054.00.4-3. RELATIONS WITH POLICYHOLDERS
AR ADC 054.00.4-3Arkansas Administrative Code
Ark. Admin. Code 054.00.4-3
054.00.4-3. RELATIONS WITH POLICYHOLDERS
A. Sections 66-3608 through 66-3612 of the Arkansas Insurance Code set forth the required individual policy provisions dealing with notice of claim, claim forms, proofs of loss, time of payment of claims and payment of claims. The provisions are clear as to the rights, duties and responsibilities of both insured and insurer in regard to the manner in which claims are to be submitted and administered. The provisions carry with them, however, the additional responsibility of the insurer to take prompt action upon receipt of any notice, inquiry or request of the insured concerning the submission of a claim for benefits under a policy. Lax and inefficient claims administration by any insurer licensed to the business in this State is not in the public interest. Any such procedures and undue delays in the settling of claims will be investigated thoroughly by this Department and appropriate disciplinary action will be taken where warranted.
B. In order that residents of this State who purchase Individual Accident and Sickness insurance may realize more the importance of the application for insurance, no policy of such insurance, when an application containing questions relating to the medical history of the person or persons to be insured is attached thereto and made a part of the policy, shall be delivered or issued for delivery to any person in this State unless the insurer follows one of the procedures outlined below:
Procedure No. 1 A statement in the form of a sticker shall be placed on the policy and printed in a prominent manner or on paper or in ink of a contrasting color. The statement shall contain a caption and shall read substantially as follows:
IMPORTANT NOTICE
Please read the copy of the application attached to this policy. Carefully check the application and write to the company ..........(Address) .......... within 10 days if any information shown on it is not correct and complete, or if any past medical history has been left out of the application. This application is part of the policy and the policy was issued on the basis that the answers to all questions and the information shown on the application are correct and complete.
Procedure No. 2 In lieu of Procedure No. 1, an insurer may use the method of sending the policyholder, attached to the fact page of the policy, the type of letter used by many insurers welcoming the policyholder as a new policyholder. Such a Policyholder Welcoming Letter shall contain the substance of the statement contained in Procedure No. 1 directing the attention of the insured to the answers to the questions. If Procedure No. 2 is the procedure used to comply with this regulation, the Welcoming Letter shall not be separated from the policy form when the policy is delivered personally by the agent or when the insurer sends the policy to the agent for mailing by the agent to the insured.
Procedure No. 3 In lieu of either Procedure No. 1 or Procedure No. 2., the insurer may elect to use the method of sending a letter and a photostatic copy of the application to the insured within a specified period of time from the date of delivery of the policy, such as 10 days, with a request the insured review the photostatic copy of the application, and suggesting the insured notify the insurer within 10 days if there is any error or mistake in the answers to the questions.
Other Methods of Procedure Insurers may design methods of procedure other than the three procedures outlined above if the method is designed to achieve a similar result, especially if such procedures are designed to be used with electronic data processing equipment. Insurers shall notify this Department of the procedure they will adopt in order to comply with this regulation. If the procedure designed by a company is a procedure other than the three procedures outlined above, such a procedure shall be submitted to the Department for authorization of use of such a method of procedure prior to use.
Processing of Responses Responses received from the policyholder to any procedure used by the insurer under the provisions of this regulation shall not be considered as constituting an amendment to the application form attached to the policy form. Responses which indicate the answers to one or more important questions are incorrect (an important question in the application is a question which relates to the acceptance of the risk or hazard assumed by the insurer), shall be processed by the insurer in a manner which develops corrective procedure.
1. In order to further prevent frauds, misrepresentations, sales of unnecessary insurance, and high pressure sales tactics involving senior citizens, no agent shall under any circumstances collect more than 5 per cent of the premium with the application for the period covered by the policy and this under no circumstances shall be kept by the agent but shall be immediately remitted to the company. Upon issuance of the policy by the company and delivery of this policy together with the application to the applicant either by agent or by mail, the company may then determine what period of time the applicant shall have within which to forward the remaining 95 per cent of the premium. With reference to solicitations by mail, no company shall accept more than 5 per cent of the total premium with the application, the balance to be remitted when the policy is delivered.
2. In lieu of the requirement contained in paragraph C-l, an insurer may, with the approval of the Commissioner, use a procedure providing for a Ten Day Right of Examination of such policies. Such procedure shall provide that the policy shall have printed thereon, or attached thereto, a notice stating in substance that the person to whom the policy is issued shall be permitted to return the policy within ten days of its delivery to said person and to have the premium paid refunded if, after examination of the policy, the person is not satisfied with it for any reason. If a policyholder, pursuant to such notice, returns the policy to the company at its home or branch office or to the agent through whom it waspurchased, it shall be void from the beginning and the parties shall be in the same position as if no policy had been issued.
The procedure set forth in this paragraph shall be filed with and approved by the Commissioner. Such filing shall contain an explanation that it is intended to be used in lieu of the requirement set forth in paragraph C-l.
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 054.00.4-3, AR ADC 054.00.4-3
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