PRIOR PRINTER'S NO. 323 PRINTER'S NO. 1792
No. 296 Session of 1993
INTRODUCED BY LESCOVITZ, LaGROTTA, OLASZ AND GEIST,
FEBRUARY 8, 1993
AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, MAY 5, 1993
AN ACT
1 Amending the act of May 11, 1949 (P.L.1210, No.367), entitled
2 "An act relating to group life insurance; describing
3 permitted policies and restrictions thereon, the premium
4 basis thereof and rights thereunder; limiting the amount of
5 such insurance; prescribing standard policy provisions; and
6 requiring notice of conversion privileges," further providing
7 for types of policies, for policies issued to employers or
8 trustees of employer funds, for policies issued to creditors,
9 for policies issued to unions and for policies issued to
10 trustees of joint funds; and providing for policies issued to
11 associations.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 1(4) and (7) of the act of May 11, 1949
15 (P.L.1210, No.367), referred to as the Group Life Insurance
16 Policy Law, added October 5, 1978 (P.L.1059, No.247), are
17 amended and the section is amended by adding clauses to read:
18 Section 1. Types Permitted.--No policy of group life
19 insurance shall be delivered in this State unless it conforms to
20 one of the following descriptions and to the requirements as to
21 each set forth in sections two, three, four and five of this
1 act.
2 * * *
3 (4) A policy issued to the trustees of a fund established by
4 an insurer for two or more employers [in the same industry] or <--
5 by two or more employers in the same industry or by an insurer <--
6 for one or more labor unions, or by one or more labor unions or
7 by an insurer for one or more employers and one or more labor
8 unions or by one or more employers and one or more labor unions
9 or by an insurer for one or more associations meeting the
10 qualifications as defined in clause (5.1) or by one or more
11 associations meeting the qualifications as defined in clause
12 (5.1), which trustees shall be deemed the policyholder, to
13 insure employes of the employers or members of the unions or the
14 association for the benefit of persons other than the employers
15 or the unions or members, employes thereof, and employes of the
16 associations for the benefit of persons other than the employers
17 or the unions or the associations.
18 * * *
19 (5.1) A policy issued to an association, which shall have a
20 constitution and bylaws and which has been organized by other
21 than an insurer, is maintained in good faith for purposes other
22 than that of obtaining insurance, has been in active existence
23 for at least two years, operates from offices other than the
24 insurer's and is controlled by principals other than the
25 insurer's.
26 (5.2) A policy issued to a group, other than one described
27 in clauses (1) through (5.1), and under which the Insurance
28 Commissioner finds that:
29 (i) the issuance of the group policy is not contrary to the
30 best interest of the public;
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1 (ii) the issuance of the group policy would result in
2 economies of acquisition or administration; and
3 (iii) the benefits are reasonable in relation to the
4 premiums charged.
5 * * *
6 (7) A policy issued in accordance with clause (1), (3), (4)
7 [or (5)], (5) or (5.1) may include provisions for the payment by
8 the insurer of life insurance benefits upon the death of the
9 spouse of the insured employe or member, and upon the death of
10 one or more of his or her children dependent upon him or her for
11 support and maintenance.[: Provided, however, That such <--
12 insurance upon the life of the spouse shall not exceed ten
13 thousand dollars ($10,000) or one-half of the amount of
14 insurance on the life of the insured employe or member as
15 provided in such policy, whichever is less, and such insurance
16 upon the life of each dependent child shall not exceed five
17 thousand dollars ($5,000) or one-third of the amount of
18 insurance on the life of the insured employe or member as
19 provided in such policy, whichever is less.] <--
20 Section 2. Section 2(2) and (4) of the act, amended March
21 23, 1972 (P.L.144, No.53), are amended to read:
22 Section 2. Policies Issued to Employers or Trustees of
23 Employer Funds.--A policy issued to an employer, or to the
24 trustees of a fund established by an employer, to insure
25 employes of the employer for the benefit of persons other than
26 the employer shall be subject to the following requirements:
27 * * *
28 (2) The premium for the policy shall be paid by the
29 policyholder, either wholly OR PARTIALLY from the employer's <--
30 funds or funds contributed by him, or [partly from such funds
19930H0296B1792 - 3 -
1 and partly from funds contributed by the insured employes. No
2 policy may be issued on which the entire premium is to be
3 derived from funds contributed by the insured employes] wholly
4 OR PARTIALLY from funds contributed by the insured employes or <--
5 from both. [A policy on which part of the premium is to be <--
6 derived from funds contributed by the insured employes may be
7 placed in force only if at least [seventy-five] fifty per cent <--
8 of the then eligible employes, excluding any as to whom evidence
9 of individual insurability is not satisfactory to the insurer,
10 elect to make the required contributions.] A policy on which no <--
11 part of the premium is to be derived from funds contributed by
12 the insured employes must insure all eligible employes, or all
13 except any as to whom evidence of individual insurability is not
14 satisfactory to the insurer.
