisors (NAIFA). The associations' goal was to create annuity disclosures that would be uniform among the various states, and provide clear, consumer-friendly, and easy to understand information about annuity products. After extensive review of the proposed annuity pilot program, including careful review of the annuity disclosure templates, as well as conferring with representatives from the Iowa Department of Insurance (which successfully piloted the disclosure program in 2008), and the life insurance industry, the Department has determined that it is in the best interests of Ohio consumers to pursue a means to provide more consumer friendly, plain-English annuity disclosures. Therefore, this Bulletin provides notice to all insurers marketing fixed or indexed annuities in Ohio that the Department is implementing an Annuity Disclosure Pilot Program (ADP Program) for a period of one year, beginning on April 1, 2009. The following points provide more information about the ADP Program: 1. Participation in the ADP Program is voluntary. 2. To participate in the ADP Program, companies must provide written notification that they wish to participate to the Department. The notice must acknowledge that the company is voluntarily participating in the pilot program; identify the annuity disclosure template or templates it will be using; and identify by name and product form number the annuity product or products for which they will be using the disclosure templates. Please send the notice to: annuity.project@ins.state.oh.us. 3. Companies should not use any template in Ohio before providing the required notification to the Department. 4. Companies participating in the ADP Program must correctly follow the disclosure templates and the instructions for their use. 5. Companies providing annuity disclosures using one or more of the templates for the appropriate annuity product (fixed or indexed or both) will not be required to provide any other disclosures that may otherwise be required under Ohio law for that product to Ohio consumers except for The Annuity Buyer's Guide. 6. Participating companies will instruct and direct their insurance agents to provide the newly-developed annuity disclosures in conjunction with all sales of the annuity products covered by the templates. 7. Although the ADP Program will be launched as of April 1, 2009, companies that are unable to begin using the templates as of that date may delay implementation until such time as they are ready to use the annuity templates. Notice to the Department must be provided as set forth herein. 8. Companies not participating in the ADP Program must continue to use annuity disclosure forms that comply with Ohio's annuity disclosure rules in agency rules 3901-6-14 and 3901-1-47 of the Ohio Administrative Code. 9. If a company is participating in the Iowa Annuity Disclosure Pilot program, the company may use the Iowa templates in Ohio by notifying the Department as provided above and including information about its Iowa participation. Companies providing the required notice and using the Iowa templates in Ohio will be deemed to be participating in, and in compliance with, Ohio's ADP Program. 10. The Department's ADP Program is only testing the fixed and indexed annuity templates. The Department is not testing a variable annuity template at this time. 11. Companies can access the templates at http://www.acli.com/ACLI/Issues/GR09-120.htm?Issue=39. The Department will continually evaluate the success of the ADP Program in Ohio during the coming months and will discuss possible and any necessary modifications to the templates with representatives of the ACLI and AOLIC. On or shortly after April 1, 2010, if the ADP Program proves to be successful, the Department will adopt a rule requiring the use of the annuity disclosure templates by all insurers marketing fixed or indexed annuities or both in this state. Mary Jo Hudson Mary Jo Hudson Superintendent of Insurance Bulletin 2009-08 – Certificates of Insurance (Effective March 12, 2009) The Department of Insurance (“Department”) is aware that some licensed insurance agents (“agents”) or insurers are being asked to issue preprinted or client-furnished certificate of insurance documents or other evidences of insurance coverage (“other evidence documents”) which include language that purports to amend or alter terms of the underlying insurance policies. These certificates of insurance or other evidence documents are typically used in lieu of providing a full copy of the policy and serve as proof of insurance and to summarize terms of the policy. This bulletin is to clarify the use of certificates of insurance or other evidence documents by agents or insurers in Ohio. Certificates of insurance or other evidence documents must clearly and accurately state the insurance coverage provided. Any certificate or other evidence documents issued by an insurer or agent that obscures or misrepresents the insurance coverage or terms of an insurance policy is a violation of the Ohio Revised Code and may subject the issuer to civil penalties and/or license suspension or revocation. Therefore, an insurance agent may not issue a certificate of insurance or other evidence document that does not accurately represent the terms or conditions of the policy without written authority from the insurer to alter the terms or conditions of that policy, or unless the agent has written