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H0118...........................................................by BUSINESS INSURANCE - HEARINGS/APPEALS - Repeals and amends existing law relating to insurance to revise provisions applicable to hearings and appeals; and to revise notice requirements applicable to such hearings and appeals. 02/04 House intro - 1st rdg - to printing 02/07 Rpt prt - to Bus 02/18 Rpt out - rec d/p - to 2nd rdg 02/21 2nd rdg - to 3rd rdg 02/23 3rd rdg - PASSED - 70-0-0 AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon, Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge, Field(18), Field(23), Garrett, Hart, Harwood, Henbest, Henderson, Jaquet, Jones, Kemp, Lake, LeFavour, Loertscher, Martinez, Mathews, McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills, Wood, Mr. Speaker NAYS -- None Absent and excused -- None Floor Sponsor - Snodgrass Title apvd - to Senate 02/24 Senate intro - 1st rdg - to Com/HuRes 03/04 Rpt out - rec d/p - to 2nd rdg 03/07 2nd rdg - to 3rd rdg 03/11 3rd rdg - PASSED - 32-0-2, 1 vacancy AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett, Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis, Gannon, Geddes, Goedde, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson, Schroeder, Stegner, Stennett, Werk, Williams NAYS -- None Absent and excused -- Hill, Sweet, (District 21 seat vacant) Floor Sponsor - Malepeai Title apvd - to House 03/14 To enrol 03/15 Rpt enrol - Sp signed 03/16 Pres signed 03/17 To Governor 03/21 Governor signed Session Law Chapter 77 Effective: 07/01/05
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature First Regular Session - 2005 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 118 BY BUSINESS COMMITTEE 1 AN ACT 2 RELATING TO INSURANCE; AMENDING SECTION 41-231, IDAHO CODE, TO REVISE PROVI- 3 SIONS APPLICABLE TO HEARINGS AND APPEALS; REPEALING SECTION 41-233, IDAHO 4 CODE, APPLICABLE TO STAYS OF ACTION; AMENDING SECTION 41-235, IDAHO CODE, 5 TO PROVIDE FOR FOURTEEN DAYS OF ADVANCE NOTICE, TO DELETE LANGUAGE 6 REFERENCING HEARINGS HELD FOR CONSIDERATION OF RULES AND REGULATIONS OF 7 THE DIRECTOR OR OTHER SPECIFIED MATTERS AND TO MAKE TECHNICAL CORRECTIONS; 8 REPEALING SECTIONS 41-239, 41-242 AND 41-246, IDAHO CODE, APPLICABLE TO 9 HEARING PROCEDURES, METHODS OF APPEAL AND APPEALS TO THE SUPREME COURT; 10 AMENDING SECTION 41-1016, IDAHO CODE, TO REVISE A NOTICE REQUIREMENT; 11 AMENDING SECTION 41-1301, IDAHO CODE, TO PROVIDE A CORRECT CODE REFERENCE 12 AND TO MAKE A TECHNICAL CORRECTION; REPEALING SECTION 41-1320, IDAHO CODE, 13 APPLICABLE TO SERVICE OF NOTICES AND PROCESSES; AMENDING SECTION 41-1321, 14 IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO PROCEDURES RELATED TO 15 UNDEFINED PRACTICES; REPEALING SECTION 41-1322, IDAHO CODE, APPLICABLE TO 16 APPEALS BY INTERVENORS; AMENDING SECTION 41-1417, IDAHO CODE, TO REVISE 17 NOTICE REQUIREMENTS AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 18 41-1426, IDAHO CODE, TO DELETE A CODE REFERENCE AND TO MAKE TECHNICAL COR- 19 RECTIONS; AMENDING SECTION 41-1432, IDAHO CODE, TO REVISE A NOTICE 20 REQUIREMENT AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 41-1434, 21 IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO HEARING PROCEDURES; REPEAL- 22 ING SECTION 41-1435, IDAHO CODE, APPLICABLE TO APPEALS FROM A DIRECTOR'S 23 ORDER; AMENDING SECTIONS 41-1440 AND 41-1610, IDAHO CODE, TO REVISE NOTICE 24 REQUIREMENTS AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 41-1614, 25 IDAHO CODE, TO MAKE A TECHNICAL CORRECTION AND TO REVISE A NOTICE REQUIRE- 26 MENT; AMENDING SECTION 41-1619, IDAHO CODE, TO DELETE A CODE REFERENCE AND 27 TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 41-1620, IDAHO CODE, TO 28 REVISE A NOTICE REQUIREMENT; AMENDING SECTION 41-1621, IDAHO CODE, TO 29 REVISE A NOTICE REQUIREMENT, TO PROVIDE A CORRECT CODE REFERENCE AND TO 30 MAKE TECHNICAL CORRECTIONS; AMENDING SECTIONS 41-1622 AND 41-1623, IDAHO 31 CODE, TO REVISE NOTICE REQUIREMENTS; REPEALING SECTION 41-1625, IDAHO 32 CODE, APPLICABLE TO HEARINGS AND APPEALS; AMENDING SECTION 41-2309, IDAHO 33 CODE, TO REVISE A NOTICE REQUIREMENT AND TO MAKE TECHNICAL CORRECTIONS; 34 REPEALING SECTION 41-2315, IDAHO CODE, RELATING TO JUDICIAL REVIEW; AND 35 AMENDING SECTION 41-2316, IDAHO CODE, TO REVISE A CODE REFERENCE AND TO 36 MAKE TECHNICAL CORRECTIONS. 37 Be It Enacted by the Legislature of the State of Idaho: 38 SECTION 1. That Section 41-231, Idaho Code, be, and the same is hereby 39 amended to read as follows: 40 41-231. HEARINGS AND APPEAL -- SCOPE OF PROVISIONS. Sections41 41-232--41-246Except as otherwise provided in title 41, Idaho Code, and to 42 the extent not inconsistent therewith, chapter 52, title 67, Idaho Code, shall 43 apply as to all hearings and as to all appeals from the director relative to 2 1 any matter treated in this code ; except, that such sections shall not apply as2 to chapters 14 (property insurance rates), 15 (casualty and surety rates), 163 (workmen's compensation rates), and 17 (insurance examining bureaus). 4 SECTION 2. That Section 41-233, Idaho Code, be, and the same is hereby 5 repealed. 6 SECTION 3. That Section 41-235, Idaho Code, be, and the same is hereby 7 amended to read as follows: 8 41-235. NOTICE OF HEARING. (1) Except where a longer period of notice is 9 provided by other provisions of this code relative to particular matters, not 10 less than tenfourteen (1 04) days in advance the director shall give notice 11 of the time and place of the hearing, stating the matters to be considered 12 thereat. If the persons to be given notice are not specified in the provision 13 pursuant to which hearing is held, the director shall give such notice to all 14 persons whose pecuniary interests are to be directly and immediately affected 15 by such hearing. 