Legislative Proposals
DPFR-25
STATE OF MAINE
IN THE YEAR OF OUR LORD
TWO THOUSAND AND SEVEN
________________
____ L.D. ____
AN ACT to Clarify and Update the Laws Related to Property and
Casualty Insurance
Be it enacted by the People of the State of Maine as follows:
Part A
Sec. A-1. 24-A M.R.S.A. § 2303 sub-§ 3-A
is repealed.
Part B
Sec. B-1. 24-A M.R.S.A. § 2304-A sub-§ 1
is amended to read:
§ 2304-A. Rate Filings
1. Every insurer shall file with the superintendent,
except as to inland marine risks, which by general custom of the business
are not written according to manual rates or rating plans, every manual
rate, minimum premium, class rate, rating schedule or rating plan
and every other rating rule, and every modification of any of the
foregoing that it proposes to use. The filing must state the effective
date of the filing and indicate the character and extent of the coverage
contemplated. The filing must be made not less than 30 days in advance
of the stated effective date unless that 30-day requirement is waived
by the superintendent. The effective date may be suspended by the
superintendent for a period of time not to exceed 60 days, except
that the effective date for filings made electronically may not be
suspended. Filings made electronically must
be acted on no later than 30 days from receipt unless an extension
is requested by the filer.
Part C
Sec. C-1. 24-A M.R.S.A. § 2384-B is repealed.
Sec. C-2. 24-A M.R.S.A. § 2384-C is repealed.
Part D
Sec. D-1. 24-A M.R.S.A. § 2908, sub-§ 1E
is amended to read:
§ 2908. Cancellation and Nonrenewal
E. "Renewal" or "to renew" means the issuance
of, or the offer to issue by an insurer, a policy succeeding a policy
previously issued and delivered by the same insurer or
an affiliate of an insurer or the issuance of a certificate
or notice extending the terms of an existing policy for a specified
period beyond its expiration date. For the
purposes of this section, the transfer of a policy from an insurer
to an affiliate is considered a policy renewal.
Sec. D-2. 24-A M.R.S.A. § 2908, sub-§5D is
enacted to read:
D. For policies providing automobile physical damage
coverage, like notice of cancellation or nonrenewal must also be given
to any party named in a loss payable clause.
Sec. D-3. 24-A M.R.S.A. § 2912, sub-§1 is
amended to read:
1. Policy. "Policy" means an automobile
insurance policy providing bodily injury liability, property damage
liability, medical payments, uninsured motorist coverage, physical
damage coverage, or any combination thereof, deliverydelivered
or issued for delivery in this State, insuring a single individual
or one or more related individuals resident in the same household,
as named insured and insuring vehicles of the following types only:
A. Motor vehicles of the private passenger or station wagon type
which are not used as public conveyances nor rented to others;
B. Any other 4-wheel motor vehicles with a load capacity of 1,500
pounds or less which are not used in the business or professions
of the insured.
Sec. D-4. 24-A M.R.S.A. § 2912, sub-§2 is
amended to read:
2. Renewal or renew. "Renewal" or "to
renew" means the issuance and delivery by an insurer of a policy
replacing at the end of the previous policy term a policy previously
issued and delivered by the same insurer, or the issuance and delivery
of a certificate or notice extending the coverage of the policy beyond
its original term. Any renewal policy with a
term of one year or less, other than a replacement policy for an unfinished
term, with a term of one year or less is considered written, for the
purposes of this subchapter, for a term of one year. For purposes
of this subchapter, the transfer of a policy from an insurer to an
affiliate or an offer to renew under less
favorable terms is considered a policy renewal.
Any policy written for a term longer than one year or with no fixed
expiration date is considered written for successive policy terms
of one year for the purposes of this subchapter.
Sec. D-5. 24-A M.R.S.A. § 2915 is amended to
read:
§ 2915. Delivery of notice
A notice of cancellation of a policy is not effective unless received
by the named insured at least 20 days prior to the effective date
of cancellation, or, when the cancellation is for nonpayment of premium,
at least 10 days prior to the effective date of cancellation. In the
event the policy is an automobile
provides automobile physical damage policy
coverage, like notice of cancellation must also be given to
any other person DPFR-25 party
mentioned in the loss payable clause. A postal service certificate
of mailing to the named insured at the insured's last known address
is conclusive proof of receipt on the 5th calendar day after mailing.
Except for a policy that has been in effect for less than 60 days
at the time notice of cancellation is received by the named insured,
the reason for cancellation must accompany the notice, together with
a notice of the right to apply for a hearing before the Superintendent
of Insurance within 30 days, as provided in section 2920.
