Chapter 15 - State Laws

Appointment (Insurance Commissioner)

• The Commissioner of Insurance is appointed by the governor with the advice and consent of the Senate.

• At the time of taking office, the Commissioner must execute a $50,000 bond to the state of Arkansas for the faithful performance of their duties.

General Duties & Powers (Insurance Commissioner)

• The Commissioner of Insurance has general supervision, control, and regulation of persons and companies authorized to transact the business of insurance in Arkansas.

• They have the authority to make any rules necessary to enforce the insurance laws in Arkansas.

• The Commissioner regulates premium rates, policy forms, insurer solvency and receiverships, as well as other matters relating to the regulation of insurance.

• The Commissioner also issues the proper insurance license for agents, brokers, and certificates of authority for the insurers who qualify to conduct business in the state of Arkansas.

• The Commissioner may conduct insurer and agency audits, examinations, and investigations, and enforce any provision of the Insurance Code.

Examination of Records (Insurance Commissioner)

• The Commissioner of Insurance may examine the transactions, accounts and records of each insurer as often as they feel necessary, and at least once every 5 years.

• The Commissioner must also examine each insurer applying for a certificate of authority to transact insurance in Arkansas.

• The Commissioner has the authority to examine or investigate any person necessary or material to the examination of an insurer.

• The Commissioner may subpoena witnesses, administer oaths, and require the disclosure of books and records with respect to an examination.

• In lieu of making their own examination of any foreign or alien insurer authorized in Arkansas, the Commissioner may accept a full report of a foreign or alien insurer as prepared by its state of domicile’s insurance department.

• The examination of an alien insurer must be limited to its insurance transaction and affairs in the US.

Self-Incrimination

• Any person who asks to be excused from attending, testifying, or producing any documents in connection with any examination on the ground that the testimony or evidence required may tend to incriminate them must give the testimony or produce the evidence, but will be granted immunity for any penalty or forfeiture because of the testimony or evidence they provide.

• However, the person is not exempt from prosecution or punishment for any perjury committed, and their license may still be suspended or revoked.

Authorized Insurer & Unauthorized Insurer

• An authorized insurer in duly authorized by a subsisting certificate of authority issued by the Commissioner to transact insurance in Arkansas.

• An unauthorized insurer is not authorized by a subsisting certificate of authority issued by the Commissioner to transact insurance in Arkansas.

• An unauthorized insurer is not authorized by a subsisting certificate of authority issued by the Commissioner to transact insurance in Arkansas.

Certificate of Authority

• A person cannot act as an insurer- and an insurer cannot transact insurance in Arkansas - unless authorized by a certificate of authority issued to it by the Commissioner.

• However, the following do not require an insurer to have a certificate of authority:

  • Investigating, settling, or litigating claims under policies lawfully written in Arkansas

  • Making contract modifications (like beneficiary changes), otherwise administering contracts in force, or liquidating assets (other than the collection of new premiums) as a result of its former authorized operations in Arkansas

  • Transactions after issuing a policy covering only subjects of insurance that are not resident, located, or expressly performed in Arkansas at the time of issuance, when the policy was lawfully solicited, written, or delivered outside of Arkansas

  • Transactions related to policies covering property being transported by land, air, or water to, from, through Arkansas, when the policy was lawfully solicited, written, or delivered outside of Arkansas

  • Lawfully surplus lines transactions

Permit for Charitable Annuity Programs

• At the Commissioner’s discretion, the Commissioner may issue a special permit that allows a duly organized domestic or foreign nonstock corporation or association make fixed-dollar, life-only annuity agreements with donors.

• The permit authorizes the corporation or association to receive gifts (of money or assets of monetary value) and, in return, agree to pay an annuity to the donor or someone the donor chooses.

• To get this permit, the corporation or association must meet the following requirements:

  • It must be a nonprofit corporation or association

  • It must be engaged in active operation solely in charitable, religious, missionary, educational, or philanthropic activities for at least 5 years prior to receiving the permit. Some exceptions may apply, at the Commissioner’s discretion.

• Similarly, the Commissioner can create rules to allow a city, town, municipality, or county acting independently or according to an interlocal cooperation agreement to obtain a charitable annuity program. Ex: a person who donates to support a library, a hospital, or street maintenance could be eligible for an annuity.

• Penalties

  • If a person fails to meet the requirements applicable to a permit for a charitable annuity program, the Commissioner may punish the person by imposing a penalty of up to $10,000 or by suspending or revoking the permit.

Rules Applicable to Foreign Insurers

• A foreign Insurer will be authorized to transact insurance if the following apply:

  • The foreign insurer has not furnished the Commissioner with evidence that it has been organized an actively engaged in insurance business in its state of incorporation for 3 years prior to the date of its application to be admitted in Arkansas. Certain exceptions may apply, including any of the following circumstances:

    • The Commissioner waives the requirement

    • The insurer is a wholly owned subsidiary of an insurer authorized to do business in Arkansas

    • A corporation results from a merger or consolidation of insurance companies, of which at least 1 has been organized and actively engaged in the insurance business in the state of its organization for at least 3 years before applying to be admitted in Arkansas

  • The foreign insurer does not maintain reserves as required by law

• A foreign insurer may transact business in the state without a certificate of authority only for the purpose of investing its funds in Arkansas real estate or securities.

• The insurer must comply with Arkansas law relating to foreign business corporations generally.

Domestic, Foreign, & Alien Insurer

• A domestic insurer is formed under the laws of Arkansas.

• A foreign insurer is formed under the laws of any jurisdiction other than Arkansas.

• An alien insurer is formed under the laws of any country other than the US, its states, districts, territories, and commonwealths.

Stock Insurer & Mutual Insurer

• A stock insurer is an incorporated insurer with capital divided into shares and owned by its stockholders.

• A mutual insurer is an incorporated insurer without permanent capital stock.

Fraternal Benefit Society (Fraternals)

• A fraternal benefit society is any incorporated society, order, or supreme lodge, without capital stock, whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries.

• It is not for profit, operated on a lodge system with ritualistic form of work, has a representative form of government, and provides benefits for its members.

• A fraternal benefit society must operate for the benefit of members and their beneficiaries by:

  • Providing death benefits, endowment benefits, annuity benefits, temporary or permanent disability benefits, hospital or medical benefits, and monument or tombstone benefits to the memory of deceased members

  • Operating for one or more social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious purposes for the benefit of its members

• Every society must have the power to adopt laws for the government of the society, the admission of its members, and the management of its affairs.

• It will have the power to change, alter, add to, or amend the laws and will have other powers that are necessary for carrying the purposes of the society.