15 * * *
16 [(4) The amounts of insurance under the policy must be based
17 upon some plan precluding individual selection either by the
18 employes or by the employer or trustees.]
19 Section 3. Section 3(2), (3) and (4) of the act, amended
20 July 11, 1991 (P.L.86, No.19), are amended to read:
21 Section 3. Policies Issued to Creditors.--A policy issued to
22 a creditor to insure debtors of the creditor shall be subject to
23 the following requirements:
24 * * *
25 (2) The premium for the policy shall be paid by the
26 policyholder, either from the creditor's funds, or from charges
27 collected from the insured debtors, or from both. [A policy on
28 which part or all of the premium is to be derived from the
29 collection from the insured debtors of identifiable charges not
30 required of uninsured debtors shall not include, in the class or
19930H0296B1792 - 4 -
1 classes of debtors eligible for insurance, debtors under
2 obligations outstanding at its date of issue without evidence of
3 individual insurability unless at least seventy-five per cent of
4 the then eligible debtors elect to pay the required charges.] A
5 policy on which no part of the premium is to be derived from the
6 collection of such identifiable charges must insure all eligible
7 debtors, or all except any as to whom evidence of individual
8 insurability is not satisfactory to the insurer.
9 [(3) The policy may be issued only if the group of eligible
10 debtors is then receiving new entrants at the rate of at least
11 one hundred persons yearly, or may reasonably be expected to
12 receive at least one hundred new entrants during the first
13 policy year, and only if the policy reserves to the insurer the
14 right to require evidence of individual insurability if less
15 than seventy-five per cent of the new entrants become insured.]
16 (4) The amount of insurance on the life of any debtor shall
17 at no time exceed the amount owed by him which is repayable in
18 instalments to the creditor[, or one hundred thousand dollars <--
19 ($100,000) whichever is less]. <--
20 * * *
21 Section 4. Section 4(2) and (4) of the act, amended July 31,
22 1968 (P.L.939, No.287) and March 23, 1972 (P.L.144, No.53), are
23 amended to read:
24 Section 4. Policies Issued to Labor Unions, Credit Unions,
25 Police Fraternities, Firemen's Fraternities or Teachers'
26 Associations or Federations.--A policy issued to a labor union,
27 a credit union, a police fraternity, a firemen's fraternity or a
28 teachers' association or federation, to insure members of such
29 union, fraternity, association or federation for the benefit of
30 persons other than the union, fraternity or federation or any of
19930H0296B1792 - 5 -
1 its officials, representatives or agents, shall be subject to
2 the following requirements:
3 * * *
4 (2) The premium for the policy shall be paid by the
5 policyholder, either wholly OR PARTIALLY from the union's funds, <--
6 the fraternity's funds, association's funds or federation's
7 funds, or [partly from such funds and partly from funds
8 contributed by the insured members specifically for their
9 insurance. No policy may be issued on which the entire premium
10 is to be derived from funds contributed by the insured members
11 specifically for their insurance. A policy on which part of the
12 premium is to be derived from funds contributed by the insured
13 members specifically for their insurance may be placed in force
14 only if at least seventy-five per cent of the then eligible
15 members, excluding any as to whom evidence of individual
16 insurability is not satisfactory to the insurer, elect to make
17 the required contributions.] wholly OR PARTIALLY from funds <--
18 contributed by the insured members or from both. A policy on <--
19 which no part of the premium is to be derived from funds
20 contributed by the insured members specifically for their
21 insurance must insure all eligible members, or all except any as
22 to whom evidence of individual insurability is not satisfactory
23 to the insurer.
