Pennsylvania Act 2024-19 — INSURANCE (40 PA.C.S.) - PET INSURANCE AND IMPOSING PENALTIES

Act text

Session of 2024

No. 2024-19

HB 660

AN ACT

Amending Title 40 (Insurance) of the Pennsylvania Consolidated Statutes, in regulation of insurers and related persons generally, providing for pet insurance; and imposing penalties.

The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1. Part II of Title 40 of the Pennsylvania Consolidated Statutes is amended by adding a chapter to read:

CHAPTER 47

PET INSURANCE

Sec.

4701. Purpose and scope of chapter.

4702. Definitions.

4703. Use of definitions in pet insurance policy.

4704. Right to examine and return pet insurance policy.

4705. Policy disclosures.

4706. Policy conditions.

4707. Sales practices for pet insurance policies.

4708. Sales practices for wellness programs.

4709. Insurance producer training.

4710. Violations.

4711. Rules and regulations.

§ 4701. Purpose and scope of chapter.

(a) Purpose.--The purpose of this chapter is to create a comprehensive legal framework for the sale, solicitation and negotiation of pet insurance policies in this Commonwealth.

(b) Applicability.--This chapter applies to a pet insurance policy that is:

(1) sold, solicited or negotiated in this Commonwealth and issued to a resident of this Commonwealth; or

(2) delivered or issued for delivery in this Commonwealth.

§ 4702. Definitions.

The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:

"Chronic condition." A condition that can be treated or managed, but not cured.

"Commissioner." The Insurance Commissioner of the Commonwealth.

"Congenital anomaly or disorder." A condition that is present from birth, whether inherited or caused by the environment, which may cause or contribute to illness or disease.

"Hereditary disorder." An abnormality that is genetically transmitted from parent to offspring and may cause illness or disease.

"Insurance producer." As defined in section 601-A of the act of May 17, 1921 (P.L.789, No.285), known as The Insurance Department Act of 1921.

"Insured." A person on whose behalf a pet insurer is obligated to pay or reimburse covered veterinary expenses under a pet insurance policy.

"Orthopedic condition." As follows:

(1) A condition affecting the bones, skeletal muscle, cartilage, tendons, ligaments or joints.

(2) The term includes elbow dysplasia, hip dysplasia, intervertebral disc degeneration, patellar luxation and ruptured cranial cruciate ligaments.

(3) The term does not include cancer or a metabolic, hemopoietic or autoimmune disease.

"Pet insurance policy." A property insurance policy, certificate or rider that provides coverage for accidents and illnesses of pets.

"Pet insurer." An insurer that issues a pet insurance policy.

"Practice of veterinary medicine." As defined in section 3 of the act of December 27, 1974 (P.L.995, No.326), known as the Veterinary Medicine Practice Act.

"Preexisting condition." A condition for which any of the following apply regarding a pet prior to the effective date of a pet insurance policy for the pet or during any waiting period:

(1) A veterinarian provided medical advice regarding the pet.

(2) The pet received previous treatment.

(3) Based on information from verifiable sources, the pet had signs or symptoms directly related to the condition for which a claim is being made.

"Renewal." As defined in section 3 of the act of July 22, 1974 (P.L.589, No.205), known as the Unfair Insurance Practices Act.

"Veterinarian." An individual who holds a valid license to engage in the practice of veterinary medicine from the appropriate licensing entity of the jurisdiction in which the individual engages in the practice of veterinary medicine.

"Veterinary expenses." The costs associated with medical advice, diagnosis, care or treatment provided by a veterinarian, including the cost of drugs prescribed by a veterinarian.

"Waiting period." As follows:

(1) The period of time specified in a pet insurance policy that is required to transpire before some or all of the coverage in the policy can begin.

(2) A waiting period may not be applied to a renewal of existing coverage.

"Wellness program." As follows:

(1) A subscription or reimbursement-based program that is separate from a pet insurance policy that provides goods and services to promote the general health, safety or well-being of the pet.

(2) A wellness program does not assume or transfer any risk of loss.

§ 4703. Use of definitions in pet insurance policy.

(a) Terms.--If a pet insurer uses any of the terms in section 4702 (relating to definitions) in a pet insurance policy, the definition under section 4702 shall apply and the pet insurer shall include the definition of the term in the pet insurance policy.

(b) Website.--A pet insurer shall make each definition described in subsection (a) available through a clear and conspicuous link on the main page of the publicly accessible Internet website of the pet insurer or pet insurer's program administrator.

(c) Construction.--Nothing in this chapter shall:

(1) prohibit or limit the types of exclusions that a pet insurer may use in a pet insurance policy; or

(2) require a pet insurer to have any of the limitations or exclusions described in this chapter.

§ 4704. Right to examine and return pet insurance policy.