Insurance Transaction

An insurance transaction includes any:

• Solicitation

• Preliminary negotiations

• Execution of an insurance contract

• Transaction of matters arising out of the contract

Lines of Authority (Licensing)

Any person who meets the requirements will be issued an insurance agent license. The lines of authority are:

• Life insurance

• Accident and health or sickness insurance

• Casualty insurance

• Property insurance

• Variable life and variable annuity products

• Personal lines property and casualty insurance

• Limited line credit insurance

• Any other line of insurance perm

Producer (Required to be Licensed)

• A producer is a person or business entity who solicits, negotiates, effects, procures, delivers, renews, continues, or binds an insurance policy, including annuities, for risks residing, located, or to be performed in Arkansas.

• A resident producer is an individual who lives in Arkansas, or who may vote in Arkansas, and is licensed as a resident insurance provider by the Commissioner.

• Qualifications

  • Anyone at least 18 years old who wants to transact business as an insurance agent must submit a license application to the Commissioner of Insurance. Applicant must also:

    • Pay an appropriate nonrefundable application fee

    • Pass a 20 hour prelicensing course for each class of insurance they wish to transact

      • An applicant is not required to repeat the hours of instruction within 2 years of taking those hours for a previous line of authority

    • Pass a licensing exam for each class of insurance they with to transact. The exam determines if the candidate possesses the competence and knowledge of the kinds of insurance and transactions under the license for which they have applied.

  • A written exam is not required for applicants for a limited line license (i.e. limited line credit or limited line travel), temporary license, or nonresident license (subject to reciprocity agreements).

• Exam Expectations

  • The licensing examination is not required for nonresident agents or brokers, temporary licenses, or for any of the following types of insurance:

    • Transportation

    • Limited line credit

    • Funeral

    • Mortgagor’s decreasing term life or disability insurance to debtors

Business Entities

• Any business entity that acts as an insurance agent and holds a direct agency appointment from an insurance company must obtain an insurance agent license.

• Business entities must identify a licensed agent as a compliance officer who will be responsible for the business entity’s compliance with the insurance laws, rules, and regulations of Arkansas.

• The business entity must ensure that each officer, director, partner, and employee of the business entity who acts as an insurance agent is licensed as an insurance agent, and disclose this info to the Department.

Nonresident

• A nonresident producer is an individual licensed in and who is a resident of another state.

• The agent must submit an application and be in good standing in their home state.

• Their home state must also award nonresident agent licenses to residents of Arkansas on the same basis - this is known as reciprocity.

Temporary License

• The Commissioner of Insurance may issue a temporary insurance agent license for a period not exceeding 180 days, without requiring an exam, in the following circumstances:

  • The surviving spouse or court-appointed personal representative of a licensed insurance agent who dies or becomes mentally or physically disabled, while new agents are being trained as a replacement, the business is being sold, or until a disabled agent can return to the business

  • Any member or employee of a business entity licensed as an insurance agent, upon the death or disability of an individual, designated in the business entity’s application or the insurance agent’s license

  • The designee of a licensee who is entering active service in the armed forces of the US

  • Any other person deemed necessary by the Commissioner

Consultant

• A consultant is an individual or business entity that, for a fee, advises or counsels anyone as to their insurance needs under any insurance policy or contract.

• A consultant does not include licensed attorneys, actuaries, certified public accountants, medical bill analysts, or any other person who gives or offers incidental advice to the public in the normal course of normal business activity other than insurance consulting.

• A consultant license can cover life & disability, property & casualty (including surety and marine insurance), or both.

• A license will state the name and address of the licensee, the date of issue, general conditions relative to expiration or termination, kind of insurance covered, the license number, and the other conditions of the license.

Contents of License

• Licenses must contain the licensee’s name, address, personal identification number, dates of issuance & expiration, lines of authority, and other info the Commissioner deems necessary.

Producer Appointment/Termination of Contract

• An insurance producer may not act as an agent of an insurer unless the producer becomes appointed agent of that insurer.

• An insurance producer who is not acting as an agent of an insurer is not required to become appointed.

• To appoint a producer as its agent, the appointing insurer must file a notice of appointment within 15 days after the date the agency contract is executed or the first insurance application is submitted.

• Upon receipt of the notice of appointment, the Commissioner must verify that the insurance producer is eligible for appointment within 30 days.

• Each appointment will remain in effect until the agent’s license terminates unless written notice of earlier termination of the appointment is filed with the Commissioner by the insurer or agent.

Combination License

• A licensed agent may also be licensed to act as a broker for insurers for which they re not currently licensed as an agent.

• A licensed broker may be licensed as an be an agent as to insurers appointing them as agent.

• The sole relationship between a broker and an insurer as to which they are currently licensed as an agent, will be that of insurer and agent and not that of insurer and broker.

Commissions

• An insurer or producer may not pay/A person may not accept a commission, service fee, brokerage, or other valuable consideration to a person for selling, soliciting, or negotiating insurance in Arkansas if that person is required to be licensed, but is not.

• Renewal or other deferred commissions my be paid to a person for selling, soliciting, or negotiating insurance in Arkansas if that person was licensed when the sale, solicitation, or negotiating of insurance occurred.

• Any insurance agent may pay or assign a commission, service fee, brokerage, or any other valuable consideration to an insurance agency or any financial holding company which does not sell, solicit, or negotiate insurance in Arkansas unless that payment or assignment violates a state provision.

• Any insurance producer licensed in Arkansas who knowingly sells or solicits a product of an unauthorized person will be guilty of a Class D felony.

License Renewal & Reinstatement

• All insurance agents, brokers, consultants, and adjuster licenses will continue in force unless nonrenewed, expired, suspended, revoked, or terminated.

• However, they are subject to annual payments to the Commissioner of a continuation fee, accompanied by a written request for the continuation.

• A licensee who allows their license to lapse may reinstate the same license within 12 months after the due date of the renewal fee without the necessity of passing a written exam.

• However a penalty in the amount of double the unpaid renewal fee will be required for any renewal fee received after the due date.

Continuing Education (CE)

• An insurance producer licensed in Arkansas must successfully complete and report the courses of instruction to satisfy the continuing eduction requirements.

• Every 2 years, agents must complete 24 hours of continuing education courses in. the line(s) for which they are licensed, 3 hours of which must be in ethics.

• CE courses may not be repeated for credit more than once in a 2 year period.

• Completion dates must be at least 24 months apart.

• An exception to this course repetition rule allows for the repetition of 1 hour ethics courses.