24 * * *
25 [(4) The amounts of insurance under the policy must be based
26 upon some plan precluding individual selection either by the
27 members or by the union, fraternity, association or federation.]
28 Section 5. Section 5 of the act, amended March 23, 1972
29 (P.L.144, No.53) and December 10, 1974 (P.L.901, No.296), is
30 amended to read:
19930H0296B1792 - 6 -
1 Section 5. Policies Issued to Trustees of Joint Funds.--A
2 policy issued to the trustees of a fund established by an
3 insurer for two or more employers [in the same industry] or by <--
4 two or more employers in the same industry or by an insurer for <--
5 one or more labor unions, or by one or more labor unions or by
6 an insurer for one or more employers and one or more labor
7 unions, or by one or more employers and one or more labor unions
8 or by an insurer for one or more associations meeting the
9 qualifications as defined in clause (5.1) of section 1, or by
10 one or more associations meeting the qualifications as defined
11 in clause (5.1) of section 1, to insure employes of the
12 employers or members of the unions or members, employes thereof,
13 and employes of the associations for the benefit of persons
14 other than the employers or the unions, or the associations,
15 shall be subject to the following requirements:
16 (1) The persons eligible for insurance shall be all of the
17 employes of the employers or all of the members of the unions,
18 or members, employes of unions, and employes of the associations
19 or all of any class or classes thereof determined by conditions
20 pertaining to their employment, or to membership in the unions
21 or associations, or to both. The policy may provide that the
22 term "employes" shall include retired employes, and the
23 individual proprietor or partners if an employer is an
24 individual proprietor or a partnership. The policy may provide
25 that the term "employes" shall include the trustees or their
26 employes, or both, if their duties are principally connected
27 with such trusteeship.
28 (2) The premium for the policy shall be paid by the trustees
29 wholly from funds contributed by the employer or employers of
30 the insured persons, or by the union or unions, or by the
19930H0296B1792 - 7 -
1 associations, or by both, or partly from such funds and partly
2 from funds contributed by the insured persons. [A policy on
3 which part of the premium is to be derived from funds
4 contributed by the insured persons specifically for their
5 insurance may be placed in force only if at least seventy-five
6 per cent of the then eligible persons, excluding any as to whom
7 evidence of insurability is not satisfactory to the insurer,
8 elect to make the required contributions.] A policy on which no
9 part of the premium is to be derived from funds contributed by
10 the insured persons specifically for their insurance must insure
11 all eligible persons, or all except any as to whom evidence of
12 individual insurability is not satisfactory to the insurer.
13 [(3) The policy must cover at date of issue at least one
14 hundred persons and not less than an average of five persons per
15 employer unit; and if the fund is established by the members of
16 an association of employers the policy may be issued only if (i)
17 either (a) the participating employers constitute at date of
18 issue at least sixty per cent of those employer members whose
19 employes are not already covered for group life insurance or (b)
20 the total number of persons covered at date of issue exceeds six
21 hundred; and (ii) the policy shall not require that, if a
22 participating employer discontinues membership in the
23 association, the insurance of his employes shall cease solely by
24 reason of such discontinuance.
25 (4) The amounts of insurance under the policy must be based
26 upon some plan precluding individual selection either by the
27 insured persons or by the policyholder, employers, or unions.]
