HF 2527 (LSB 5545YH (4) 90)

HOUSE FILE 2527

BY  AMOS JR., GAINES, KRESSIG, CAHILL, FORBES, WILBURN, and ISENHART

A BILL FOR

An Act relating to pet insurance and pet wellness programs.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  515L.1  Definitions.
   1.  For purposes of this chapter:
   a.  “Chronic condition” means a condition that can be treated or managed, but not cured.
   b.  “Congenital anomaly or disorder” means a condition that is present from birth, whether inherited or caused by the environment, which may cause or contribute to illness or disease.
   c.  “Hereditary disorder” means an abnormality that is genetically transmitted from a parent to the parent’s offspring and that may cause or contribute to illness or disease.
   d.  “Insurance producer” or “producer” means a person licensed pursuant to chapter 522B and trained pursuant to section 515L.6 to sell, solicit, or negotiate pet insurance.
   e.  “Insurer” means an entity qualified and licensed by the insurance division to transact the business of pet insurance in this state.
   f.  “Orthopedic condition” means a condition that affects the bones, skeletal muscle, cartilage, tendons, ligaments, or joints of a pet. “Orthopedic condition” includes but is not limited to elbow dysplasia, hip dysplasia, intervertebral disc degeneration, patellar luxation, and ruptured cranial cruciate ligaments. “Orthopedic conditions” shall not include cancer or metabolic, hemopoietic, or autoimmune diseases.
   g.  “Pet insurance” means an insurance policy that provides coverage for accidents or illnesses of a pet.
   h.  “Preexisting condition” means a pet’s condition for which any of the following are true prior to the effective date of a pet insurance policy or during any waiting period:
   (1)  A veterinarian has provided medical advice regarding the condition.
   (2)  The pet has received previous treatment for the condition.
   (3)  Based on information from verifiable sources, the pet had signs or symptoms directly related to the condition for which a claim is being made. A condition for which coverage is afforded on a pet insurance policy shall not be considered a preexisting condition on any renewal of the pet insurance policy.
   i.  “Veterinarian” means a person licensed under chapter 169.
   j.  “Veterinary expenses” means any costs associated with medical advice, diagnosis, care, or treatment by a veterinarian, or the cost of prescription drugs prescribed by a veterinarian.
   k.  “Waiting period” means the period of time specified by a pet insurance policy that must transpire before some or all of the coverage under the pet insurance policy shall begin. “Waiting period” shall not apply to the renewal of a pet insurance policy.
   l.  “Wellness program” means a subscription or reimbursement-based program that provides goods and services to promote the general health, safety, or well-being of a pet. An entity that offers, promotes, or sells a wellness program to a resident of this state shall not engage in any activity that constitutes the business of insurance in this state.
   2.  The definitions in this section shall apply to the interpretation of any contract for pet insurance entered into in this state.
    Sec. 2.  NEW SECTION.  515L.2  Scope.
   This chapter shall apply to pet insurance policies that are delivered, issued for delivery, renewed, sold, solicited, negotiated, or offered in this state.
    Sec. 3.  NEW SECTION.  515L.3  Required disclosures.
   1.  Disclosures prior to entering into a contract.  An insurer shall disclose to a person prior to entering into a contract for pet insurance all of the following:
   a.  Whether the pet insurance policy excludes coverage due to any of the following:
   (1)  A preexisting condition.
   (2)  A hereditary disorder.
   (3)  A congenital anomaly or disorder.
   (4)  A chronic condition.
   b.  If the pet insurance policy includes any other exclusions, the pet insurance policy must include a statement that other exclusions may apply, and the applicant should refer to the exclusions section of the pet insurance policy for more information.
   c.  Any waiting period required by the pet insurance policy, any provisions that limit coverage during a waiting period, and any deductibles, coinsurance, or annual or lifetime policy limits.
   d.  Whether the pet insurer reduces coverage or increases premiums based on the policyholder’s claim history, the age of the covered pet, or a change in the geographic location of the policyholder.
   e.  Whether the underwriting company differs from the brand name used to market and sell the pet insurance.
   2.  Right to examine and return the policy.
   a.  Unless a pet insurance policyholder has filed a claim under a pet insurance policy, the policyholder shall maintain the right to examine and return the policy to the insurer within fifteen days of receipt and to have the policyholder’s premium refunded if, after examination of the policy, the policyholder is not satisfied for any reason.
   b.  A pet insurance policy shall contain a notice prominently printed on the first page of the policy, and on the first page of any certificates or riders, that includes specific instructions to complete a return.
   c.  A refund issued under paragraph “a” shall be paid to the policyholder within thirty calendar days after the insurer receives the returned policy.
   3.  Claim payments.  An insurer shall clearly disclose a summary description of the basis or formula on which the insurer determines claim payments under the insurer’s pet insurance policy within the pet insurance policy, prior to issuance of the pet insurance policy, and on the insurer’s internet site.
   4.  Benefit schedules.  If an insurer uses a benefit schedule to determine claim payments under a pet insurance policy, the insurer shall do all of the following:
   a.  Clearly disclose the applicable benefit schedule within the pet insurance policy.
   b.  Disclose all benefit schedules used by the insurer on the insurer’s internet site and on the insurer’s program administrator’s internet site, if applicable.