• For good cause, the Commissioner may grant an extension of up to 1 year to complete the CE requirements.

• A person teaching any approved course or program of instruction will be credited the same number of hours as a person taking and successfully completing the course.

• Subject to the Commissioner’s approval, an agent/broker’s active annual membership in local, regional, state, or national professional insurance organizations or associations may be approved for up to 2 annual hours of instruction.

• Reporting & License Reinstatement

  • Educational requirements are obtained and reported annually to the Commissioner on or before the birthdate of the licensee.

  • Failure to report or obtain the mandated educational requirements along with the fee imposed in a timely manner will result in the additional following fines:

    • If within 30 days after the due date, a fine of $25 will be imposed automatically

    • If within 60 days after the due date, a fine of $50 will be imposed automatically

    • If within 90 days after the due date, a fine of $100 will be imposed automatically

    • If after 90 days from the due date, the license will become automatically suspended

  • Reinstatement of the license requires a payment of $150 if reinstated within 1 year from the due date of the education.

  • Reinstatement is not available if more than 1 year after the due date has passed.

  • If a license is desired at that point, the person must complete all licensing requirements as though they never held a license, completing the education due at the time of suspension, and pay a $150 fine.

• Exemption from CE Requirement

  • The CE requirements do not apply to any of the following

    • Licensees for any kind of insurance for which an exam is not required

    • Any limited or restricted license the Insurance Commissioner may exempt

    • Anyone who is age 60 or older

    • Anyone who has held an active license as an agent, solicitor, consultant, or broker for at least 15 consecutive years

    • Nonresident producers

    • Licensed insurance constultants

    • Any person called to active duty in any branch of the US military services

    • A person who obtains a waiver of renewal procedures due to military service or other extenuating circumstance, like long-term medical disability

Change of Contact Info

• Licenses must inform the Commissioner by any acceptable means of a change of address within 30 days after the change.

• Failure to timely inform the Commissioner of a charge in legal name or address will result in license suspension for up to 36 months, license revocation, refusal to continue a license, or probationary status.

Place of Business & Record Maintenance

• Every resident agent and broker must have and maintain a place of business accessible to the public and located in Arkansas.

• This place must be where the licensee principally conducts transactions under the license.

• The address of the place of business must appear on the license.

• If the address changes, the licensee must promptly notify the Commissioner in writing within 10 days of that change.

• The agent or broker license will be conspicuously displayed at the place of business.

• The agent or broker must keep all records pertaining to transactions under their license for at least:

  • 5 years from the date the record was created; or

  • 1 year following the final settlement or final adjudication of a criminal proceeding, civil litigation, or an administrative proceeding that:

    • Began within 5 years from the date the record was created

    • Involves records pertaining to a transaction conducted by the agent or broker under their license

• Records may be maintained in its original form, electronically, or as a hard copy.

• An agent’s broker’s insurance company may maintain records on the agent’s or broker’s behalf, which will relieve the agent’s or broker’s obligation to maintain records.

Renewal, Suspension, or Revocation of a License

• The Commissioner may suspend a license for up to 36 months (3 years), revoke a license, refuse to renew any license issued, or place the licensee on probation if the licensee does any of the following:

  • Provided incorrect, incomplete or materially untrue info in the license application

  • Has violated any insurance law, regulation, subpoena or order of the Commissioner, or of another state’s insurance commissioner

  • Obtained their license through fraud or misrepresentation

  • Improperly withheld, misappropriated or converted any money or properties received in the course of doing business

  • Misrepresented the provisions, terms and conditions of an insurance policy

  • Has been convicted of a misdemeanor or felony

  • Admitted to or was found to have committed any insurance unfair trade practice

  • Had an insurance agent license denial, suspension or revocation in any other state

  • Forged another person’s name in an application or document related to insurance

  • Improperly used notes or reference material to complete an exam

  • Knowingly accepts business from a producer who is not licensed

  • Failed to comply with any order imposing a child support obligation on them

  • Failed to pay state income tax or an order directing payment of such tax

  • Intentionally omitted material facts during the presentation of an insurance policy

  • Made misleading representations or incomplete policy comparisons in order to induce someone to surrender an existing policy

  • Violated any subpoena or order of the Commissioner or of the regulatory official of insurance in another state

  • Has used fraudulent, coercive, or dishonest practices or demonstrated incompetence, untrustworthiness, lack of good personal or business reputation, or financial irresponsibility

  • Has failed to provide a written response after receipt of a written inquiry from the Commissioner within 30 days after receipt of the written inquiry

• In most cases, action against a license is only effective after a hearing. However, if a licensee’s home state license ceases to be active, their nonresident license in Arkansas is summarily suspended without a hearing. The notice of summary suspension must inform the licensee of their right to request a hearing within 30 days after receiving the notice.

• Other Optional Penalties

  • In addition to or in lieu of revocation or suspension the Commissioner may discipline with one of the following:

    • Order payment of an administrative penalty of up to $1,000 per violation or up to $5,000 for the same violation if the person should have known that their license suspension or revocation

    • Order restitution of actual losses to affected persons

• Additional Rules

  • The Commissioner may suspend or revoke the license of an insurance agent who places excess lines risks without first obtaining an excess lines license.

  • Upon the suspension or revocation of a license, the Commissioner will immediately notify the licensee and the insurers they represent.

  • The insurer must retrieve all solicitation materials, policy applications, binders, and all other materials that are the insurer’s property

• License Restoration or Reissue

  • The Commissioner may not issue a license under the Arkansas Insurance Code to any person whose license has been revoked until after 3 years and not until:

    • The person has paid any fines or penalties imposed at the time of revocation in full

    • The person has paid restitution of actual losses to affected persons

    • The person again qualifies for license in accordance with the applicable provisions of the Arkansas Insurance Code

  • If a business has its license suspended or revoked, no member, partner, or employee will be licensed or be designated in any license during the suspension/revocation period unless the Commissioner determines that the person was not personally at fault and did not agree to the matter which resulted in the license suspension/revocation.

• Return of License to Commissioner

  • All licenses are the property of the state of Arkansas.

  • Upon any expiration, termination, suspension, or revocation of license, the licensee must immediately return i to the Commissioner.

  • For any license lost, stolen, or destroyed, the Commissioner may accept the affidavit of the licensee or concerning the facts of the loss, theft, or destruction.

  • Any licensee who ceases to maintain residence in Arkansas must deliver their insurance license to the Commissioner within 10 days after terminating residency.

Hearings

• The Commissioner may hold a hearing for any purpose within the scope of the Insurance Code.