16 (2) If any such hearing is to be held for consideration of rules and reg-17 ulations of the director, or for the consideration of other matters which18 under subsection (1) abovewould otherwise require separate notices to more 19 than one hundred (100) persons, in lieu of the notice required under such sub- 20 section the director may give notice of the hearing by publishing the notice 21 in at least three (3), but not to exceed five (5), daily newspapers, at least 22 once each week during the four (4) weeks immediately preceding the week in 23 which the hearing is to be held. The director shall select such newspapers, as 24 to location and circulation, as he deems necessary to give adequate opportu- 25 nity of notice to such persons as should receive notice of the hearing. The 26 published notice shall state the time and place of the hearing and shall spec- 27 ify the matters to be considered thereat. At the time of first publication the 28 director shall mail to every advisory organization which has filed with him 29 pursuant to section 41-1425, Idaho Code, a copy of the published notice if the 30 proposed hearing would affect any interest of the members of such advisory 31 organization. 32 (3) All such notices, other than published notices, shall be given as 33 provided in section 41-212, Idaho Code. 34 SECTION 4. That Sections 41-239, 41-242 and 41-246, Idaho Code, be, and 35 the same are hereby repealed. 36 SECTION 5. That Section 41-1016, Idaho Code, be, and the same is hereby 37 amended to read as follows: 38 41-1016. ADMINISTRATIVE PENALTY -- SUSPENSION, REVOCATION, REFUSAL OF 39 LICENSE. (1) The director may impose an administrative penalty not to exceed 40 one thousand dollars ($1,000), for deposit in the general fund of the state of 41 Idaho, and may suspend for not more than twelve (12) months or may revoke or 42 refuse to issue or continue any license issued under this chapter, chapter 27, 43 title 41, Idaho Code (title insurance), chapter 11, title 41, Idaho Code 44 (adjusters), or any surplus lines broker license if, after a hearing held on45 not less than twenty-one (2 01) days' notice of suchthe opportunity for a 46 hearing and of the charges against the licensee given as provided in section 47 41-212(3), Idaho Code, to the licensee and to any appointing insurers repre- 48 sented (as to a producer who is appointed as an agent), the director finds 49 that as to the licensee any one (1) or more of the following causes or viola- 3 1 tions exist: 2 (a) Providing incorrect, misleading, incomplete or materially untrue 3 information in the license application; 4 (b) Violating any provision of title 41, Idaho Code, department rule, 5 subpoena or order of the director or of another state's insurance direc- 6 tor; 7 (c) Obtaining or attempting to obtain a license through misrepresentation 8 or fraud; 9 (d) Improperly withholding, misappropriating or converting any moneys or 10 properties received in the course of doing insurance business; 11 (e) Misrepresenting the terms of an actual or proposed insurance contract 12 or application for insurance or misrepresenting any fact material to any 13 insurance transaction or proposed transaction; 14 (f) Being convicted of or pleading guilty to any felony, or to a misde- 15 meanor which evidences bad moral character, dishonesty, a lack of integ- 16 rity and financial responsibility, or an unfitness and inability to pro- 17 vide acceptable service to the consuming public; 18 (g) Admitting or being found to have committed any insurance unfair trade 19 practice or fraud; 20 (h) Using fraudulent, coercive or dishonest practices, or demonstrating 21 incompetence, untrustworthiness or financial irresponsibility, or being a 22 source of injury and loss to the public or others, in the conduct of busi- 23 ness in this state or elsewhere; 24 (i) Having an insurance license denied, suspended or revoked in any other 25 state, province, district or territory; 26 (j) Forging another's name on an application for insurance or on any doc- 27 ument related to an insurance transaction; 28 (k) Improperly using notes or any other reference material to complete an 29 examination for an insurance license; 30 (l) Knowingly accepting insurance business from an individual who is not 31 licensed; 32 (m) Failing to comply with an administrative or court order imposing a 33 child support obligation, provided however, that nothing in this provision 34 shall be deemed to abrogate or modify chapter 14, title 7, Idaho Code; or 35 (n) Failing to pay state income tax or to comply with any administrative 36 or court order directing payment of state income tax. 37 (2) The director shall, without hearing, suspend for not more than twelve 38 (12) months, or shall revoke or refuse to continue any license issued under 39 this chapter to a nonresident where the director has received a final order of 40 suspension, revocation or refusal to continue from the insurance regulatory 41 official or court of jurisdiction of the licensee's home state. If cause under 42 this provision exists after the expiration of the twelve (12) months, succes- 43 sive suspensions may be imposed by the director without hearing. 44 (3) In the event that the director denies or refuses to renew an applica- 45 tion for a license, the director shall notify the applicant or licensee and 46 advise, in writing, the applicant or licensee of the reason for the denial or 47 nonrenewal of the applicant's or licensee's license. The applicant or licensee 48 may make written demand upon the director within twenty-one (21) days for a 49 hearing before the director to determine the reasonableness of the director's 50 action. The hearing shall be held pursuant to chapter 2, title 41, and chapter 51 52, title 67, Idaho Code. 52 (4) The license of a business entity may be suspended, revoked or refused 53 if the director finds, after hearing, that the violation of an individual 54 licensee, who is registered to or acting on behalf of the business entity, was 55 known or should have been known by one (1) or more of the owners, officers or 4 1 managers acting on behalf of the business entity and that the violation was 2 not reported to the director and no corrective action was taken. 3 (5) In addition to or in lieu of any applicable denial, suspension or 4 revocation of a license, a person may, after hearing, be subject to a civil 5 fine or administrative penalty pursuant to subsection (1) of this section or 6 any other applicable section. 