Prior to the date of renewal of a policy that has
been transferred by an insurer to an affiliate, the insured must receive
notice of any changes to the terms of the policy that are less favorable
to the insured.
Sec. D-6. 24-A M.R.S.A. § 2916-A is amended to
read:
§ 2916-A. Nonrenewal - reasons
No notice of nonrenewal shall be issued, unless it is based upon
a reason for which the policy could have been cancelled or unless
it is based upon one or more of the following grounds which occurred
during the 36-month period preceding the yearly anniversary date of
the policy. A nonrenewal shall be effective
only on the policy’s yearly anniversary date.
Sec. D-7. 24-A M.R.S.A. § 2917-A is enacted to
read:
§ 2917-A Changes at renewal
If an insurer offers or purports to renew a contract,
but on less favorable terms to the insured or at higher rates or a
higher rating plan, the new terms or rates and rating plan may take
effect on the renewal date, if the insurer has provided the insured
30 days notice. If the insurer has not so notified the contract holder,
the contract holder may elect to cancel the renewal policy within
the 30-day period after receipt of the notice or delivery. Earned
premium for the period of coverage for such time as the renewal contract
may have been in force, shall be calculated pro rata at the lower
of the current or previous year's rate. If the insured accepts the
renewal, the premium increase, if any, and other changes shall be
effective immediately following the prior policy's expiration or anniversary
date. This section does not apply if the change is a rate, form or
plan filed with the superintendent and applicable to the entire class
of business to which the policy belongs.
Sec. D-8. 24-A M.R.S.A. § 3051-A is enacted to
read:
§ 3051-A. Changes at renewal
If an insurer offers or purports to renew a contract,
but on less favorable terms to the insured or at higher rates or a
higher rating plan, the new terms or rates and rating plan may take
effect on the renewal date, if the insurer has provided the insured
30 days notice. If the insurer has not so notified the contract holder,
the contract holder may elect to cancel the renewal policy within
the 30-day period after receipt of the notice or delivery. Earned
premium for the period of coverage for such time as the renewal contract
may have been in force, shall be calculated pro rata at the lower
of the current or previous year's rate. If the insured accepts the
renewal, the premium increase, if any, and other changes shall be
effective immediately following the prior policy's expiration or anniversary
date. This section does not apply if the change is a rate, form or
plan filed with the superintendent and applicable to the entire class
of business to which the policy belongs.
Sec. D-9. 24-A M.R.S.A. § 2917 is amended to read:
§ 2917. Notice of intent
No insurer shall fail to renew a policy except by notice to the insured
as provided in this subchapter. A notice of intention not to renew
shall not be effective unless received by the named insured at least
30 days prior to the expiration date of the policy. In
the event the policy provides automobile physical damage coverage,
like notice of intention not to renew must be given to any party named
in the loss payable clause. A post-office department certificate
of mailing to the named insured at his last known address shall be
conclusive proof of receipt on the 3rd calendar day after mailing.
The reason or reasons for the intended nonrenewal action shall accompany
the notice of intent not to renew and the reason or reasons shall
be explicit. Explanations such as "underwriting reasons,"
"underwriting experience," "loss record," "driving
experience," "credit report," and similar insurance
terms are not by themselves acceptable explanations of an insurer's
intended nonrenewal of an automobile insurance policy. A notice of
a right to apply for a hearing before the Superintendent of Insurance
within 30 days as provided herein shall accompany the notice of intent
not to renew.
This section shall not apply:
1. If the insurer has manifested its willingness
to renew;
2. If the insured fails to pay any premium due or
any advance premium required by the insurer for renewal.;
or
3. If the insurer has transferred
a policy to an affiliate. Prior to the date of renewal of a policy
that has been transferred by an insurer to an affiliate, the insured
must receive notice of any changes to the terms of the policy that
are less favorable to the insured.
Sec. D-10. 24-A M.R.S.A. § 3007, sub-§ 8
is amended to read:
8. This notice section
does not apply to any insurance policy that has not been previously
renewed if the policy has been in effect less than 60 days at the
time notice of cancellation is mailed or otherwise delivered, except
as provided in subsection 1, paragraph A and subsection 5, paragraphs
A and C. This section does not apply to any policy subject to the
Maine Property Insurance Cancellation Control Act, subchapter V. This
section does not apply to any policy issued pursuant to any assigned
risk plan. The superintendent may suspend, in whole or in part, the
applicability of this section to any insurer if, in the superintendent's
discretion, its application will endanger the ability of the insurer
to fulfill its contractual obligation.