• The Commissioner must hold a hearing within 30 days of its request and must give a notice of the date, time, and location of the hearing 10 days in advance.

• The Commissioner must make an order on the hearing within 30 days after it concludes.

• Any person who is aggrieved by an order of the Commissioner may appeal that order.

• The appeal must take place within 30 days after the notice of appeal has been received by the Commissioner.

• The Commissioner may grant a rehearing or reargument of the matters involved in the hearing, and the notice must be given 10 days in advance.

• Whenever the Insurance Commissioner has reason to believe that any person has engaged in any unfair or deceptive act or practice, they may issue a statement of the charges and notice of a hearing to be held at least 10 days after the date of notice.

• At the hearing, the person will have an opportunity to show why a cease and desist order should not be made by the Commissioner.

• Upon the hearing, the Commissioner:

  • May administer oaths, examine and cross-examine witnesses, and receive oral and documentary evidence

  • Will have the power to subpoena witnesses, compel their attendance, and require the production of books, papers, records, correspondence, or other documents that the Commissioner deems relevant to the inquiry

General Penalties

• Unless a greater penalty is provided by another law of Arkansas, any person who violates any provision of the Insurance Code is subject to one or both of the following:

  • Refusal, suspension, or revocation of license or certificate of authority

  • A fine of up to $1,000 for each violation, which cannot exceed $50,000 in any 6 month period

Cease & Desist Orders

• The Insurance Commissioner may order a person or entity to cease and desist from an act or practice when the Commissioner has reason to believe that the person or entity has not complied with the requirements of this section or any other provision of the Arkansas Insurance Code.

• Upon the entry of a cease and desist order, the Commissioner must promptly notify the person or entity named that the order has been entered, the reasons for the order, and that the person or entity has right to a hearing on the order.

• A hearing may be held on the written request of the person or entity named in the order if the Commissioner receives the request within 30 days of the entry of the order.

• The person or entity named in the cease and desist order will have the burden of proving that the actions, methods, or practices described in the order are not in violation of the Arkansas Insurance Code.

• Any insurance producer licensed in Arkansas, or any other person, who knowingly sells, solicits, or negotiates a product of an unauthorized entity in violation of the law will be guilty of a Class D felony, and may be personally liable for damages caused by the unauthorized person or entity, including claims unpaid by the unauthorized person or entity.

• Failure to comply with a cease and desist order may be subject to one or more of the following:

  • A penalty of no more than $10,000

  • Suspension/Revocation of the person’s or entity’s license or registration

  • Injunctive relief

Fiduciary Responsibility

• All funds, fees, or premiums received by a licensee are trust funds for which the licensee is accountable to the insured, insurer, or any other person so entitled.

• Any licensee who diverts or appropriates trust funds for their own use will be guilty of theft of property and be punished as provided by law.

Fraud Reporting

• Any producer who has reason to know that an insurer is not licensed must report the insurer to the Department.

• Any producer who knows or has reason to know that a health plan is not licensed in accordance with the Arkansas Insurance Code must immediately report the health plan to the Insurance Department.

Unauthorized Transactions

• A person or entity may not act as agent or broker in the solicitation, negotiation, or effectuation of insurance, inspection of risks, fixing of rates, investigation or adjustment of losses, collection of premiums, or in any other manner if that person or entity is not authorized or licensed by the State Insurance Department.

• A person or entity may not act as a producer, adjuster, or consultant without first obtaining appropriate licensure or registration as required by Arkansas insurance law.

• A contract of insurance carried out by an unauthorized insurer is voidable.

Unfair Claim Practices

The following acts constitute improper claim settling practices:

• Misrepresenting pertinent facts or provisions in the insurance policy that relate to any coverage at issue

• Failing to promptly acknowledge communications pertinent to a claim

• Failing to use reasonable standards in the prompt investigation of claims

• Failing to attempt to promptly and fairly settle claims in which liability is clear

• Compelling an insured to file suit by offering substantially less than what a lawsuit would award

• Refusing to pay claims without conducting a reasonable investigation

• Failing to affirm or deny coverage on a claim within a reasonable time after receiving a proof of loss

• Attempting to settle a claim for less than the amount to which the claimant believed they were entitled by reference to written or printed advertising material accompanying the application

• Attempting to settle a claim based on an application that was altered by the agent or company without notice to, or consent of, the insured

• Making claim payments that are not accompanied by statements indicating the coverage under which payments are being made

• Delaying the investigation or payment of a claim by requiring the claimant to submit a formal proof of loss form and subsequent verification when both submissions contain the same information

• Failing to promptly explain the denial of a claim or an offer of compromise in relation to the facts and applicable law

• Letting claimants know that a policy of appealing arbitration awards that favors claimants for the purpose of compelling them to accept a lesser settlement than awarded

• Failing to promptly settle claims, where liability is clear, under one section of the policy coverage in order to influence settlements under other sections

• Failing to acknowledge and act promptly upon communications regarding claims

Claims Communications and Investigations

• Upon receiving notification of a claim, every insurer must acknowledge the receipt of the notice within 15 working days.

• An insurer must advise the claimant of the acceptance or denial of the claim within 15 working days after receipt of proofs of loss and an appropriate reply will be made within 15 working days.

• Every insurer must complete investigation of a claim within 45 days of notification, unless the investigation cannot reasonably be completed within the time.

• If an investigation cannot be completed within the 45 day period, insurers must notify claimants that additional time is required and include the reasons for the delay.

Unfair Methods of Competition

The following acts are defined by statute as unfair methods of competition and unfair or deceptive acts or practices.

• Rebating

• Misrepresentation

• False Advertising

• Defamation

• False Financial Statments

• Boycott, Coercion, Intimidation

• Unfair Discrimination

• Twisting

• Churning of Business

Rebating

• Offering any rebate of premiums payable, any special favor in dividends or other benefits, or any valuable consideration or inducement not specified in the policy.

• Rebating is the act of knowingly:

  • Permitting or offering to make or making any life, health, and annuity insurance contract other than as expressed in the insurance contract issued for the life, health, or annuity insurance policy

  • Paying, allowing, or giving or offering to pay, directly or indirectly, as inducement to the insurance contract, any rebate of premiums payable or any special favor or advantage in the dividends

• Similarly, an insurer or producer may not offer or provide insurance as an inducement to purchase another policy.

• Rebating Exceptions

  • The following practices are not considered unfair rebating or unfair discrimination

    • Paying bonuses to policyholders under a life insurance or annuity contract or otherwise abating premiums out of the surplus accumulated from nonparticipating insurance

    • Readjusting a group insurance policy premium rate based on loss or expense at the end of the first or any subsequent year and applied retroactively only for the policy year

    • Offering or providing a value-added product or service at little or no cost. The value-added product must relate to insurance policy coverage and be designed for certain purposes, like providing loss mitigation, reducing claim costs, monitoring risk, or enhancing health.