   5.  Usual and customary fees.  If an insurer determines claim payments under a pet insurance policy based on usual and customary fees, or any other reimbursement limitation based on prevailing veterinary service provider charges, the insurer shall do all of the following:
   a.  Include a usual and customary fee limitation provision in the pet insurance policy that clearly describes the insurer’s basis for determining usual and customary fees and how that basis is applied in calculating claim payments.
   b.  Disclose the insurer’s basis for determining usual and customary fees on the insurer’s internet site and on the insurer’s program administrator’s internet site, if applicable. 
   6.  Veterinary examinations.  If a medical examination by a veterinarian is required for coverage under a pet insurance policy, the insurer shall clearly disclose the required aspects of the examination, and whether documentation from the examination may result in a preexisting condition exclusion.
   7.  Internet site disclosures.  A pet insurer shall include a summary of all policy provisions required by subsections 1 through 6 in a separate document that is provided to all policyholders upon issuance of the pet insurance policy, and that may be accessed on the main page of the insurer’s internet site and on the insurer’s program administrator’s internet site, if applicable.
   8.  Disclosures upon issuance or delivery.  At the time a pet insurance policy is delivered or issued for delivery, an insurer shall provide a written disclosure to the policyholder that contains all of the following:
   a.  The mailing address, telephone number, and internet site of the department of insurance and financial services.
   b.  The address and customer service telephone number of the insurer, or of the agent or broker of record.
   c.  If the policy is issued or delivered by an agent or broker, a statement advising the policyholder to contact the agent or broker for assistance.
   d.  Any other disclosures required by law or rule.
    Sec. 4.  NEW SECTION.  515L.4  Policy conditions.
   1.  An insurer may issue a pet insurance policy that excludes coverage on the basis of a preexisting condition provided that the insurer complies with the disclosure requirement under section 515L.3, subsection 1, paragraph “a”. The pet insurer shall have the burden of proving that a preexisting condition exclusion applies to the condition for which a policyholder makes a claim.
   2.  a.  An insurer shall not issue a pet insurance policy that imposes any of the following:
   (1)  A waiting period for accidents.
   (2)  A waiting period upon effectuation of the policy that exceeds thirty calendar days for illnesses or orthopedic conditions not resulting from an accident.
   b.  If an insurer issues a pet insurance policy that imposes a waiting period, the insurer shall include a provision in the pet insurance policy allowing for waiver of the waiting period upon completion of a medical examination, paid for by the policyholder unless the pet insurance policy provides otherwise. An insurer may require a medical examination under this paragraph to be conducted by a veterinarian, may specify the elements to be included as part of an examination, and may require documentation of the medical examination. An insurer shall not specify elements to be included as part of the examination that unreasonably restrict a policyholder’s ability to waive a waiting period. 
   3.  An insurer shall not require a veterinary examination of a pet covered under a pet insurance policy as a condition for the renewal of the pet insurance policy.
   4.  Any prescriptive, wellness, or noninsurance benefits included in a pet insurance policy shall comply with all state insurance laws and rules.
    Sec. 5.  NEW SECTION.  515L.5  Wellness programs.
   1.  An insurer or a producer shall not do any of the following:
   a.  Require a person to participate, or to not participate, in a wellness program as a prerequisite to purchasing a pet insurance policy.
   b.  Market a wellness program as pet insurance.
   c.  Market a wellness program during the offer, sale, solicitation, or negotiation of pet insurance.
   2.  A wellness program sold by an insurer or a producer shall comply with all of the following:
   a.  The costs associated with the wellness program shall be separate and identifiable from any pet insurance policy sold by the insurer or a producer.
   b.  The terms and conditions for the wellness program shall be separate from any pet insurance policy sold by the insurer or a producer.
   c.  The products or coverages available through the wellness program shall not duplicate products or coverages available through a pet insurance policy sold by the insurer or producer.
   d.  The advertising of the wellness program shall not be misleading as to the nature of the wellness program.
   3.  An insurer or a producer that engages in the sale of a wellness program shall clearly disclose to a person prior to the person purchasing the wellness program all of the following:
   a.  A statement that a wellness program is not a pet insurance policy.
   b.  The mailing address, telephone number, and internet site of the department of insurance and financial services.
   c.  The address and customer service telephone number of the insurer, or of the producer, agent, or broker of record.
   d.  Any coverage included in a pet insurance contract that is described as wellness shall be considered insurance.
    Sec. 6.  NEW SECTION.  515L.6  Insurance producer training.
   1.  An insurance producer shall not sell, solicit, or negotiate pet insurance until the producer has completed training as required by this section and is licensed under chapter 522B.
   2.  An insurer shall require that the insurer’s insurance producers are trained as required by this section and have been trained on the coverages and conditions of all pet insurance policies offered by the insurer.
   3.  Training for insurance producers shall include information on all of the following topics:
   a.  Preexisting conditions, hereditary disorders, congenital anomalies or disorders, and chronic conditions in pets, and applicable pet insurance coverages.
   b.  Waiting periods required by pet insurance policies, if any.
   c.  Rating, underwriting, renewal, and other related administrative topics as it relates to pet insurance.