28 Section 6. The act is amended by adding sections to read:
29 Section 5.1. Policies Issued to Associations.--A policy
30 issued to an association, which shall have a constitution and
19930H0296B1792 - 8 -
1 bylaws and which has been organized by other than an insurer, is
2 maintained in good faith for purposes other than that of
3 obtaining insurance, has been in active existence for at least
4 two years, operates from offices other than the insurer's and is
5 controlled by principals other than the insurer's, shall be
6 subject to the following requirements:
7 (1) The persons eligible for insurance shall be all of the
8 members of the association, employes of the association, or
9 employes of members of the preceding or all of any class or
10 classes for the benefit of persons other than the association.
11 (2) The premium for the policy shall be paid by the policy
12 holder either wholly from funds contributed by the association
13 or by employer members, or by both, or wholly from funds
14 contributed by the insured persons or partly from funds
15 contributed by the insured persons and partly from funds
16 contributed by the association or employer member. A policy on
17 which no part of the premium is to be derived from funds
18 contributed by the insured persons must insure all eligible
19 persons, or all eligible persons except any eligible person as
20 to whom evidence of individual insurability is not satisfactory
21 to the insurer.
22 (3) At the date of issue, the policy must cover at least 25 <--
23 members, employes, or employes of members.
24 Section 5.2. Policies Issued to Other Groups.--A policy
25 issued to a group, other than one described in clauses (1)
26 through (5.1) of section 1, and which meets the requirements of
27 clause (5.2) of section 1, shall also meet the requirements of
28 this section. The premium for the policy shall be paid by the
29 policyholder either wholly from the policyholder's funds or
30 funds contributed by the policyholder, or wholly from funds
19930H0296B1792 - 9 -
1 contributed by the insured persons, or both. A policy on which
2 no part of the premium is to be derived from funds contributed
3 by the insured persons must insure all eligible persons, or all
4 eligible persons except any eligible persons as to whom evidence
5 of individual insurability is not satisfactory to the insurer.
6 Section 7.2. Out-of-State Coverage.--(a) No insurer shall
7 issue in this Commonwealth group life insurance coverage
8 provided under a group policy issued in another state or deliver
9 or issue for delivery in this Commonwealth a certificate of
10 group life insurance evidencing coverage under a group policy
11 issued in another state unless the coverage is in compliance <--
12 with the requirements of this act or any other applicable act.