(a) General rule.--Except as provided in subsection (b), an individual who applies for a pet insurance policy may examine the pet insurance policy and, if not satisfied with the pet insurance policy for any reason, may return the pet insurance policy to the company that produced the pet insurance policy, or an agent or insurance producer of the company, within 30 days of receipt of the pet insurance policy. The following apply:

(1) The company that produced the pet insurance policy shall refund any premium paid by the individual regarding the pet insurance policy within 30 days after receiving the returned pet insurance policy.

(2) A refunded premium shall be sent directly to the person who paid the premium.

(3) If a pet insurance policy is returned in accordance with this subsection, the pet insurance policy shall be void as if it had never been issued.

(b) Exception.--Subsection (a) shall not apply if the individual is an insured who has filed a claim under the pet insurance policy.

(c) Notice.--Each pet insurance policy shall have the following notice printed in at least 12-point type, which shall be included on the first page of the pet insurance policy or attached to the pet insurance policy:

You have 30 days from the day you receive this policy, certificate or rider to review it and return it to the company if you decide not to keep it. You do not have to tell the company why you are returning it. If you decide not to keep it, simply return it to the company at its administrative office or you may return it to the agent or insurance producer that you bought it from as long as you have not filed a claim. You must return it within 30 days of the day you first received it. The company will refund the full amount of any premium paid within 30 days after it receives the returned policy, certificate or rider. The premium refund will be sent directly to the person who paid it. The policy, certificate or rider will be void as if it had never been issued.

§ 4705. Policy disclosures.

(a) Information.--A pet insurer shall clearly and conspicuously disclose, in accordance with subsection (b), the following information to an insured or a prospective insured in a pet insurance policy:

(1) Whether the pet insurance policy excludes coverage due to any of the following:

(i) A preexisting condition.

(ii) A hereditary disorder.

(iii) A congenital anomaly or disorder.

(iv) A chronic condition.

(2) If the pet insurance policy includes any other exclusions, the following statement: "Other exclusions may apply. Please refer to the exclusions section of the policy for more information."

(3) Any limitation of coverage through a waiting period or affiliation period.

(4) Any deductible or coinsurance.

(5) The annual or lifetime policy limit of the pet insurance policy, if any.

(6) Whether the pet insurer will reduce coverage or increase premiums based on the insured's claim history, the age of the covered pet or a change in the geographic location of the insured.

(7) The name of the underwriting company if it differs from the brand name used to market and sell the product.

(8) A summary description of the basis or formula on which the pet insurer determines claim payments under the pet insurance policy.

(9) If a pet insurer uses a benefit schedule to determine claim payment under the pet insurance policy:

(i) The applicable benefit schedule in the pet insurance policy.

(ii) All benefit schedules used by the pet insurer under its pet insurance policies.

(10) If a pet insurer determines claim payments under a pet insurance policy based on usual and customary fees, or any other reimbursement limitation based on prevailing veterinary service provider charges:

(i) The usual and customary fee limitation provision in the pet insurance policy that clearly describes the pet insurer's basis for determining usual and customary fees and how that basis is applied in calculating claim payments.

(ii) The pet insurer's basis for determining usual and customary fees.

(11) If any medical examination by a veterinarian is required to effectuate coverage, the required aspects of the examination and a statement that the examination documentation may result in a preexisting condition exclusion.

(12) Clear and prominent disclosure of waiting periods, if any, and requirements applicable to them.

(b) Methods of disclosure.--

(1) A pet insurer shall prepare a separate document in at least 12-point type that contains the information specified under subsection (a) and in section 4704 (relating to right to examine and return pet insurance policy), which shall be titled "Insurer Disclosure of Important Policy Provisions." The following apply:

(i) The pet insurer shall post the document through a clear and conspicuous link on the main page of the publicly accessible Internet website of the pet insurer or pet insurer's program administrator.

(ii) The pet insurer shall provide the insured a copy of the document upon issuance or delivery of the pet insurance policy.

(2) A pet insurer shall disclose the information required under subsection (a)(8), (9) and (10) in the language of the pet insurance policy itself.

(3) A pet insurer shall disclose the information required under subsection (a)(8), (11) and (12) prior to the issuance of the pet insurance policy.

(4) The information specified under subsection (a)(8), (9) and (10) shall be posted through a clear and conspicuous link on the main page of the publicly accessible Internet website of the pet insurer or pet insurer's program administrator.

(c) Additional information.--At the time that a pet insurance policy is issued or delivered to an insured, the pet insurer shall include a written disclosure with the following information, printed in 12-point boldface type:

(1) The department's mailing address, toll-free telephone number and website address.

(2) The address and customer service telephone number of the pet insurer or the agent or broker of record.

(3) If the pet insurance policy was issued or delivered by an agent or broker, a statement advising the insured to contact the broker or agent for assistance.

(d) Other requirements.--The disclosures required in this section shall be in addition to any other disclosure requirements required by law or regulation.