7 (6) The director shall retain the authority to enforce the provisions of 8 and impose any penalty or remedy authorized by title 41, Idaho Code, against 9 any person who is under investigation for or charged with a violation of title 10 41, Idaho Code, or department rule, even if the person's license or registra- 11 tion has been surrendered, has lapsed by operation of law, or if the person 12 has never been licensed. 13 SECTION 6. That Section 41-1301, Idaho Code, be, and the same is hereby 14 amended to read as follows: 15 41-1301. PURPOSES OF TRADE PRACTICES LAW. The purpose of sections 41-1301 16 through 41-132 21, Idaho Code, is to regulate trade practices in the business 17 of insurance in accordance with the intent of congress as expressed in the act 18 of congress of March 9, 1945 (Public Law 15, 79th Congress [ch. 20, 59 U.S. 19 Stat. at Large 33]), by defining, or providing for the determination of, all 20 such practices in this state which constitute unfair methods of competition or 21 unfair or deceptive acts or practices and by prohibiting the trade practices 22 so defined or determined. 23 SECTION 7. That Section 41-1320, Idaho Code, be, and the same is hereby 24 repealed. 25 SECTION 8. That Section 41-1321, Idaho Code, be, and the same is hereby 26 amended to read as follows: 27 41-1321. PROCEDURES AS TO UNDEFINED PRACTICES. (1) Whenever the director 28 has reason to believe that any person engaged in the business of insurance is 29 engaging in this state in any method of competition or in any act or practice 30 in the conduct of such business which is not expressly prohibited or defined 31 in this chapter, that such method of competition is unfair or that such act or 32 practice is unfair or deceptive and that a proceeding by him in respect 33 thereto would be to the interest of the public, he may issue and serve upon 34 such person a statement of the charges in that respect and a notice of a hear- 35 ing thereon to be held at a time and place fixed in the notice, which shall36 not be less than twenty (20) days after the date of the service thereof. Each37 such hearing shall be conducted in the same manner as the hearingsas provided 38 for in chapter 2, title 41, of thisIdaho C code, or seek any other relief 39 authorized by title 41, Idaho Code. The director shall, after such hearing,40 make a report in writing in which he shall state his findings as to the facts,41 and he shall serve a copy thereof upon such person.42 (2) If such report charges a violation of this chapter and if such method43 of competition, act or practice has not been discontinued, the director may,44 through counsel, at any time after thirty (30) days after the service of such45 report cause a petition to be filed in the District Court of Ada county, to46 enjoin and restrain such person from engaging in such method, act or practice.47 The court shall have jurisdiction of the proceeding and shall have power to48 make and enter appropriate orders in connection therewith and to issue such49 writs as are ancillary to its jurisdiction or are necessary in its judgment to50 prevent injury to the public pendente lite.5 1 (3) A transcript of the proceedings before the director, including all2 evidence taken and the report and findings, shall be filed with such petition.3 If either party applies to the court for leave to adduce additional evidence4 and shows, to the satisfaction of the court, that such additional evidence is5 material and there were reasonable grounds for the failure to adduce such evi-6 dence in the proceeding before the director, the court may order such addi-7 tional evidence to be taken before the commissioner and to be adduced upon the8 hearing in such manner and upon such terms and conditions as may seem proper9 to the court. The director may modify his findings of fact or make new find-10 ings by reason of the additional evidence so taken, and he shall file such11 modified or new findings with the return of such additional evidence.12 (4) If the court finds that the method of competition complained of is13 unfair or that the act or practice complained of is unfair or deceptive, that14 the proceeding by the director with respect thereto is to the interest of the15 public and that the findings of the director are supported by the weight of16 the evidence, the court shall issue its orders enjoining and restraining the17 continuance of such method of competition, act or practice.18 SECTION 9. That Section 41-1322, Idaho Code, be, and the same is hereby 19 repealed. 20 SECTION 10. That Section 41-1417, Idaho Code, be, and the same is hereby 21 amended to read as follows: 22 41-1417. ADMISSION OF SUBSCRIBERS -- SERVICES NONDISCRIMINATORY. (1) Sub- 23 ject to rules and regulationswhich have been approved by the director as rea- 24 sonable, each rating organization shall permit any insurer, not a member, to 25 be a subscriber to its rating services for any kind of insurance or subdivi- 26 sion thereof, or class of risk or a part or combination thereof for which it 27 is authorized to act as a rating organization. Notice of proposed changes in 28 such rules and regulationsshall be given to subscribers. 29 (2) Each rating organization shall furnish its rating services without 30 discrimination to its members and subscribers. 31 (3) The reasonableness of any rule or regulationin its application to 32 subscribers, or the refusal of any rating organization to admit an insurer as 33 a subscriber, shall, at the request of any subscriber or any such insurer, be 34 reviewed by the director at a hearing heldupon at least ten (10) days' writ-35 tennotice to the rating organization and to the subscriber or insurer in 36 accordance with chapter 2, title 41, Idaho Code. If the director finds that 37 such rule or regulationis unreasonable in its application to subscribers, he 38 shall order that the rule or regulationshall not be applicable to sub- 39 scribers. If a rating organization fails to grant or reject an insurer's 40 application for subscribership within thirty (30) days after it was made, the 41 insurer may request a review by the director as if the application had been 42 rejected. If the director finds that the insurer has been refused admittance 43 to the rating organization as a subscriber without justification, he shall 44 order the rating organization to admit the insurer as a subscriber. If he 45 finds that the action of the rating organization was justified, he shall make 46 an order affirming its action. 