13 The UNLESS: <--
14 (1) SUCH COVERAGE IS IN COMPLIANCE WITH THE REQUIREMENTS OF
15 THIS ACT AND ANY OTHER APPLICABLE ACT; OR
16 (2) FOR COVERAGE UNDER A GROUP POLICY OR A CERTIFICATE
17 EVIDENCING COVERAGE UNDER A GROUP POLICY ISSUED TO AN OUT-OF-
18 STATE TRUSTEE OF A FUND, SUCH COVERAGE IS ISSUED IN ANOTHER
19 STATE WHEREIN THE INSURANCE SUPERVISORY OFFICIAL OR AGENCY OF
20 THAT STATE HAS DETERMINED THAT THE ISSUANCE OF THE GROUP POLICY
21 OR CERTIFICATE IS NOT CONTRARY TO THE BEST INTERESTS OF THE
22 GENERAL PUBLIC, THE ISSUANCE OF THE GROUP POLICY OR CERTIFICATE
23 WOULD RESULT IN ECONOMIES OF ACQUISITION OR ADMINISTRATION AND
24 THE BENEFITS ARE REASONABLE IN RELATION TO THE PREMIUM CHARGED.
25 IF COVERAGE OR A CERTIFICATE IS ISSUED IN THIS COMMONWEALTH
26 PURSUANT TO THIS CLAUSE, AN INSURER SHALL FILE WITH THE
27 INSURANCE DEPARTMENT A COPY OF THE GROUP POLICY AND CERTIFICATE,
28 A COPY OF THE STATUTE FROM THE STATE IN WHICH THE GROUP POLICY
29 OR CERTIFICATE IS ISSUED AUTHORIZING THE ISSUANCE OF THE GROUP
30 POLICY OR CERTIFICATE, EVIDENCE OF APPROVAL IN THE STATE WHERE
19930H0296B1792 - 10 -
1 THE POLICY OR CERTIFICATE IS ISSUED AND COPIES OF ALL SUPPORTIVE
2 MATERIAL USED BY THE COMPANY TO SECURE APPROVAL OF THE GROUP
3 POLICY OR CERTIFICATE IN THAT STATE, INCLUDING ALL THE
4 DOCUMENTATION REQUIRED IN THIS CLAUSE. THE INSURANCE
5 COMMISSIONER, AT ANY TIME SUBSEQUENT TO RECEIPT OF SUCH
6 INFORMATION, AFTER FINDING THAT THE STANDARDS OF THIS CLAUSE
7 HAVE NOT BEEN MET, MAY ORDER THE INSURER TO STOP MARKETING SUCH
8 COVERAGE IN THIS COMMONWEALTH.
9 (I) THIS CLAUSE SHALL APPLY TO ANY GROUP POLICY OR
10 CERTIFICATE EVIDENCING COVERAGE UNDER A GROUP POLICY ISSUED TO
11 ANY ORGANIZATION, OR TO ANY TRUST OR TRUSTEE OF A TRUST
12 ESTABLISHED OR PARTICIPATED IN BY ONE OR MORE ORGANIZATIONS, TO
13 INSURE CERTAIN PERSONS: PROVIDED, HOWEVER, THAT THE ORGANIZATION
14 MUST BE:
15 (A) A BANK, RETAILER OR OTHER ISSUER OF A CREDIT CARD,
16 CHARGE CARD OR PAYMENT CARD THAT IS ISSUED TO BUY GOODS OR
17 SERVICES, AND THE POLICY MUST INSURE HOLDERS OF THAT CARD; OR
18 (B) A BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION,
19 MUTUAL FUND, MONEY MARKET FUND, STOCK BROKER OR OTHER SIMILAR
20 FINANCIAL INSTITUTION REGULATED BY STATE OR FEDERAL LAW, AND THE
21 POLICY MUST INSURE THE DEPOSITORS, ACCOUNT HOLDERS OR MEMBERS OF
22 THAT INSTITUTION.
23 (II) THIS CLAUSE SHALL NOT APPLY TO ANY GROUP POLICY OR
24 CERTIFICATE PROVIDING CREDIT LIFE INSURANCE AS DEFINED IN THE
25 ACT OF SEPTEMBER 2, 1961 (P.L.1232, NO.540), KNOWN AS THE "MODEL
26 ACT FOR THE REGULATION OF CREDIT LIFE INSURANCE AND CREDIT
27 ACCIDENT AND HEALTH INSURANCE."
28 (B) THE provisions of this act shall not apply if a group
29 policy is issued to:
30 (1) An out-of-State trustee of a fund where Commonwealth <--
19930H0296B1792 - 11 -
1 residents shall not at any time comprise twenty-five per cent or
2 more of the total certificate holders, or where Commonwealth
3 residents shall not at any time comprise the largest share of
4 the total certificate holders, whichever is less.
5 (2) (1) An out-of-State single employer. <--
6 (3) (2) A trustee of a fund established by any person acting <--
7 directly as an employer having its principal office located in a
8 state other than the Commonwealth of Pennsylvania.
9 (4) An association, organized or domiciled in a state other <--
10 than the Commonwealth of Pennsylvania, which has a constitution
11 and bylaws, has been organized by other than an insurer, is
12 maintained in good faith for purposes other than that of
13 obtaining insurance, has been in active existence for a least
14 two years, operates from offices other than the insurer's, and
15 is controlled by principals other than the insurer's.
