Current through August 26, 2024
(1) PURPOSE. The
purpose of this rule is to promote the fair and equitable treatment of
Wisconsin residents in the solicitation, underwriting and administration of
accident and sickness insurance and of contracts issued by a plan subject to
ch. 613, Stats. Sections of statutes interpreted or implemented by this rule
include but are not limited to ss.
601.04(3),
601.01(2),
611.20,
618.12(1),
and
632.76,
Stats.
(2)SCOPE. This rule applies
to the solicitation, underwriting and administration of any insurance issued by
any insurer or fraternal benefit society under s.
Ins 6.75(1) (c) or
(2) (c) and ss.
600.03(22) and
632.93,
Stats., except credit accident and sickness insurance under s.
Ins 6.75(1) (c) 1. or
(2) (c) 1., and to any contract, other than
one issued on a group or group type basis as defined in s.
Ins 6.51(3), issued by a plan subject to
ch. 613, Stats. For the purpose of this rule, references to insurer, policy,
and insurance agent or representative, also apply to organizations or
associations operating non-profit plans, contracts, and persons within the
scope of the rule, respectively.
(3)APPLICATION FORM. An application form
which becomes part of the insurance contract shall provide to the effect that
statements made by the applicant in the application form regarding the general
medical history or general health of a proposed insured person which require an
opinion or the exercise of judgment are representations or are to the best of
the applicant's knowledge and/or belief. Such form need not so provide with
respect to statements regarding specifically named diseases, physical
conditions, or types of medical consultation or treatment. Such form shall not
require the applicant to state that he or she has not withheld any information
or concealed any facts in completing the application; however, the applicant
may be required to state that his or her answers are true and complete to the
best of his or her knowledge and/or belief.
(4)SOLICITATION. An insurance agent or
representative shall review carefully with the applicant all questions
contained in each application which he or she prepares and shall set down in
each such form all material information disclosed to him or her by the
applicant in response to the questions in such form.
(5)UNDERWRITING.
(a) An insurer shall make provision for
adequate underwriting personnel and procedures so as to process without undue
delay each application for insurance received by it.
(b) An insurer shall give due consideration
to all statements in each application for insurance submitted to it and shall
duly evaluate the proposed insured person before issuing coverage for such
person.
(c) An insurer which issues
coverage for a person shall not use the statements, information or material set
out in subds. 1., 2. and 3. to void the coverage on the basis of
misrepresentation in the application, or deny a claim on the basis of a
pre-existing condition defense, unless the insurer has:
1. Resolved patently conflicting or
incomplete statements in the application for the coverage;
2. Duly considered information furnished to
it:
a. In connection with the processing of
such application, or
b. In
connection with individual coverage on the person previously issued by it and
currently in force, or
3. Duly considered the material which it
would have obtained through reasonable inquiry following due consideration of
the statements or information.
(d) An insurer shall at the issuance or
amendment of a policy, contract or subscriber certificate, furnish notice
concerning statements in the application to the policyholder, contracting party
or certificate holder, where the application for the coverage or amended
coverage contains questions relating to the medical history or other matters
concerning the insurability of the person or persons being insured and the
application is part of the insurance contract.
1. The notice shall be printed prominently in
contrasting color on the first page of the policy, contract, or subscriber
certificate or in the form of a sticker, letter or other form attached to the
first page of the policy, contract or certificate, or a letter or other form to
be mailed within 10 days after the issuance or amendment of coverage.
2. The notice shall contain substantially the
following as to text and caption or title:
IMPORTANT NOTICE CONCERNING STATEMENTS IN THE APPLICATION FOR
YOUR INSURANCE
Please read the copy of the application attached to this notice
or to your policy. Omissions or misstatements in the application could cause an
otherwise valid claim to be denied. Carefully check the application and write
to the insurer within 10 days if any information shown on the application is
not correct and complete or if any medical history has not been included. The
application is part of the insurance contract. The insurance contract was
issued on the basis that the answers to all questions and any other material
information shown on the application are correct and complete.
(e) An insurer shall
file with the commissioner a description of the procedure it will follow and
the form or forms it will use to meet the requirements of par. (d).