    • Offering or providing token gives of $100 or less in wholesale value for advertising purposes, such as offering pens, calendars, notebooks, and other items

Misrepresentation

• Making, issuing, or circulating any statement that misrepresents the benefits, advantages, conditions or terms of any insurance policy. This includes:

  • Misrepresenting the dividends or share of the surplus to be received on any insurance policy

  • Using any name or title that misrepresents the policy’s true nature. Ex: representing a standard whole life policy as a savings plan.

  • Misrepresentation for the purpose of effectuating a pledge or effecting a loan against any insurance policy

  • Misrepresenting any insurance policy as being shares of stock

• Any person who misrepresents the benefits of a policy or who makes incomplete comparisons regarding the benefits contained in any policy will, upon conviction, be guilty of a Class D felony, and will be subject to a fine of no more than $10,000, or imprisonment for up to 6 years, or both.

False Advertising

• False advertising involves publishing or disseminating in any fashion, or through any media, any untrue, deceptive, or misleading statement about the business of insurance or, with respect to any person, in the conduct of a person’s insurance business.

• This includes knowingly making any false entry of a material fact or knowingly omitting a true entry of any material fact with he intent to deceive.

Defamation

• Defamation involves making any false or maliciously critical statement regarding the financial condition of any person, with the intent to injure that person.

Unfair Discrimination

• Unfair discrimination involves permitting individuals of the same class and equal life expectancy to be charged different rates for life insurance or annuities.

• Unfair discrimination includes:

  • Permitting individuals of the same class and essentially the same hazard to be charged different rates for accident or health insurance

  • Refusing to insure or charging a different rates to an individual based solely on blindness or partial blindness

  • Refusing to insure or charging a different rate for life or health insurance to an individual who is, has been, or may be a victim of domestic abuse

  • Refusing to insure an individual because of the marital status or race of the individual

Twisting

• Twisting involves misrepresenting for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy.

Churning of Business

• Churning of business involves replacing an existing policy of life insurance or accident and health insurance, or both, where the replacement:

  • Does not include the required memorandum comparing the existing coverage to the proposed coverage

  • Is without demonstration by the licensee of the purpose of replacing the policy for the benefit of the insured

Penalty Orders

• If the Commissioner determines after a hearing that a person has engaged in an unfair or deceptive act or practice, the Commissioner will write down findings and issue a cease and desist order.

• At the Commissioner’s discretion, the Commissioner may also order one or more of the following:

  • A monetary penalty of up to $1,000 per act or violation, not to exceed an aggregate penalty of $10,000. However, if the person knew or reasonably should have known about the violation, the penalty can equal up to $5,000 per act or violation, not to exceed an aggregate penalty of $50,000.

  • Suspension or revocation of the person’s license if they knew or reasonably should have known about the violation

Life & Health Insurance Guarantee Association Act

• The Arkansas Life & Health Insurance Guarantee Association provides protection to policyowners and beneficiaries in the event of insurer impairment or insolvency.

• An insolvent insurer is one which has been placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

• An impaired insurer is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

• All insurers authorized to transact life and health insurance in Arkansas are required to be members of the Association, which is under the immediate supervision of the Insurance Commissioner.

• If a member insurer becomes impaired or insolvent, an assessment will be made against the other members to pay the claims of the insolvent insurer.

• The Association does not provide coverage for:

  • A portion of a policy not guaranteed by the member insurer

  • A portion of a policy of reinsurance

  • A policy issued in Arkansas by a member insurer at a time when they were not licensed or did not have a certificate of authority

  • A portion of a policy to the extent that it provides for dividends

• The Association assumes all the rights, duties, and obligations of the insolvent insurer.

• Protection provided by the Association does not apply where any guarantee protection is provided by the laws of the domiciliary state of the impaired or insolvent insurer other than Arkansas.

Detection & Prevention of Insolvencies & Impairments

• To aid in the detection and prevention of insurer insolvencies or impairments, the Commissioner will notify all the other insurance commissioners when they take any of the following actions against a member insurer:

  • Revokes or suspends a license

  • Makes any formal order that such company restrict its premium writing, obtain additional contributions to surplus, withdraw from the state, reinsure all or any part of its business, or increase capital, surplus, or any other account for the security of policy owners or creditors

• This notice will be mailed to all commissioners within 30 days following the action taken or the date on which the action occurs.

Life Insurance Policies & Annuity Contracts

• General Provisions

  • Right to Examine (Free Look)

  • Grace Period

  • Reinstatement

  • Incontestability

  • Misstatement of Age

  • Limitation of Liability

  • Holding of Proceeds

  • Unpaid Premium

  • Refund of Premium

Right to Examine (Free Look)

• The free look period on individual life insurance policies and annuity contracts is 10 days.

• This requirement does not apply to variable life policies or variable annuities.

Grace Period

• The grace period for individual life insurance policies must be at least 30 days

Reinstatement

• The period within which to reinstate a lapsed life insurance policy is 3 years.

Incontestability

• An individual life insurance policy is incontestable after it has been in force during the lifetime of the insured for 2 years from its date of issue, except for fraud in procurement and for nonpayment of premiums.

Misstatement of Age

• If the age of the insured has been misstated, and their age is considered in determining the premium, any amount payable under the policy will be adjusted as if the age of the insured was originally stated correctly.

Limitation of Liability

• Life insurance policies my exclude coverage for death while the insured is a resident outside the continental US or Canada.

• They may also exclude death benefits for specified hazardous occupations.

• Death by suicide is contestable for 2 years.

Holding of Proceeds

• The death benefit under a policy of life insurance is exempt from the claims of creditors.

• Participating life insurance policies must include a provision that by the end of the third policy year, the insurer will be annually determine the dividends, if any, to be paid under the policy.

• Any life insurer may hold the proceeds of any policy, as agreed to in writing by the insurer and the policyholder, with the beneficiaries.

• The insurer is not required to segregate the funds but may hold them as part of their general assets.

Unpaid Premium

• In determining the death benefit due under a life insurance policy, a deduction may be made for any unpaid premiums and the principal and accrued interest of any outstanding policy loan or other indebtedness.

Refund of Premium

• The proceeds payable upon death under an individual life insurance policy must include the amount of any premiums paid beyond the end of the policy month in which death occurred.