47 SECTION 11. That Section 41-1426, Idaho Code, be, and the same is hereby 48 amended to read as follows: 49 41-1426. JOINT UNDERWRITING OR JOINT REINSURANCE. (1) Every group, asso- 50 ciation, or other organization of insurers which engages in joint underwriting 6 1 or joint reinsurance, shall be subject to regulation with respect thereto as 2 herein provided, subject, however, with respect to joint underwriting, to all 3 other applicable provisions of this chapter, or chapter 16 ( workmen'sworker's 4 compensation rates), title 41, Idaho Code, and, with respect to joint reinsur- 5 ance to sections as follows: 6 (a) Section 41-1427 (examination of rating, advisory, and joint reinsur- 7 ance organizations); 8 (b) Section 41-1432 (penalties); and 9 (c) Section 41-1434 (hearing procedure) ; and10 (d) Section 41-1435 (appeal from the director). 11 (2) If, after a hearing, the director finds that any activity or practice 12 of any such group, association or other organization is unfair or unreasonable 13 or otherwise inconsistent with the applicable provisions of this chapter, or 14 chapter 16, title 41, Idaho Code, he may issue a written order specifying in 15 what respects such activity or practice is unfair or unreasonable or otherwise 16 inconsistent with such provisions, and requiring the discontinuance of such 17 activity or practice. 18 SECTION 12. That Section 41-1432, Idaho Code, be, and the same is hereby 19 amended to read as follows: 20 41-1432. PENALTIES FOR VIOLATIONS OR NONCOMPLIANCE. (1) Violations of 21 this chapter, or of chapter 16 ( workmen'sworker's compensation rates), title 22 41, Idaho Code, shall be subject to the penalties provided by section 41-117 23 (general penalty), Idaho Code. 24 (2) After a hearing thereon of which not less than ten (10) days' written25 notice specifying the alleged noncompliance has been given the rating organi-26 zation or insurerin accordance with chapter 2, title 41, Idaho Code, the 27 director may suspend or revoke any insurer which has failed to comply with an 28 order of the director within the time limited by the order, or within any 29 extension of time which the director may grant. The director shall not so sus- 30 pend or revoke for failure to comply with his order until the time prescribed 31 for an appeal from such order has expired or if an appeal has been taken, 32 until such order has been affirmed. The director may determine when the sus- 33 pension or revocation shall become effective, and, subject to section 41-329, 34 Idaho Code, as to an insurer's certificate of authority, any suspension order 35 shall remain in effect for the period fixed by him unless he modifies or 36 rescinds the suspension or until the order upon which the suspension is based 37 is modified, rescinded or reversed. 38 SECTION 13. That Section 41-1434, Idaho Code, be, and the same is hereby 39 amended to read as follows: 40 41-1434. HEARING PROCEDURE. (1) An insurer, rating organization, or 41 insurance examining bureau aggrieved by an order or decision of the director 42 made without a hearing, may, within thirty (30) days after notice of the order 43 to the insurer, organization or bureau, make written request to the director 44 for a hearing thereon. The director shall hear such party or parties within45 twenty (20) days after receipt of such request and shall give not less than46 ten (10) days' written notice of the time and place of the hearing. The hear-47 ing shall be concluded within fifteen (15) days from the commencement thereof,48 provided however, that the director upon application with notice to the inter-49 ested parties and for good cause shown, may grant additional time, not exceed-50 ing fifteen (15) days. Within twenty (20) days after the conclusion of such51 hearing the director shall affirm, reverse or modify his previous action,7 1 specifying his reasons therefor, and shall give a copy of such order or deci-2 sion to all interested parties.3 (2) The order shall contain specific findings of fact by the director in4 relation to the matter before him, such findings to be supported by a prepon-5 derance of the evidence. Any party may file with the director proposed find-6 ings of fact, to be accepted or rejected by the director.7 (3) Pending such hearing and decision thereon the director may suspend or8 postpone the effective date of his previous action.9 (4) Nothing contained in this chapter or in chapter 16 (workmen's compen-10 sation rates), shall require the observance at any hearing before the director11 of formal rules of pleading or evidence, except that the right of any person12 to invoke such rules and the rule of exclusion of witnesses is preservedin 13 accordance with chapter 2, title 41, Idaho Code. 14 SECTION 14. That Section 41-1435, Idaho Code, be, and the same is hereby 15 repealed. 16 SECTION 15. That Section 41-1440, Idaho Code, be, and the same is hereby 17 amended to read as follows: 18 41-1440. HEARINGS. (1) Any person aggrieved by any rate charged, rating 19 plan, rating system, or underwriting rule followed or adopted by an insurer or 20 rating organization may himself or by his authorized representative make writ- 21 ten request of the insurer or rating organization to review the manner in 22 which the rate, plan, system, or rule has been applied with respect to insur- 23 ance afforded him. If the request is not granted within thirty (30) days after 24 it is made, the requestor may treat it as rejected. Any person aggrieved by 25 the refusal of an insurer or rating organization to grant the review 26 requested, or by the failure or refusal to grant all or part of the relief 27 requested, may file a written complaint and request for hearing with the 28 director, specifying the grounds relied upon. If the director has already dis- 29 posed of the issue as raised by a similar complaint, he may deny the hearing. 