16 (3) AN ASSOCIATION, OR A TRUST OR TRUSTEE OF A TRUST <--
17 ESTABLISHED OR PARTICIPATED IN BY ONE OR MORE ASSOCIATIONS, TO
18 INSURE ASSOCIATION MEMBERS OR SPOUSES OR DEPENDENTS OF MEMBERS:
19 PROVIDED, HOWEVER, THAT THE ASSOCIATION MUST BE ORGANIZED OR
20 DOMICILED IN A STATE OTHER THAN THIS COMMONWEALTH, HAVE A
21 CONSTITUTION AND BYLAWS, BE ORGANIZED BY OTHER THAN AN INSURER,
22 BE MAINTAINED IN GOOD FAITH FOR PURPOSES OTHER THAN THOSE OF
23 OBTAINING INSURANCE, HAVE BEEN IN ACTIVE EXISTENCE FOR AT LEAST
24 TWO YEARS, OPERATE FROM OFFICES OTHER THAN THE INSURER'S AND BE
25 CONTROLLED BY PRINCIPALS OTHER THAN THE INSURER'S.
26 (5) (4) A union-negotiated out-of-State trust. <--
27 (6) (5) Other groups as may be determined discretionally by <--
28 the Insurance Commissioner, SUBJECT TO SUBSECTION (A). <--
29 (b) (1) Clause (1) of subsection (a) shall apply only if <--
30 the insurer supplies to the Insurance Commissioner certification
19930H0296B1792 - 12 -
1 as to its insured trusts and, for each trust, the percentage of
2 Commonwealth certificate holders or the number of Commonwealth
3 certificate holders compared to the total number of certificate
4 holders.
5 (2) The initial certification shall be supplied no later
6 than the effective date of this section, and thereafter, no
7 later than by March 1 of each year. The certification shall be
8 filed along with the annual statement but shall not be made a
9 part of the annual statement.
10 (c) (1) All FOR GROUP LIFE INSURANCE COVERAGE PROVIDED IN <--
11 THIS COMMONWEALTH UNDER A GROUP POLICY ISSUED IN ANOTHER STATE,
12 AND EXCEPT AS PROVIDED IN CLAUSE (2) OF SUBSECTION (A) AND
13 SUBSECTION (B), ALL group policies, certificates, amendments,
14 endorsements and enrollment forms shall be filed with the
15 Insurance Commissioner for approval. The insurer shall also file
16 with the Insurance Commissioner evidence of approval in the
17 state where the group policy is issued.
18 (2) Forms so filed for approval shall be deemed approved at <--
19 the expiration of sixty days after filing, unless earlier
20 approved or disapproved by the Insurance Commissioner. The
21 Insurance Commissioner, by written notice to the insurer, may
22 within the sixty-day period extend the period for approval or
23 disapproval for an additional sixty days.
24 (3) An approval shall become void upon any subsequent notice
25 of disapproval from the Insurance Commissioner, or upon any
26 subsequent withdrawal of license or refusal of the Insurance
27 Commissioner to relicense any company, association, or exchange,
28 or upon the subsequent passage of an act which would no longer
29 make group policies a fit subject for approval, except that this
30 provision shall not affect previously issued contracts.
19930H0296B1792 - 13 -
1 (4) Upon any disapproval, the Insurance Commissioner shall
2 notify the insurer in writing, specifying the reason for
3 disapproval; and within thirty days from the date of mailing of
4 the notice to the insurer, the insurer may make written
5 application to the Insurance Commissioner for a hearing on the
6 disapproval. The hearing shall be scheduled within a reasonable
7 period of time following receipt of the application. The
8 procedure before the Insurance Commissioner shall be in
9 accordance with 2 Pa.C.S. (relating to administrative law and
10 procedure) and the insurer shall be entitled to the judicial
11 review as provided for in that title.
12 (5) Upon satisfactory evidence of the violation of this
13 section by any person, corporation, insurance company, exchange,
14 order or society, the Insurance Commissioner may discretionally
15 pursue any one or more of the following courses of action:
16 (i) Suspend or revoke the license of the offending person,
17 corporation, insurance company, exchange, order or society.
18 (ii) Refuse, for a period not to exceed the year thereafter,
19 to issue a new license to the person, corporation, insurance
20 company, exchange, order or society.
21 (iii) Impose a civil penalty of not more than one thousand
22 dollars ($1,000) for each violation of this subsection.