• Death benefits and unearned premiums must be paid in a lump sum within 30 days after the insurer receives proof of death.

• If death proceeds and unearned premiums are not paid within 30 days of receiving a proof of death, these funds will accrue interest at 8% per year from the insured’s date of death.

Standard Nonforfeiture Law

• A policy of life insurance, except for term life insurance, may not be issued for delivery in Arkansas unless it contains the following provisions:

  • In the event of default in any premium payment, the insurer will grant a paid-up nonforfeiture benefit no later than 60 days after the due date of the premium in default

  • Upon surrender of the policy within 60 days after the due date of any premium payment in default, after premiums have been paid for at least 3 full years, the insurer will pay a cash surrender value in lieu of any paid-up nonforfeiture benefits. In the case of industrial insurance, premiums must have been paid for at least 5 full years.

  • A specified paid-up nonforfeiture benefit becomes effective unless the policyowner elects another available option within 60 days after the due date of the premium in default

  • A life insurance policy must state that the cash surrender values and the paid-up nonforfeiture benefits are not less than the minimum values and benefits required by the insurance laws in Arkansas

  • The insurer reserves the right to defer the payment of any cash surrender value for a period of 6 months after it has been requested

Life Insurance Advertising

• Producers must ensure that any advertisements they use provide accurate and balanced info on the benefits and limitations of a policy.

• The insurer and the producer who created an advertisement are responsible for its content.

• All advertisements used by producers must be approved by the insurer for whom it advertises.

• Insurers must annually notify producers that company approval is required before an advertisement not furnished by the company may be used.

• The name of the insurer must be clearly identified in all advertisements, and if any specific individual policy is advertised, it must be identified either by form number or another appropriate description.

• An advertisement may not use any combination of words or symbols that are so similar to those used by a governmental program or agency that they tend to mislead prospective insureds into believing that the solicitation is connected with the governmental program or agency.

• Advertisements may not imply that prospective purchasers become a group of members who enjoy special rates or privileges ordinarily associated with group insurance.

• The interest for prospective purchasers of life insurance must be safeguarded by providing the purchasers with clear and unambiguous statements, explanations, and written proposals concerning the contracts that are offered to them.

• It is required and in the public interest to make a cost index available so that price competition in the life insurance market is encouraged.

Testimonials

Testimonials used in advertisements must:

• Be genuine

• Represent the current opinion of the author

• Be applicable to the policy advertised

• Be reproduced accurately

In using a testimonial, the insurer or agent is responsible for the statements made.

It must be clearly and prominently disclosed in the advertisement if the individual making a testimonial or an endorsement is being compensated or if they have a financial interest in the insurer.

Advertisements

• Language used in advertisements must be easily understood by persons of average education or intelligence.

• Advertisements may not imply that an insurer or a policy has been approved or endorsed by a group of individuals, society, association, or other organization unless it is true and unless any proprietary relationship between an organization and the insurer is disclosed.

• Advertisements of an individual policy or combination of policies may not imply:

  • That the policy or combination of policies is an introductory, initial, or special offer

  • That applicants will receive special advantages not available at a later date

  • That the offer is available only to a specified group of individuals, unless it is true

• Advertisements may not imply that the insurer, its financial condition, the payment of its claims, or its policy forms are recommended or endorsed by any governmental entity, unless it is true and the entity authorizes its recommendation or endorsement to be used in the advertisement.

• If an amount of insurance coverage is advertised, a disclosure of the type of insurance being offered must also be made in close proximity to the amount.

• Advertisements must refer to premiums only as premiums.

• Use of words such as “deposit”, “deposit premium”, “investment”, or other such misleading wording is prohibited.

• If an advertisement used the term “Non-medical”, “No Medical Exam Required”, or similar term where the issue is not guaranteed, the advertisement must further disclose that health questions are involved, that policy issue may depend upon the answers to the health questions, and that policy issue is not guaranteed.

Record Keeping

• Insurers, agents, and producers must maintain info collected from consumers for 5 years after the insurance transaction is completed.

• Insurers must also maintain a complete file with a copy of each document authorized to make required disclosures for 5 years after the date of its last authorized use; this file must be maintained in the insurer’s home office or principal office.

Life Insurance Disclosures

• Rules regarding life insurance disclosures intend to ensure that insurers deliver clear and unambiguous language to life insurance purchasers that will improve the buyer’s ability to select an appropriate policy that meets their needs.

• Disclosure requirements do not apply to the following:

  • Annuity contracts (individual & group)

  • Credit life insurance

  • Group life insurance

  • Life insurance policies issued in connection with pension and welfare plans defined by and subject to ERISA

  • Variable life insurance

  • Any policy or certificate issued to fund a prepaid funeral benefits contract

General Duties of Insurers & Producers

• Insurers must provide a Buyer’s Guide to all prospective purchasers prior to accepting the initial premium or premium deposit.

• However, if the policy contains a free look period of at least 10 days, it may be delivered no later than policy delivery.

• Insurers must provide a separate Policy Summary to prospective purchasers that does not minimize or render any portion of the summary obscure.

• A Policy Summary is a written statement describing the elements of the policy, including info like the producer’s name and address, the generic name of the basic policy and each rider, and certain amounts.

• The timing of delivery is the same as the requirements for the Buyer’s Guide.

• The Policy Summary is subject to the following requirements:

  • Any amounts that remain level for 2 or more years may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year

  • Certain amounts (such as annual premium, death benefit payable at the beginning of each policy year, and guaranteed cash surrender value at the end of each policy year) must be included for the first 5 policy years and representative years after that, including at least on age from 60-65 and at policy maturity. Amounts should be represented in total, rather than on a per thousand or per unit basis.

  • If the policy insurers multiple people, the death benefit must be displayed separately for each insured or class of insureds

• If an insurer changes its method of determining scales of nonguaranteed elements on existing policies, it must advise each affected policyowner of the change no later than when the first payment is made on the new basis.

• This does not apply to policies with a death benefit of $5,000 or less at the time notice would be required.

Other Disclosure Rules

• Insurance producers must inform the prospective purchaser prior to beginning a sales presentation that the producer is acting as a life insurance producer.

• The producer must disclose the full name of the insurer they represent.

• When the sale involves a product in addition to life insurance, the life insurance solicitation must be independently available without the purchase of another product and all info applicable to the life insurance sale must be separately disclosed.

• References to a nonguaranteed element or value must include a statement that the item is not guaranteed and is based on the company’s current scale of nonguaranteed elements.

• Dividends may only be described as a refund or return of part of the premium paid that is not guaranteed and is subject to change.

