Chapter 4 — Additional Unfair Acts & Practices

It is a violation of the Insurance Code for anyone to fail to maintain a complete record of all the complaints received since the date of the last examination. For purposes of this paragraph, “complaint” means any written communication primarily expressing a grievance, including correspondence received by email.

• Knowingly making a false or fraudulent written or oral statement on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit
• Knowingly making a material omission in the comparison of a life, health, or Medicare supplement insurance replacement policy with the policy it replaces, for the purpose of obtaining a fee, commission, money, or other benefit

Free insurance is insurance for which the purchaser of real property, personal property, or services pays no identifiable charge. Insurance for which an identifiable or additional charge is paid in an amount less than the cost of the insurance would also be categorized as prohibited free insurance. Using the word “free” or words that imply insurance without a cost to describe life insurance in advertising is also prohibited.

• Once a premium payment reaches your hands, you need to submit it on behalf of the client immediately and in the manner it was paid
• Do not impose or request an additional premium for a policy of motor vehicle liability, personal injury protection, medical payment, or collision insurance
• Do not refuse to renew a policy solely because the insured was involved in a motor vehicle accident, unless the insurer’s file contains information from which the insurer, in good faith, determines the insured was substantially at fault

• A life insurer cannot designate who will conduct an insured’s funeral or restrict freedom of choice in the open market as to the purchase, arrangement, and conduct of a funeral service
• An insurer cannot contract or agree to furnish funeral merchandise or services in connection with the disposition of an insured at death
• An insurer cannot contract or agree with any funeral director promising a funeral director consent to conduct the funerals of insureds

An insurer issuing a group or individual health benefit plan may offer a voluntary wellness or health improvement program and may encourage or reward participation by authorizing rewards or incentives such as merchandise, gift cards, debit cards, premium discounts, contributions to a member’s health savings account, or modifications to copayment, deductible, or coinsurance amounts. Any reward or incentive offered must be disclosed in the policy or certificate.

No person may require, as a condition precedent or subsequent to the lending of money or extension of credit, that the borrower negotiate any policy or contract of insurance through a particular insurer, group of insurers, agent, or broker. Federally or state-insured depository institutions and credit unions must make clear and conspicuous written disclosure prior to the sale of any insurance policy that policies ARE NOT deposits, are not insured by the FDIC or any other entity, and are not guaranteed by the insured depository institution. All documents constituting policies of insurance must be separate and cannot be combined with or part of other documents.

The department and office each have the power, within their respective regulatory jurisdictions, to examine and investigate the affairs of every person involved in the business of insurance in order to determine whether any person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice.

Whenever the department or office has reason to believe a person has engaged in an unfair method of competition or unfair or deceptive act and that a proceeding would be in the best interest of the public, it will conduct a hearing in accordance with the Administrative Procedures Act. Penalties for failure to comply with a subpoena or an order directing discovery are limited to fines up to $1,000 per violation.

No life or disability insurer can refuse to renew, sell, or issue a life or disability insurance policy, or establish or charge a discriminatory premium rate, based solely on the grounds that the applicant or policyholder suffers from a severe disability. Severe Disability means:

• A spinal cord disease or injury resulting in permanent and total disability
• Amputation of any extremity that requires prosthesis
• Permanent visual acuity of 20/200 or worse in the better eye with the best correction
• A peripheral field that the widest diameter of the field subtends an angular distance no greater than 20 degrees
• Neurosensory deafness

Insurers cannot refuse to issue and deliver a policy of life insurance, or carry a higher premium rate or charge, solely because the person to be insured has the sickle-cell trait. The same prohibition applies to disability insurance. [See also §626.9707]

The purpose of §626.99 requires insurers to provide purchasers of life insurance: information that will improve the buyer’s ability to select the most appropriate plan; improve the buyer’s understanding of the basic features of the policy purchased or under consideration; and improve the ability of the buyer to evaluate the relative costs of similar plans of life insurance.