underwriting authority to do so. When an insurer provides a certificate of insurance or other evidence document that goes beyond a synopsis of the policy, the insurer may be exceeding the underlying policy language. Any statement in the certificate or other evidence document that amends or extends coverage of the underlying policy, including references to construction contracts, service contracts, or insurance requirements could be, in effect, changing the policy terms and the insurer may be bound by those changes. When an insurance agent executes a certificate of insurance or other evidence document which goes beyond a mere synopsis of the policy, the agent may be exceeding the policy language. If the agent includes any statement in the certificate or other evidence document that amends or extends coverage of the underlying policy, including references to construction contracts, service contracts, or insurance requirements, the agent could be, in effect, changing the policy terms. By issuing such a certificate or other evidence document, the agent may be in violation of Ohio insurance laws. Ohio Revised Code section 3901.21(A) defines misrepresenting the terms or benefits of an insurance policy as an unfair and deceptive act or practice in the business of insurance. Pursuant to the authority in section 3905.14(B)(8) of the Revised Code, the Superintendent may impose a civil penalty or suspend or revoke the insurance license of an agent who is found to have committed an unfair or deceptive act or practice. Revised Code section 3905.14(B)(5) authorizes the Superintendent to impose civil penalties or to suspend or revoke the license of an agent if the agent intentionally misrepresents the terms of an actual or proposed insurance contract. An agent who signs a certificate of insurance or other evidence document or issues an opinion that the agent knows alters or amends the coverage of the underlying policy may be in violation of this section and thereby be subject to administrative penalties under the Revised Code. A certificate of insurance, an ACORD (“Association for Cooperative Operations Research and Development”) form, or other evidence documents should not provide false information. The following guidelines should be reviewed and adhered to by insurers and agents when issuing certificates of insurance or other evidence documents relating to commercial insurance: 1. No agent may issue a binder, certificate of insurance or indemnity agreement, affidavit, other evidence document, or any other instrument which either affirmatively or negatively amends, extends, or alters or misrepresents the terms, conditions, or coverage provided by the underlying insurance policy. 2. Each certificate of insurance or evidence document should contain the following statement or one substantively similar: “This document neither affirmatively nor negatively amends, extends, or alters the terms of or the coverage afforded by policy referenced herein. 3. Certificates of insurance or other evidence documents should not contain references to construction contracts, service contracts, or insurance requirements for the purpose of amending coverage afforded by the policies to which the certificate of insurance or evidence document makes reference. No certificate of insurance or evidence document may be used to amend, extend, restrict or alter the terms or coverage of policies to which the certificate or other evidence document makes reference. Mary Jo Hudson Mary Jo Hudson Superintendent of Insurance Bulletin No. 2007 – 3 # Terrorism Risk Insurance Program Reauthorization Extension Act of 2007 (Effective December 31, 2007) The purpose of this bulletin is to advise Ohio insurers of certain provisions of the Terrorism Risk Insurance Program Reauthorization Extension Act of 2007, that may require insurers to submit a filing in this state of the policy language and the applicable rates and rules as a result of the original 2002 Act, the Extension Act of 2005 and this Extension Act of 2007. # **Background** The United States Congress enacted and the President signed into law in November 2002, the Terrorism Risk Insurance Act of 2002 (The Act or TRIA). This federal law provides a federal backstop for defined acts of terrorism and imposes certain obligations on insurers. The Act was extended for a two-year period (Extension Act of 2005) covering program years 2006 and 2007. The Act has now been extended for an additional seven years through December 31, 2014, with the enactment of the Terrorism Risk Insurance Program Reauthorization Extension Act of 2007. Several provisions of the initial Act have changed in the Extension Act of 2007. Those changes include: - Revising the definition of a certified act of terrorism to eliminate the requirement that the individual(s) are acting on behalf of any foreign person or foreign interest. - Extending the program through December 31, 2014. - Requiring clear and conspicuous notice to policyholders of the existence of the $100,000,000,000 cap. - Fixing the Insurer Deductible at 20% of an insurer's direct earned premium, and the federal share of compensation at 85% of insured losses that exceed insurer deductibles. - Fixing the program trigger at $100,000,000 for all additional program years. - Requiring the U.S. Treasury to promulgate regulations for determining pro-rata shares of insured losses under the program when insured losses exceed $100,000,000,000. - Requiring the Comptroller General to study the availability and affordability of insurance coverage for losses caused by terrorist attacks involving nuclear, biological, chemical, or radiological materials and issue a report not later than one year after the enactment of the Terrorism Risk Insurance Program Reauthorization Extension Act of 2007. - Requiring the Comptroller General to determine whether there are specific markets in the United States where there are unique capacity constraints on the amount of terrorism insurance available and issue a report not later than 180 days after the enactment of the Terrorism Risk Insurance Program Reauthorization Extension Act of 2007. - Requiring the President's Working Group on Financial Markets to continue an ongoing study of the long-term availability and affordability of terrorism risk insurance. - Accelerating the timing of the mandatory recoupment of the federal share through policyholders surcharges. Other terms of The Act, as amended by the Terrorism Risk Insurance Extension Act of 2005, remain unchanged. ## Certified and Non-Certified Losses As a result of the definition of insured loss contained in The Act, there are essentially two distinct types of losses that a business might face that result from terrorism. One type of loss is the insured loss that is defined within and covered by the provisions of The Act. For convenience, we will adopt the moniker of "certified loss" to refer to losses resulting from certified acts of terrorism. The second type of loss that a business might face is one that does not fit within the definition of insured loss as described in The Act. For convenience, we will adopt the moniker of "non-certified loss" to refer to losses resulting from terrorism that is not certified. The Ohio Department of Insurance (The Department) has allowed, and will continue to allow, some significant limitations that provide coverage for acts of terrorism under certain circumstances for commercial lines policies. For policies providing property insurance coverage the following limitations apply to non-certified losses: - Exclusion for acts of terrorism only apply if the acts of terrorism result in industry-wide insured losses that exceed $25,000,000 for related incidents that occur within a 72 hour period; - Exclusions for acts of terrorism are not subject to the limitations above if: o The act involves the use, release or escape of nuclear materials, or that directly or indirectly results in nuclear reaction or radiation or radioactive contamination; o The act is carried out by means of the dispersal or application of pathogenic or poisonous biological or chemical materials; or o Pathogenic or poisonous biological or chemical materials are released, and it appears that one purpose of the terrorism was to release such materials. For policies providing liability insurance coverage the following limitations apply to non-certified losses: - Exclusion for acts of terrorism only apply if the acts of terrorism result in industry-wide insured losses that exceed $25,000,000 for related incidents that occur within a 72 hour period; or - Fifty or more persons sustain death or serious physical injury for related incidents that occur within a 72 hour period. For purposes of this provision serious physical injury means: o Physical injury that involves a substantial risk of death; o Protracted and obvious physical disfigurement; or o Protracted loss of or impairment of the function of a bodily member or organ. - Exclusions for acts of terrorism are not subject to the limitations above if: o The act involves the use, release or escape of nuclear materials, or that directly or indirectly results in nuclear reaction or radiation or radioactive contamination; o The act is carried out by means of the dispersal or application of pathogenic or poisonous biological or chemical materials; or o Pathogenic or poisonous biological or chemical materials are released, and it appears that one purpose of the terrorism was to release such materials. 2 ## Definition of Act of Terrorism One of the changes made to TRIA with the enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007 was a revision to the definition of an act of terrorism that eliminated the requirement that an individual or individuals that carry out an act of terrorism be acting on behalf of a foreign person or foreign interest. In short, this means that acts formerly referred to as “domestic” terrorism may now be certified as an act of terrorism under TRIA. Section 102(1) defines an act of terrorism for purposes of The Act. Please note that the unmodified reference to “the Secretary” refers to the Secretary of the Treasury. Revised Section 102(1)(A) states, “The term “act of terrorism” means any act that is certified by the Secretary, in concurrence with the Secretary of State, and the Attorney General of the United States—(i) to be an act of terrorism; (ii) to be a violent act or an act that is dangerous to—(I) human life, (II) property; or (III) infrastructure; (iii) to have resulted in damage within the United States, or outside the United States in the case of—(I) an air carrier or vessel described in paragraph (5)(B); or (II) the premises of a United States mission; and (iv) to have been committed by an individual or individuals, as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion.” Section 102(1)(B) states, “No act