(f) An insurer which, after coverage for a
person has been issued, receives information regarding such person which would
reasonably be considered a sufficient basis to void or reform such person's
coverage shall effect such voiding or reformation as provided in s.
631.11(4),
Stats., or the insurer shall be held to have waived its rights to such
action.
(g) An insurer may use
statements in an application form as a defense to a claim or to avoid or reform
coverage only if it has complied with par. (d).
(6)CLAIMS ADMINISTRATION.
(a) If the existence of a disease or physical
condition is duly disclosed in the application for coverage in response to the
questions therein, the insurer shall not use the pre-existence defense, under
coverage providing such a defense, to deny benefits for such disease or
condition unless such disease or condition is excluded from coverage by name or
specific description effective on the date of loss. This paragraph does not
apply to a preexisting condition exclusion permitted under s.
632.746(1),
Stats.
(b) If an application
contains no question concerning the proposed insured person's health history or
medical treatment history and regardless of whether it contains a question
concerning the proposed insured person's general health at the time of the
application, the insurer may use the pre-existence defense, under coverage
providing such a defense, only with respect to losses incurred or disability
commencing within 12 months from the effective date of coverage, unless the
disease or physical condition causing the loss or disability is excluded from
coverage by name or specific description effective on the date of loss or the
date the disability commenced. If, after 12 months from the effective date of
coverage, there is a reoccurrence of the disease or condition causing the loss
or disability, then the pre-existence defense may not be used. Under a
disability income policy a disease or condition shall be deemed to have not
reoccurred if the insured performs all important duties of the insured's or a
comparable occupation on the same basis as before the disability, for at least
6 months. Under a policy other than disability income a disease or condition
shall be deemed to have not reoccurred if a period of 6 months elapses during
which no expenses are incurred for the same or related disease or
condition.
(c) An insurer shall not
void coverage or deny a claim on the ground that the application for such
coverage did not disclose certain information considered material to the risk
if the application did not clearly require the disclosure of such
information.
(d) A claim shall not
be reduced or denied on the grounds that the disease or physical condition
resulting in the loss or disability had existed prior to the effective date of
coverage, under coverage providing such a defense, unless the insurer has
evidence that such disease or physical condition, as distinguished from the
cause of such disease or physical condition, had manifested itself prior to
such date. Such manifestation may be established by evidence of:
1. Medical diagnosis or treatment of such
disease or physical condition prior to the effective date, or
2. The existence of symptoms of such disease
or physical condition prior to the effective date which would cause an
ordinarily prudent person to seek diagnosis, care or treatment and for which
such diagnosis, care or treatment was not sought prior to such date.
(e) Coverage which contains
wording which requires the cause of the disease or physical condition, as
distinguished from the disease or physical condition itself, to originate after
the effective date of coverage shall be administered in accordance with par.
(d).
(f) An insurer shall not
exclude or limit benefits for a particular condition where the claimant's
medical records indicate a reasonable basis for, and the policy language
permits, distinguishing between the eligible condition or conditions which
necessitated the hospital confinement or medical or surgical treatment for
which claim is made, or which resulted in the disability for which the claim is
made, and a concurrently non-eligible existing condition or conditions which
did not contribute to the need for the confinement or treatment, or contribute
to the disability. The exclusion or limitation of benefits includes the use of:
1. A pre-existence defense;
2. A waiting period, such as for pregnancy,
surgery or other stated condition or procedure;
3. A benefit maximum; or
4. Other policy limitation.
(7)EFFECTIVE DATE.
(a) Subsections (4), (5) (a), (b), (c), and
(f) and (6) shall apply to all solicitation, underwriting, and claims
activities, except under franchise insurance, relating to Wisconsin residents
after March 1, 1974, except that sub. (6) (a) and (b) shall apply to policies
issued after that date.
(b)
Subsections (3) and (5) (d) and (e) shall apply to all solicitation,
underwriting, and claims activities, except under franchise insurance, relating
to Wisconsin residents after May 1, 1974.
(c) This rule shall apply to all
solicitation, underwriting and claims activities under franchise insurance
relating to Wisconsin residents after December 1, 1974, except that sub. (6)
(a) and (b) shall apply to policies issued after that date and sub. (5) (d) and
(e) shall apply to such activities after February 1, 1975.