30 If the director believes that probable cause for the complaint does not exist 31 or that the complaint is not made in good faith, he shall deny the hearing. 32 Otherwise, and if he also finds that the complaint charges a violation of this 33 chapter and that the complainant would be aggrieved if the violation is 34 proven, he shall proceed as provided in subsection (2) ,of this section. 35 (2) If after examination of an insurer, rating organization, advisory 36 organization, or group, association or other organization of insurers which 37 engages in joint underwriting or joint reinsurance, or upon the basis of other 38 information, or upon sufficient complaint as provided in subsection (1) ,of 39 this section, the director has good cause to believe that such insurer, orga- 40 nization, group or association, or any rate, rating plan or rating system made 41 or used by any such insurer or rating organization, does not comply with the 42 requirements and standards of this chapter applicable to it, he shall, unless 43 he has good cause to believe such noncompliance is wilfulwillful, give notice 44 in writing to such insurer, organization, group or association stating therein 45 in what manner and to what extent noncompliance is alleged to exist and speci- 46 fying therein a reasonable time, not less than ten (10) days thereafter, in 47 which the noncompliance may be corrected. Notices under this section shall be 48 subject to disclosure according to chapter 3, title 9, Idaho Code, unless a 49 hearing is held under subsection (3) ,of this section. 50 (3) If the director has good cause to believe that such noncompliance is 51 wilfulwillful, or if within the period prescribed by the director in the 52 notice required by subsection (2) ,of this section, the insurer, organization, 8 1 group or association does not make such changes as may be necessary to correct 2 the noncompliance specified by the director or establish to the satisfaction 3 of the director that such specified noncompliance does not exist, then the 4 director may hold a public hearing in connection therewith ; and within a rea-5 sonable period of time, which shall be not less than ten (10) days before the6 date of such hearing, he shall mail written notice specifying the matters to7 be considered at such hearing to such insurer, organization, group or associ-8 ationin accordance with chapter 2, title 41, Idaho Code. If no notice has 9 been given as provided in subsection (2) ,of this section, the notice shall 10 state in what manner and to what extent noncompliance is alleged to exist. The 11 hearing shall not consider any subject not specified in the notice required by 12 subsection (2) ,of this section. 13 (4) If after a hearing pursuant to subsection (3) of this section, the 14 director finds: 15 (a) That any rate, rating plan or rating system violates the applicable 16 provisions of this chapter, he may issue an order to the insurer, or rat- 17 ing organization, group or association which has been the subject of the 18 hearing specifying in what respects such violation exists and requiring 19 compliance within a reasonable time thereafter. 20 (b) That an insurer, rating organization, advisory organization, or a 21 group, association or other organization of insurers which engages in 22 joint underwriting or joint reinsurance, is in violation of the applicable 23 provisions of this chapter other than the provisions dealing with rates, 24 rating plans or rating systems, he may issue an order to such insurer, 25 organization, group or association which has been the subject of the hear- 26 ing specifying in what respects such violation exists and requiring com- 27 pliance within a reasonable time thereafter. 28 (c) That any such violation by an insurer or rating organization which 29 has been the subject of hearing was wilfulwillful, he may suspend or 30 revoke, in whole or in part, the certificate of authority of such insurer 31 or the license of such rating organization with respect to the class of 32 insurance which has been a subject of the hearing. 33 (d) That any rating organization has wilfullywillfully engaged in any 34 fraudulent or dishonest act or practice, he may suspend or revoke, in 35 whole or in part, the license of such organization in addition to any 36 other penalty provided in this chapter. 37 (5) Except as otherwise provided in this chapter, all proceedings in con- 38 nection with the denial, suspension or revocation of a license or certificate 39 of authority shall be conducted in accordance with the provisions of chapters 40 2 and 3, of thistitle 41, Idaho Code, and the director shall have all the 41 powers granted to him therein. 42 SECTION 16. That Section 41-1610, Idaho Code, be, and the same is hereby 43 amended to read as follows: 44 41-1610. SUBSEQUENT DISAPPROVAL OF FILING. If any time subsequent to the 45 applicable review period provided for in section 41-1608(2), Idaho Code, the 46 director finds that a filing does not meet the requirements of this chapter, 47 he shall after a hearing held upon not less than ten (10) days' written48 notice, specifying the matters to be considered at such hearingin accordance 49 with chapter 2, title 41, Idaho Code, to every rating organization which made 50 the filing, issue an order specifying in what respects he finds that the fil- 51 ing fails to meet the requirements of this chapter, and stating when, within a 52 reasonable period thereafter, the filing shall be deemed no longer effective. 53 Copies of the order shall be sent to every such rating organization. The order 9 1 shall not affect any contract or policy made or issued prior to the expiration 2 of the period set forth in the order. 