23 (2) FORMS SO FILED FOR APPROVAL SHALL BE SUBJECT TO THE <--
24 PROVISIONS OF SECTION 354 OF THE ACT OF MAY 17, 1921 (P.L.682,
25 NO.284), KNOWN AS "THE INSURANCE COMPANY LAW OF 1921."
26 (d) As used in this section, the term "out-of-State single
27 employer" means any person acting directly as an employer and
28 having its principal office located in a state other than the
29 Commonwealth of Pennsylvania. "Out-of-State trustee of a fund"
30 means a trustee of a fund established by an insurer for an <--
19930H0296B1792 - 14 -
1 employer TWO OR MORE EMPLOYERS or established by two or more <--
2 persons acting directly as employers in the same industry and <--
3 which has its principal office located in a state other than the
4 Commonwealth of Pennsylvania. "Out-of-State coverage" means
5 insurance coverage issued in the Commonwealth of Pennsylvania
6 and provided under a group policy issued in a state other than
7 the Commonwealth of Pennsylvania. A "union-negotiated out-of-
8 State trust" means a trust established under a collective
9 bargaining agreement and which is located in a state other than
10 this Commonwealth.
11 Section 7.3. Notice of Compensation.--(a) In the case of a
12 policy issued TO A GROUP DESCRIBED IN CLAUSE (5.1) OR (5.2) OF <--
13 SECTION 1 on a group basis, if compensation of any kind will or
14 may be paid to a policyholder or sponsoring or endorsing entity,
15 the insurer shall cause to be distributed to prospective
16 insureds a written notice that compensation will or may be paid.
17 (b) The notice shall be distributed:
18 (1) whether compensation is direct or indirect; and
19 (2) whether the compensation is paid to or retained by the
20 policyholder or sponsoring or endorsing entity, or paid to or
21 retained by a third party at the direction of the policy holder
22 or sponsoring or endorsing entity, or any entity affiliated with
23 a sponsoring or endorsing entity by way of ownership, contract,
24 or employment.
25 (c) The notice required by this section shall be placed on
26 or accompany any application or enrollment form provided to
27 prospective insureds.
28 (d) As used in this section, a "sponsoring or endorsing
29 entity" means an organization which has arranged for the
30 offering of a program of insurance in a manner which
19930H0296B1792 - 15 -
1 communicates that eligibility for participation in the program
2 is dependent upon affiliation with the organization or which
3 encourages participation in the program.
4 Section 7. Section 8 of the act is repealed.
5 Section 8. The act is amended by adding sections to read:
6 Section 8.1. Policy and Certificate Issued Prior to
7 Effective Date.--The provisions of this amendatory act shall not
8 invalidate or otherwise affect any group policy legally issued
9 prior to the effective date of this section or certificate in
10 effect prior to the effective date of this section. All group
11 policies or certificates may remain in full force and effect
12 until three years after the effective date of this section
13 withstanding, NOTWITHSTANDING the fact that they do not comply <--
14 with the provisions of this act.
15 Section 8.2. Newly Issued Group Policy.--Any group policy
16 issued on or after the effective date of this section shall
17 comply with the provisions of this act.
18 Section 8.3. Newly Issued Certificate Under Policy Issued
19 Prior to Effective Date.--Certificates issued on or after the
20 effective date of this section under a group policy legally
21 issued prior to the effective date of this section shall comply
22 with the provisions of this act no later than three years after
23 the effective date of this section if issued to: an employer or
24 trustees of a fund established by an employer, trustees of a
25 fund established by two or more employers none of whom has
26 joined after the effective date of this section, a labor union,
27 police fraternity, firemen's fraternity, teachers' association
28 or federation and a unit of the National Guard or Naval Militia.
29 Any other certificates issued on or after the effective date of
30 this section under a group policy issued prior to the effective
19930H0296B1792 - 16 -
1 date of this section shall comply with the provisions of this
2 act.
3 Section 8.4. Newly Issued Certificate Under Newly Issued
4 Policy.--Any certificate issued under a group policy issued on
5 or after the effective date of this section shall comply with
6 the provisions of this act.
7 Section 9. This act shall take effect in 90 days.
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