• Producers may not use terms like “financial planner”, “investment advisor”, “financial consultant”, or “financial counseling” to falsely imply that they are primarily engaged in an advisory business in which compensation is unrelated to sales.

• Producers may not use terms like “savings”, “deposits”, “investments”, or similar to mislead the prospective purchaser to believe the primary purpose of the solicitation is of the investment nature.

• Is prohibited to use comparisons, analogies, or manipulations of amounts and numbers to mislead prospective purchasers about the cost of insurance.

• Any system for comparing the cost must recognize the time value of money.

• References to the premium as a deposit, investment, savings, or other similar phrase is prohibited.

• Insurers and producers must not make unfair or misleading comparisons of dissimilar policies or riders.

Eligible Groups (Group Life Insurance)

• The following groups may purchase and use group life insurance:

  • Employer groups

  • Labor union groups

  • Trustee groups

  • Debtor groups, which refer to policies issued to a creditor to insure the creditor’s debtors

  • Credit union groups

  • Association groups. Eligible associations must have a minimum of 100 persons, be organized for a purpose other than obtaining insurance, have been in active existence for at least 2 years, and have a constitution & bylaws.

Restriction on Coverage of Other Groups

• If a group policy is issued to a group type other than the ones specifically named by law, the policy must meet certain requirements.

• A group policy or certificate cannot be delivered in Arkansas unless the Commissioner finds that all of the following are true:

  • Policy issuance is in the best interest of the public

  • Policy issuance would be actuarially sound

  • Policy issuance would result in economies of acquisition or administration

  • The benefits are reasonable in reasonable in relation to the premiums charged

Ineligible Groups

• Group life insurance is not available for policies insurance is not available for policies insuring only individuals:

  • Related by blood, marriage, or legal adoption

  • Having a common interest through ownership of a business enterprise

  • Having an insurable interest in each other’s lives

Conversion Rights

• If the policy itself terminates, every person insured at the date of termination who has been insured for at least 5 years prior to the termination date will be entitled to have issued them within 31 days of the termination date, and without evidence of insurability, an individual policy that will not exceed the smaller of the amount of insurance ceasing, or $10,000.

• A group life policy must contain a provision that if a person insured under the policy dies during the conversion period within which they would have been entitled to have an individual policy issued, the amount of life insurance which they would have been entitled to have issued under an individual policy must be payable as a claim under the group policy whether or not application for the individual policy has been made.

Continuation

• Where active employment is a condition of insurance, a group life policy must include a provision that an insured may continue coverage on a premium-paying basis during the insured’s total disability for up to 6 months from the date that total disability started.

Standard/Required Provisions & Coverage

• Grace Period

• Incontestability

• Misstatement of Age

• Payment of Benefits

• Insurability

Grace Period

• The grace period for a group life policy must be 31 days.

• All statements made by the policyholder will be deemed representations and not warranties.

Incontestability

• A group life policy is incontestable after it has been in force for 2 years from its date of issue.

Misstatement of Age

• A group life policy must specify an equitable adjustment of premiums to be made in the event that the age of a person insured has been misstated.

Payment of Benefits

• A provision must state that, if there is no designated beneficiary living at the time of the insured’s death, the insurer at its option may only pay up to $10,000 to any person appearing to be equitably entitled to it because they incurred funeral or other expenses related to the insured’s last illness or death.

Insurability

• The insurer may reserve the right to require a person eligible for insurance to furnish evidence of individual insurability that is deemed satisfactory to the insurer.

• An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory.

• A group life policy must contain a provision that the insurer will issue individual certificates to the policyholder for delivery to each insured.

• The premium for a group life policy may be paid either from the policyholder’s funds or from funds contributed by the insured persons, or both.

• If group policy premiums are paid entirely by the group, the policy must cover everyone except those who reject the coverage in writing.

• A group policy may define employees as:

  • The individual proprietor or partners if the employer is an individual proprietorship or partnership

  • Retired employees and directors of a corporate employer

  • Elected or appointed officials

Credit Life Insurance

• Credit life insurance is insurance on the life of a debtor in connection with a specific loan or other credit transaction for a period of time that does not exceed 10 years.

• Credit disability insurance is insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled.

• Credit life insurance and credit disability insurance must only be issued in the following forms:

  • Individual policies of life insurance issued to debtors on a term plan

  • Individual policies of disability insurance issued to debtors on a term plan, or disability provisions in individual life policies

  • Group polices of life insurance issued to creditors providing insurance upon the lives of debtors on a term plan

  • Group policies of disability insurance issued to creditors on a term plan insuring debtors, or disability provisions in group life policies

Policy Issuance & Delivery

• If an individual policy or group certificate is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for the policy or a notice of proposed insurance must be delivered to the debtor in its place.

• The copy of the application or notice of proposed insurance must refer exclusively to insurance coverage and must be separate from the loan, sale, or other credit agreement.

• Upon approval, the individual policy or group certificate must be delivered to the debtor within 30 days of the date upon which the indebtedness is incurred.

• Upon acceptance by the insurer, the insurance becomes effective as of the date the indebtedness is incurred.

• An insurer may rely upon the representations in the application regarding the health and employment of the applicant without further investigation or examination of the debtor.

• If credit life/disability insurance is rescinded due to material misrepresentation on the part of the insured, the insured will be entitled to a full refund of the premium paid.

Penalties

• Any person who violates an order form the Insurance Commissioner concerning credit insurance after it has become final may be fined up to $250 and up to $1,000 if the violation was willful.

• The Commissioner may also revoke or suspend a license or certificate of authority if the person was found guilty of any violation concerning credit insurance.

Replacement

• Whenever any agent is aware that a sale of permanent life insurance will result in the lapse, surrender, forfeit, or change in the prospective purchaser’s existing permanent life insurance coverage, the agent must provide a written memorandum comparing the existing and proposed life insurance coverage.

• At minimum, the memorandum must include the following:

  • Name of insurer

  • Face amount of policy

  • Policy number, or, if not available, type of policy

  • Signature of both the agent and insured

  • Date of delivery

• A copy of the memorandum must be furnished to the existing insurer and the company represented by the agent, who must retain the copy for 5 years.

• Any agent who violates the provisions of the Insurance Code governing replacement will be guilty of a Class A misdemeanor, or punishable by disciplinary action under the Arkansas Insurance Code.