shall be certified by the Secretary as an act of terrorism if—(i) the act is committed as part of the course of a war declared by the Congress, except that this clause shall not apply with respect to any coverage for workers’ compensation; or (ii) property and casualty insurance losses resulting from the act, in the aggregate, do not exceed $5,000,000.” Section 102(1)(C) and (D) specify that the determinations are final and not subject to judicial review and that the Secretary of the Treasury cannot delegate the determination to anyone. The Act, as amended, contains in Section 103(1)(B) a program trigger of $100 million in aggregate industry insured losses resulting from a certified act of terrorism before federal reimbursement is triggered. The Department will not allow exclusions of coverage for acts of terrorism that fail to be certified losses solely because they fall below the $5,000,000 threshold in Section 102(1)(B) on any policy that provides coverage for acts of terrorism that fail to be certified. Insurers required to file policy forms may submit language containing coverage limitations for certified losses that exceed $100 billion in the aggregate. ## Submission of Rates, Rules and Policy Form Language If an insurer relies on an advisory organization to file loss costs and related rating systems on its behalf, no rate filing is required unless an insurer plans to use a different loss cost multiplier than is currently on file for coverage for certified losses. Insurers that develop and file rates independently may choose to maintain their currently filed rates or submit a new filing. The rate filing should provide sufficient information for the reviewer to determine what price would be charged to a business seeking to cover certified losses. The Department will accept filings that contain a specified percentage of premium to provide for coverage for certified losses. Insurers may also choose to use rating plans that take into account other factors such as geography, building profile, proximity to target risks and other reasonable rating factors. The insurer should state in the filing the basis that it has for selection of the rates and rating systems that it chooses to apply. The supporting documentation should be sufficient for the reviewer to determine if the rates are excessive, inadequate or unfairly discriminatory. Insurers subject to policy form regulation must submit the policy language that they intend to use in this state. The policy should define acts of terrorism in ways that are consistent with The Act, as amended, 3 state law and the guidance provided in this bulletin. The definitions, terms and conditions should be complete and accurately describe the coverage that will be provided in the policy. Insurers may conclude that current filings are in compliance with The Act, as amended, state law and the requirements of this bulletin. However, if policy forms make a distinction between acts of a foreign person or foreign interest and a domestic person or domestic interest, it is likely that a filing is required. Another change introduced in the Terrorism Risk Insurance Program Reauthorization Act of 2007 is a new disclosure requirement for any policy issued after the enactment of The Act. Specifically, in addition to other disclosure requirements previously contained in TRIA, insurers must now also provide clear and conspicuous disclosure to the policyholder of the existence of the $100,000,000,000 cap under Section 103(e)(2), at the time of offer, purchase and renewal of the policy. Disclosure notices mandated by the Act are NOT required to be filed with The Department. Given that the provisions of the Terrorism Risk Insurance Program Reauthorization Act of 2007 are already in effect, and insurers and advisory organizations must accelerate filing activity in order to achieve compliance with the revised provisions of TRIA, The Department will suspend its “Prior Approval” and “File and Use” filing procedures found under ORC 3935.04 and 3937.03, respectively, until April 1, 2008. This suspension applies only to rate, rule and forms filings pertaining to “certified” and “non-certified” terrorism losses for commercial property and casualty lines of business (as defined under The Act). The Department will process these filings on a “Use and File” basis as detailed below: - Rate, rule and form filings for “certified” and “non-certified” terrorism losses shall be made within 30 days after they are implemented. - Disclosure notices mandated by The Act are NOT required to be filed. - The normal procedure for insurer adoption of advisory organization filings remains in effect. Therefore, if an insurer has authorized an advisory organization to file loss costs, rules, or forms on its behalf and chooses to adopt those items exactly as filed by the advisory organization and with the same effective date, NO FILING is required by the insurers. This temporary “Use and File” filing process shall remain in place until April 1, 2008. If an insurer does not want to take advantage of the “Use and File” filing process (or cannot file prior to April 1, 2008) then it must submit a filing subject to filing procedures found under ORC 3935.04 and 3937.03. Surplus lines insurers are not required to file rates, rules or forms. ## Effective Date This bulletin shall take effect on December 31, 2007. Mary Jo Hudson Mary Jo Hudson Director of Insurance 4