3 SECTION 17. That Section 41-1614, Idaho Code, be, and the same is hereby 4 amended to read as follows: 5 41-1614. DEVIATIONS. (1) Every member of a rating organization shall 6 adhere to the filings made on its behalf by such organization except that any 7 such insurer may make written application to the director for permission to 8 file a uniform percentage decrease or increase to be applied to the premiums 9 produced by the rating system so filed for a kind of insurance or for a class 10 of insurance which is found by the director to be a proper rating unit for the 11 application of such uniform percentage decrease or increase, or for a subdivi- 12 sion of a kind of insurance (a) comprised of a group of manual classifications 13 which is treated as a separate unit for rate-making purposes, or (b) for which 14 separate expense provisions are included in the filings of the rating organi- 15 zation. Such applications shall specify the basis for the modification and 16 shall be accompanied by the data upon which the applicant relies. A copy of 17 the application and data shall be sent simultaneously to such rating organiza- 18 tion. 19 (2) The director shall set a time and place for a hearing at which the 20 insurer and such rating organization may be heard and shall give them not less21 than ten (10) days' writtennotice thereof in accordance with chapter 2, title 22 41, Idaho Code. In the event the director is advised by the rating organiza- 23 tion that it does not desire a hearing he may, upon the consent of the appli- 24 cant, waive such hearing. In permitting or denying such modification with 25 respect to workmen'sworker's compensation insurance the director shall give 26 consideration to the operating methods and expense provisions of the insurer 27 as compared with the expense provisions included in the rating system filed by 28 such rating organization. 29 (3) The director shall issue an order permitting the modification for 30 such insurer to be filed if he finds it to be justified and it shall thereupon 31 become effective. He shall issue an order denying such application if he finds 32 that the modification is not justified or that the resulting premiums would be 33 excessive, inadequate or unfairly discriminatory. 34 (4) Each deviation permitted to be filed shall be effective for a period 35 of one (1) year from the date of such permission unless terminated sooner with 36 the approval of the director. 37 SECTION 18. That Section 41-1619, Idaho Code, be, and the same is hereby 38 amended to read as follows: 39 41-1619. OTHER PROVISIONS APPLICABLE. Subject to the express provisions 40 of this chapter, the following sections of chapter 14, title 41, Idaho Code, 41 shall, to the extent so applicable, also apply as to this chapter: 42 (1) Section 41-1421 (technical services). 43 (2) Section 41-1425 (advisory organizations). 44 (3) Section 41-1426 (joint underwriting or joint reinsurance). 45 (4) Section 41-1427 (examination of rating, advisory, and joint reinsur- 46 ance organizations). 47 (5) Section 41-1428 (recording, reporting of loss and expense experi- 48 ence). 49 (6) Section 41-1429 (interchange of data, consultation). 50 (7) Section 41-1431 (false, misleading information). 51 (8) Section 41-1432 (penalties for violations, noncompliance). 10 1 (9) Section 41-1433 (rules and regulations). 2 (10) Section 41-1434 (hearing procedure). 3 (11) Section 41-1435 (appeal from the director).4 SECTION 19. That Section 41-1620, Idaho Code, be, and the same is hereby 5 amended to read as follows: 6 41-1620. RATING ORGANIZATIONS. (1) A corporation, an unincorporated asso- 7 ciation, a partnership or an individual, whether located within or outside 8 this state, may make application to the director for license as a rating orga- 9 nization for such kinds of insurance or subdivisions thereof which are subject 10 to this chapter as are specified in its application, and shall file therewith: 11 (a) a copy of its constitution, its articles of agreement or association or 12 its certificate of incorporation, and of its bylaws, rules and regulations 13 governing the conduct of its business; (b) a list of its members and sub- 14 scribers; (c) the name and address of a resident of this state upon whom 15 notices or orders of the director or process affecting such rating organiza- 16 tion may be served; and (d) a statement of its qualifications as a rating 17 organization. If the director finds that the applicant is competent, trustwor- 18 thy and otherwise qualified to act as a rating organization and that its con- 19 stitution, articles of agreement or association or certificate of incorpora- 20 tion, and its bylaws, rules and regulations governing the conduct of its busi- 21 ness conform to the requirements of law, he shall issue a license specifying 22 the kinds of insurance or subdivisions thereof for which the applicant is 23 authorized to act as a rating organization. Every such application shall be 24 granted or denied in whole or in part by the director within sixty (60) days 25 of the date of its filing with him. Licenses issued pursuant to this section 26 shall remain in effect for one (1) year unless sooner suspended or revoked by 27 the director. The fee for the license shall be as provided by rule pursuant to 28 section 41-401, Idaho Code. Licenses issued pursuant to this section may be 29 suspended or revoked by the director, after hearing upon notice, in the event 30 the rating organization ceases to meet the requirements of this subsection. 31 Every rating organization shall notify the director promptly of every change 32 in: (a) its constitution, its articles of agreement or association or its cer- 33 tificate of incorporation, and its bylaws, rules and regulations governing the 34 conduct of its business; (b) its list of members and subscribers; and (c) the 35 name and address of the resident of this state designated by it upon whom 36 notices or orders of the director or process affecting such rating organiza- 37 tion may be served. 