    Sec. 7.  NEW SECTION.  515L.7  Rules.
   The commissioner of insurance may adopt rules pursuant to chapter 17A to administer this chapter.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to pet insurance policies and wellness programs.
   The bill applies to pet insurance policies (policies) that are delivered, issued for delivery, renewed, sold, solicited, negotiated, or offered in this state. Prior to entering into a contract for pet insurance, an insurer shall disclose to a person whether the policy excludes coverage due to a preexisting condition, a hereditary disorder, a congenital anomaly or disorder, a chronic condition, or any other exclusions. Prior to entering into a contract for pet insurance, an insurer shall also disclose to a person any waiting period required by the policy and any limitation on coverage during a waiting period. In addition, the insurer must disclose whether the pet insurer reduces coverage or increases premiums based on the policyholder’s claim history, the age of the covered pet, or a change in the geographic location of the policyholder, and whether the underwriting company differs from the brand name used to market and sell the pet insurance product. “Chronic condition”, “congenital anomaly or disorder”, “hereditary disorder”, “insurer”, “pet insurance”, “preexisting condition”, and “waiting period” are defined in the bill.
   Under the bill, unless a pet insurance policyholder has filed a claim under a policy, the policyholder shall maintain the right to examine and return the policy to the insurer within 15 days of receipt, and to have the policyholder’s premium refunded if the policyholder is not satisfied for any reason. A policy shall contain a notice that includes specific instructions to complete a return, and any refund issued to a policyholder shall be paid within 30 days after the insurer receives the returned policy.
   The bill requires an insurer to clearly disclose prior to issuance of a policy, and on the insurer’s internet site, a summary description of the basis or formula on which the insurer determines claim payments under the policy. An insurer shall also disclose within a policy, and on the insurer’s internet site, a benefit schedule if the insurer uses a benefit schedule to determine claim payments under a policy, and a usual and customary fee limitation provision if the insurer determines claim payments under a policy based on usual and customary fees or any other reimbursement limitation based on prevailing veterinary service provider charges. The bill requires an insurer to clearly disclose whether a medical examination by a veterinarian is required for coverage under a policy, the required aspects of the examination, and whether documentation from the examination may result in a preexisting condition exclusion.
   A pet insurer shall include a summary of all disclosures required by the bill in a separate document that is provided to all policyholders upon issuance of a policy, and that may be accessed on the main page of the insurer’s internet site.
   At the time a pet insurance policy is delivered or issued for delivery, an insurer shall provide a written disclosure to the policyholder that contains the mailing address, telephone number, and internet site of the department of insurance and financial services, the address and customer service telephone number of the insurer or of the agent or broker of record, and, if the policy is issued or delivered by an agent or broker, a statement advising the policyholder to contact the agent or broker for assistance.
   Under the bill, an insurer may issue a policy that excludes coverage on the basis of a preexisting condition provided that the insurer complies with the disclosure requirements. The bill prohibits an insurer from issuing a policy that imposes a waiting period that exceeds 30 calendar days for illnesses or orthopedic conditions not resulting from an accident, or any waiting period for accidents. If an insurer issues a pet insurance policy that imposes a waiting period, the insurer shall include a provision in the pet insurance policy allowing for waiver of the waiting period upon completion of a medical examination pursuant to the requirements in the bill.
   The bill prohibits an insurer from requiring a veterinary examination of a pet covered under a policy as a condition for the renewal of the policy. The bill requires any prescriptive, wellness, or noninsurance benefits included in a policy to comply with all state insurance laws. The bill prohibits an insurer from requiring a person to participate, or not to participate, in a wellness program as a prerequisite to purchasing a policy. “Wellness program” is defined in the bill.
   The bill prohibits an insurer from marketing a wellness program as pet insurance, or marketing a wellness program during the sale, solicitation, or negotiation of pet insurance. A wellness program sold by an insurer shall keep the costs associated with the wellness program separate and identifiable from any policy sold by the insurer, the terms and conditions for the wellness program shall be separate from any policy sold by the insurer, the products or coverages available through the wellness program shall not duplicate products or coverages available through a policy, and the advertising of the wellness program shall not be misleading as to the nature of the wellness program. An insurer that engages in the sale of a wellness program shall clearly disclose to a person prior to purchasing the wellness program a statement that a wellness program is not an insurance policy, the mailing address, telephone number, and internet site of the department of insurance and financial services, the address and customer service telephone number of the insurer or of the agent or broker of record, and a disclosure that coverages included in the pet insurance contract that are described as wellness shall be considered insurance.
   The bill prohibits an insurance producer from selling, soliciting, or negotiating a pet insurance product until after the insurance producer is licensed as an insurance producer and has completed training as required by the bill. “Insurance producer” is defined in the bill. An insurer shall require that insurance producers are trained according to the requirements detailed in the bill, and require that they have also been trained on the coverages and conditions of the insurer’s policies. 
   The commissioner of insurance may adopt rules to administer the bill.