Applicability of Regulations

• Regulations applicable to the replacement of permanent life insurance do not apply to the following types of life insurance:

  • Term life insurance

  • Credit life insurance

  • Group insurance

  • Life insurance issued in connection with a pension, profit-sharing, or other benefit plan

State-Specific Definitions & Policy Requirements

The following requirements apply to accident & health policies in Arkansas:

• Basic Hospital Expense Coverage

• Hospital Confinement Indemnity Coverage

• Major Medical Expense Coverage or Comprehensive Health Expense Coverage

• Accident Only Coverage

• Intensive Care Unit Indemnity Coverage

• Disability Income Protection Coverage

• Unpaid Premium

Basic Hospital Expense Coverage

• Basic Hospital Expense Coverage must provide coverage for a period of at least 31 days during any continuous hospital confinement for each person insured.

Hospital Confinement Indemnity Coverage

• A policy of accident & health insurance that provides daily benefits for hospital confinement on an indemnity basis in an amount of at least $80 per day and for no less than 31 days during any one period of confinement.

Major Medical/Comprehensive Health Expense Coverage

Must provide an aggregate coverage of at least $35,000.

Accident Only Coverage

Accidental death and double dismemberment amounts must be at least $1,000 and a single dismemberment must be at least $500.

Intensive Care Unit Indemnity Coverage

Must provide daily benefits of no less than $150 per day for no less than 15 days during a period of confinement.

Disability Income Protection Coverage

• Periodic payments payable at ages after 62 and reduced solely on the basis of age are at least 50% of the amounts payable immediately prior to age 62.

• The policy cannot have an elimination period greater than:

  • 90 days for a benefit period of 1 year or less

  • 180 days for a benefit period greater than 1 year but less than 2 years

  • 365 days in all other benefit periods

• A benefit period must be at least 6 months, except for normal pregnancy, for which the minimum period is 1 month.

• No reduction in benefits may be put into effect because of an increase in Social Security or similar benefits during a benefit period.

Unpaid Premium

• Arkansas allows accident and health policies to deduct unpaid premiums from a claim payment.

Policy Requirements

• Pre-existing condition may not be defined to be more restrictive than “the existence of symptoms for which diagnosis, medical advice, or treatment was provided by a physician within 5 years preceding the effective date of the coverage”.

• In the event the insurer cancels or refuses to renew, policies providing pregnancy benefits must provide for an extension of benefits while the pregnancy is commencing and while the policy is in force.

• Family coverage must continue for any unmarried dependent child who is incapable of self-sustaining employment due to mental retardation or physical handicap.

• Accidental death & dismemberment benefits must be payable if the loss occurs within 90 days from the date of the accident, irrespective of total disability. Disability income benefits will not require the loss to commence less than 30 days after the date of the accident.

• Termination of the policy must be without prejudice to any continuous loss which commenced while the policy was in force.

• Individual health insurance coverage for major medical benefits must be renewable or continue in force at the option of the insured.

Gender Discrimination

• The amount of benefits payable, or any term, condition, or type of coverage may not be restricted in any of the following ways:

  • Treatment for complications of pregnancy on a different basis from any other illness or sickness

    • Pregnancy on the effective date of the contract may be considered a pre-existing condition to the complication of pregnancy

  • Benefits for disorders of the genital organs of only one sex

  • Arbitrary waiting period for maternity benefits to exclude coverage for premature births

  • Offering lower maximum benefits to females than to males who are in the same risk classifications

  • Providing more restrictive benefit periods or more restrictive definitions of the risk assumed under the contract to one sex than the other

  • Limiting the amount of coverage an insured or prospective insured may purchase based on their marital status

  • Denying benefits for normal pregnancy to an unmarried female when the same benefits are available to a married female

Nonrenewal

• An insurer may nonrenew health insurance coverage providing major medical benefits for an individual based only on one or more of the following:

  • Nonpayment of premium

  • Fraud

  • Termination of the plan whereby the insurer ceases to offer major medical coverage in the individual market

  • Movement outside of service are

  • Association membership ceases

Time Limit on Certain Defenses

• A policy cannot be voided once it has been in force for 3 years, unless it is found that the application contains fraudulent misstatements.

• A claim for loss incurred or disability beginning after 3 years from the date of policy issue may not be reduced or denied on the grounds that a non-excluded disease or physical condition had existed prior to the policy’s effective date of coverage.

Reinstatement

• If a renewal premium is paid after the grace period, and the insurer accepts the payment without a new application, the policy will be reinstated.

• If the insurer requires an application for reinstatement and issues a conditional receipt for the premium submitted, the policy will be reinstated no later than the 45th day after the conditional receipt is given, unless the application has been disapproved.

• The reinstated policy will only cover loss:

  • Resulting from an accidental injury occurring after the reinstatement date; or

  • Due to sickness which begins 10 days after the reinstatement

• In all other respects, the insured and insurer have the same rights as they had under the policy immediately before the policy lapsed.

• Any premium accepted in connection with a reinstatement will not apply to the period of nonpayment longer than 60 days.

Notice of Claim

• Written notice of a claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon as reasonably possible.

• For policies providing loss-of-time benefits payable for at least 2 years, the insurer may require the insured to provide a notice of the disability’s continuance every 6 months.

Proof of Loss

• Written proof of loss must be furnished to the insurer within 90 days of the loss, or in the case of continuing loss, within 90 days after the period ends for which the insurer is liable.

• Failure to furnish proof within the time required will not invalidate a claim if it was not reasonably possible to do so.

• In any event, proof of loss must be provided no later than 1 year from the time the proof is otherwise required.

Time Payment of Claims

• Claims will be paid immediately upon receiving proof of loss, unless the policy authorizes periodic payments.

• Periodic payments must be made at least monthly.

Payment of Claims

• Payments for loss of life are payable in accordance with the beneficiary designation and the policy provisions.

• If there are no beneficiary or specific policy provisions, the payment will be made to the insured’s estate.

• Any other benefits that are unpaid t the insured’s death may be paid either to a beneficiary or to the estate.

Legal Action

• An insured cannot take any legal action against the insured for nonpayment of claim until at least 60 days after providing written proof of a loss.

• After that, all legal actions must be brought within 3 years after proof of loss is submitted.

Limiting Age & Exceptions

• Under the Patient Protection & Affordable Care Act, the limiting age for a dependent child’s health coverage is 26.

• A child who has reached the limiting age who is incapable of sustaining employment by reason of intellectual or physical disability may continue to be covered by a parent’s health policy.

• The child must be completely dependent upon the policyholder for support and maintenance.

Outpatient Services Required

Health insurers in Arkansas must offer coverage for the following outpatient services:

• Laboratory & pathological tests

• X-rays

• Chemotherapy

• Radiation treatment

• Renal dialysis

These coverages may be rejected by the applicant in writing.