38 (2) Subject to rules and regulations which have been approved by the 39 director as reasonable, each rating organization shall permit any insurer, not 40 a member, to be a subscriber to its rating services for any kind of insurance 41 or subdivision thereof for which it is authorized to act as a rating organiza- 42 tion. Notice of proposed changes in such rules and regulations shall be given 43 to subscribers. Each rating organization shall furnish its rating services 44 without discrimination to its members and subscribers. The reasonableness of 45 any rule or regulation in its application to subscribers, or the refusal of 46 any rating organization to admit an insurer as a subscriber, shall, at the 47 request of any subscriber or any such insurer, be reviewed by the director at 48 a hearing held upon at least ten (10) days' writtennotice to such rating 49 organization and to such subscriber or insurer in accordance with chapter 2, 50 title 41, Idaho Code. If the director finds that such rule or regulation is 51 unreasonable in its application to subscribers, he shall order that such rule 52 or regulation shall not be applicable to subscribers. If the rating organiza- 53 tion fails to grant or reject an insurer's application for subscribership 11 1 within thirty (30) days after it was made, the insurer may request a review by 2 the director as if the application had been rejected. If the director finds 3 that the insurer has been refused admittance to the rating organization as a 4 subscriber without justification, he shall order the rating organization to 5 admit the insurer as a subscriber. If he finds that the action of the rating 6 organization was justified, he shall make an order affirming its action. 7 (3) Every member of or subscriber to a rating organization shall adhere 8 to the rating organization's manuals of classifications, rules, rates, rating 9 plans and any modifications of any of the foregoing, except to the extent that 10 the rules of such rating organizations permit departures therefrom. 11 (4) No rating organization shall adopt any rule the effect of which would 12 be to prohibit or regulate the payment of dividends, savings or unabsorbed 13 premium deposits allowed or returned by insurers to their policyholders, mem- 14 bers or subscribers. 15 SECTION 20. That Section 41-1621, Idaho Code, be, and the same is hereby 16 amended to read as follows: 17 41-1621. APPEAL BY MINORITY. (1) Any member of or subscriber to a rating 18 organization may appeal to the director from the action or decision of the 19 rating organization in approving or rejecting any proposed change in or addi- 20 tion to the filings of the rating organization and the director shall, after a 21 hearing held upon not less than ten (10) days' writtennotice to the 22 appeallantappellant and to the rating organization in accordance with chapter 23 2, title 41, Idaho Code, issue an order approving the action or decision of 24 the rating organization or directing it to give further consideration to such 25 proposal, or, if such appeal is from the action or decision of the rating 26 organization in rejecting a proposed addition to its filings, he may, in the 27 event he finds that such action or decision was unreasonable, issue an order 28 directing the rating organization to make an addition to its filings, on 29 behalf of its members and subscribers, in a manner consistent with his find- 30 ings, within a reasonable time after the issuance of such order. 31 (2) If such appeal is based upon the failure of the rating organization 32 to make a filing on behalf of such member ofor subscriber which is based on a 33 system of expense provisions which differs, in accordance with the right 34 granted in section 41-1603(2), Idaho Code, from the system of expense provi- 35 sions included in a filing made by the rating organization, the director 36 shall, if he grants the appeal, order the rating organization to make the 37 requested filing for use by the appellant. In deciding such appeal the direc- 38 tor shall apply the standards set forth in sections 41-1603 and 541-1604, 39 Idaho Code. 40 SECTION 21. That Section 41-1622, Idaho Code, be, and the same is hereby 41 amended to read as follows: 42 41-1622. INFORMATION TO INSUREDS -- REVIEW OF INSURED'S COMPLAINT. (1) 43 Every rating organization and every insurer which makes its own rates shall, 44 within a reasonable time after receiving written request therefor and upon 45 payment of such reasonable charges as it may make, furnish to any insured 46 affected by a rate made by it, or to the authorized representative of such 47 insured, all pertinent information as to such rate. 48 (2) Every rating organization and every insurer which makes its own rates 49 shall provide within this state reasonable means whereby any person aggrieved 50 by the application of its rating system may be heard, in person or by his 51 authorized representative, on his written request to review the manner in 12 1 which such rating system has been applied in connection with the insurance 2 afforded him. If the rating organization or insurer fails to grant or reject 3 such request within thirty (30) days after it is made, the applicant may pro- 4 ceed in the same manner as if his application had been rejected. Any party 5 affected by the action of such rating organization or such insurer on such 6 request may, within thirty (30) days after written notice of such action, 7 appeal to the director, who, after a hearing held upon not less than ten (10)8 days' writtennotice to the appellant and to such rating organization or 9 insurer in accordance with chapter 2, title 41, Idaho Code, may affirm or 10 reverse such action. 