Sec. D-11. 24-A M.R.S.A. § 3049, sub-§ 1
is amended to read:
§ 3049. Notice of cancellation; reasons
1. Nonpayment of premium, including nonpayment of
any additional premiums, calculated in accordance with the current
rating manuel manual
of the insurer, justified by a physical change in the insured property
or a change in its occupancy or use. No notice of cancellation for
nonpayment of premium shall be effective unless deemed received under
section 3050 after the premium due date;
Sec. D-12. 24-A M.R.S.A. § 3050 is amended to
read:
§ 3050. Delivery of notice
A notice of cancellation of a policy is not effective unless received
by the named insured at least 20 days prior to the effective date
of cancellation, or, when the cancellation is for nonpayment of premium,
at least 10 days prior to the effective date of cancellation. Like
notice must also be given to any party named as mortgagee on the policy.
A postal service certificate of mailing to the named insured
at the insured's last known address is conclusive proof of receipt
on the 5th calendar day after mailing.
Except for a policy that has been in effect for less than 60
90 days at the time notice of cancellation
is received by the named insured, the reason for cancellation must
accompany the notice, together with a notice of the right to apply
for a hearing before the Superintendent of Insurance within 30 days,
as provided in section 3054.
Prior to the date of renewal of a policy that has
been transferred by an insurer to an affiliate, the insured must receive
notice of any changes to the terms of the policy that are less favorable
to the insured.
Sec. D-13. 24-A M.R.S.A. § 3051 is amended to
read:
§ 3051 Notice of intent
An insurer may not fail to renew a policy except by notice to the
insured as provided in this subchapter. A notice of intention not
to renew is not effective unless received by the named insured at
least 30 days prior to the expiration date of the policy. Like
notice must also be given to any party named as mortgagee in the policy.
A post office certificate of mailing to the named insured at
the insured's last known address is conclusive proof of receipt on
the 3rd calendar day after mailing. The reason must accompany the
notice of intent not to renew, together with notification of the right
to apply for a hearing before the Superintendent of Insurance within
30 days as provided.
The reason or reasons for the intended nonrenewal action must accompany
the notice of intent not to renew and the reason or reasons must be
explicit. Explanations such as "underwriting reasons," "underwriting
experience," "loss record," "location of risk,"
"credit report" and similar insurance terms are not by themselves
acceptable explanations of an insurer's intended nonrenewal of a policy
insuring property of the kind defined in section 3048. The reason
for nonrenewal must be a good faith reason and related to the insurability
of the property or a ground for cancellation pursuant to section 3049.
This section does not apply:
1. If the insurer has manifested its willingness
to renew;
2. If the insured fails to pay any premium due or
any advance premium required by the insurer for renewal; or
3. If the insured insurer
has transferred a policy to an affiliate.
Prior to the date of renewal of a policy that has
been transferred by an insurer to an affiliate, the insured must receive
notice of any changes to the terms of the policy that are less favorable
to the insured.
SUMMARY
Part A corrects a redundancy made by prior revisions to the rate making
law.
Part B amends the rate filing law to require the Bureau to act on electronic
filings within 30 days.
Part C amends the Workers’ Compensation Rating Act by repealing
the statutes relating to the statistical advisory organization data
collection and reporting system and to collecting data evaluating the
costs and operation of the workers’ compensation benefit delivery
system.
Part D makes a variety of changes to the cancellation statutes. It
amends the definition of
“renewal” in the casualty insurance law by adding affiliate
language that the Legislature added to the property insurance law in
2005. It adds to the laws governing cancellation of commercial policies
covering physical damage the Automobile Cancellation Control Act requirement
that the loss payee receive notice of cancellation or nonrenewal. It
amends the Automobile Cancellation Control Act to correct a typographical
error in the definition of policies; to improve clarity by moving affiliate
language from the cancellation statute to the notice of intent not to
renew statute; and to clarify treatment of 6-month policies as if they
are annual policies for purposes of application of the control act.
Part D also amends several typographical errors in the property insurance
law. It also amends the Property Insurance Cancellation Control Act
to be consistent in excepting policies that have been in effect for
less than 90 days, to add to personal policies the requirement that
the mortgagee receive notice of cancellation, to move the affiliate
renewal language from the delivery of cancellation notice statute to
the notice of intent to the notice of intent to non-renew statute. Last,
Part D amends the casualty insurance law and the Cancellation Control
Acts to consider an offer of renewal under revised terms to be a policy
renewal and not a nonrenewal.