11 SECTION 22. That Section 41-1623, Idaho Code, be, and the same is hereby 12 amended to read as follows: 13 41-1623. APPEAL FROM FILING. (1) Any person or organization aggrieved 14 with respect to any filing which is in effect may make written application to 15 the director for a hearing thereon, provided, however, that the insurer or 16 rating organization that made the filing shall not be authorized to proceed 17 under this section. Such application shall specify the grounds to be relied 18 upon by the applicant. If the director finds that the application is made in 19 good faith, that the applicant would be so aggrieved if his grounds are estab- 20 lished, and that such grounds otherwise justify holding such a hearing, he 21 shall , within thirty (30) days after receipt of such application,hold a hear- 22 ing upon not less than ten (10) days' writtennotice to the applicant and to 23 every insurer and rating organization which made the filing in accordance with 24 chapter 2, title 41, Idaho Code. 25 (2) If, after such hearing, the director finds that the filing does not 26 meet the requirements of the law he shall issue an order specifying in what 27 respects he finds that such filing fails to meet the requirements of law, and 28 stating when, within a reasonable period thereafter, such filing shall be 29 deemed no longer effective. Copies of the order shall be sent to the applicant 30 and to every such insurer and rating organization. The order shall not affect 31 any contract or policy made or issued prior to the expiration of the period 32 set forth in the order. 33 SECTION 23. That Section 41-1625, Idaho Code, be, and the same is hereby 34 repealed. 35 SECTION 24. That Section 41-2309, Idaho Code, be, and the same is hereby 36 amended to read as follows: 37 41-2309. FILING, APPROVAL AND WITHDRAWAL OF FORMS. (1) All policies, cer- 38 tificates of insurance, notices of proposed insurance, applications for insur- 39 ance, endorsements and riders delivered or issued for delivery in this state 40 and the schedule of premium rates pertaining thereto shall be filed with the 41 director. 42 (2) The director shall within thirty (30) days after the filing of any 43 such policies, certificates of insurance, notices of proposed insurance, 44 applications for insurance, endorsements and riders, disapprove any such form 45 if the premium rates charged or to be charged are excessive in relation to 46 benefits, or if it contains provisions which are unjust, unfair, inequitable, 47 misleading, deceptive or encourage misrepresentation of the coverage, or are 48 contrary to any provision of this code or of any rule or regulationpromul- 49 gated thereunder. In determining whether to disapprove any such forms the 50 director shall give due consideration to past and prospective loss experience 13 1 within and outside this state, to underwriting practice and judgment to the 2 extent appropriate, and to all other relevant factors within and outside this 3 state. 4 (3) If the director notifies the insurer that the form is disapproved, it 5 is unlawful thereafter for such insurer to issue or use such form. In such 6 notice, the director shall specify the reason for his disapproval and state 7 that a hearing will be granted within twenty (20) days after request in writ- 8 ing by the insurer. No such policy, certificate of insurance, notice of pro- 9 posed insurance, nor any application, endorsement or rider, shall be issued or 10 used until the expiration of thirty (30) days after it has been so filed, 11 unless the director shall give his prior written approval thereto. 12 (4) The director may, at any time after a hearing held not less than13 twenty (20) daysafter writtennotice to the insurer in accordance with chap- 14 ter 2, title 41, Idaho Code, withdraw his approval of any such form on any 15 ground set forth in subsection (2) aboveof this section. The written notice 16 of such hearing shall state the reason for the proposed withdrawal. 17 (5) The insurer shall not issue such forms or use them after the effec- 18 tive date of such withdrawal. 19 (6) If a group policy of credit life insurance or credit disability 20 insurance: (a) has been delivered in this state before the effective date of 21 this code, or (b) has been or is delivered in another state before or after 22 the effective date of this code, the insurer shall be required to file only 23 the group certificate and notice of proposed insurance as specified in subsec- 24 tions (2) and (4) of section 41-2308, Idaho Code, and such forms shall be 25 approved by the director if they conform with the requirements specified in 26 such subsections and if the schedules of premium rates applicable to the 27 insurance evidenced by such certificate or notice are not in excess of the 28 insurer's schedules of premium rates on file with the director; provided, how- 29 ever, the premium rate in effect on existing group policies may be continued 30 until the first policy anniversary date following the date this code becomes 31 effective. 32 (7) Any order or final determination of the director under the provisions 33 of this section shall be subject to judicial review as provided in chapter 2, 34 of thistitle 41, Idaho C code. 35 SECTION 25. That Section 41-2315, Idaho Code, be, and the same is hereby 36 repealed. 37 SECTION 26. That Section 41-2316, Idaho Code, be, and the same is hereby 38 amended to read as follows: 39 41-2316. PENALTIES. In addition to any other penalty provided by law, any 40 person who violates an order of the director after it has become final, and 41 while such order is in effect, shall, upon proof thereof to the satisfaction 42 of the court, forfeit and pay to the state of Idaho a sum not to exceed two 43 hundred andfifty dollars ($250) which may be recovered in a civil action, 44 except that if such violation is found to be wilfulwillful, the amount of 45 such penalty shall be a sum not to exceed one thousand dollars ($1,000). The 46 director, in his discretion, may revoke or suspend the license or certificate 47 of authority of the person guilty of such violation. Such order for suspension 48 or revocation shall be upon notice and hearing, and shall be subject to judi- 49 cial review as provided in section 41-2315chapter 52, title 67, Idaho Code.
STATEMENT OF PURPOSE RS 14434C2 The insurance code, Idaho Code Title 41, contains a number of references to administrative hearing procedures that were adopted before the current version of the Administrative Procedures Act (APA) was adopted. The purpose of the proposed legislation is to make Title 41 and the APA more consistent relating to administrative hearing procedures. FISCAL IMPACT None. CONTACT Name: Shad Priest Agency: Insurance, Dept. of Phone: 334-4214 Statement of Purpose/Fiscal Impact H 118