§ 4706. Policy conditions.

(a) Preexisting conditions.--

(1) A pet insurer may issue pet insurance policies that exclude coverage on the basis of one or more preexisting conditions if the pet insurer follows the disclosure requirements of section 4705 (relating to policy disclosures).

(2) A pet insurer has the burden of proving that the preexisting condition exclusion under paragraph (1) applies to the condition for which a claim is being made.

(3) A condition for which coverage is afforded on a pet insurance policy may not be considered a preexisting condition upon any renewal of the pet insurance policy.

(b) Waiting periods.--

(1) A waiting period under a pet insurance policy for an accident is prohibited.

(2) A waiting period under a pet insurance policy for an illness or orthopedic condition not resulting from an accident is permitted in accordance with the following:

(i) The waiting period may not exceed 30 days.

(ii) The waiting period, and the requirements applicable to any waiting period, must be clearly and prominently disclosed to a prospective insured prior to the purchase of the pet insurance policy.

(iii) The pet insurance policy must contain a provision that allows for the waiver of a waiting period upon completion of a medical examination in accordance with the following:

(A) The pet insurer may require the medical examination to be conducted by a veterinarian.

(B) The medical examination shall be paid for by the insured, unless the pet insurance policy specifies that the pet insurer will pay for the medical examination.

(C) The pet insurer may specify elements to be included as part of the medical examination and require documentation regarding the medical examination, provided that the specifications do not unreasonably restrict the waiver.

(c) Examination not required upon renewal.--A pet insurer may not require a veterinary examination of a pet covered under a pet insurance policy when the insured seeks a renewal of the pet insurance policy.

(d) Wellness benefits.--

(1) If a pet insurer includes any prescriptive, wellness or noninsurance benefits in the pet insurance policy form, those benefits become part of the policy contract and must follow all applicable insurance laws and regulations.

(2) An insured's eligibility to purchase a pet insurance policy may not be based on participation, or lack of participation, in a separate wellness program.

(e) Acceptance.--A pet insurer shall accept a claim submitted by an insured electronically or through physical mail.

§ 4707. Sales practices for pet insurance policies.

A pet insurer:

(1) May not make any false, deceptive or misleading statement in the advertisement of a pet insurance policy.

(2) Shall disclose in any advertisement regarding a pet insurance policy a statement as to whether the pet insurer will reduce coverage or increase premiums based on:

(i) the insured's claim history;

(ii) the species or breed of the pet covered under the pet insurance policy;

(iii) the age of the pet covered under the pet insurance policy; or

(iv) a change in the geographic location of the insured.

§ 4708. Sales practices for wellness programs.

(a) Prohibitions.--A pet insurer or insurance producer may not characterize a wellness program as pet insurance.

(b) Conditions.--The sale, solicitation or negotiation of a wellness program by a pet insurer or insurance producer shall be in accordance with the following requirements:

(1) The purchase of the wellness program shall not be required for the purchase of a pet insurance policy.

(2) The costs of the wellness program shall be separate and identifiable from any pet insurance policy sold by a pet insurer or insurance producer.

(3) The terms and conditions of the wellness program must be separate from any pet insurance policy sold by a pet insurer or insurance producer.

(4) The products or coverages available through the wellness program shall not duplicate products or coverages available through the pet insurance policy.

(5) The advertising of the wellness program shall not be misleading and shall be in accordance with this subsection.

(6) The insured or prospective insured shall be provided a notice containing the following information in 12-point boldface type:

(i) A statement that a wellness program is not insurance.

(ii) The address and customer service telephone number of the pet insurer or insurance producer or broker of record.

(iii) The department's mailing address, toll-free telephone number and website address.

(c) Construction.--If a pet insurance policy contains coverage for benefits described as "wellness benefits," the benefits shall be considered insurance for purposes of this chapter.

§ 4709. Insurance producer training.

(a) Prohibitions.--An insurance producer may not sell, solicit or negotiate a pet insurance policy or related product unless the insurance producer is appropriately licensed in this Commonwealth and has completed the training requirements of subsection (c).

(b) Requirement.--A pet insurer shall ensure that its insurance producers are trained under subsection (c) and have been appropriately trained on the coverages and conditions of its pet insurance policies and related products.

(c) Training requirements.--The training required under this section shall include the following topics:

(1) Pets' preexisting conditions and waiting periods.

(2) The differences between pet insurance and noninsurance wellness programs.

(3) Pets' hereditary disorders, congenital anomalies or disorders and chronic conditions and how pet insurance policies interact with these conditions or disorders.

(4) Rating, underwriting, renewal and other related administrative topics.

(d) Training in other states.--The satisfaction of the training requirements of another state that are substantially similar to the provisions of subsection (c) shall be deemed to satisfy the training requirements in this Commonwealth.

§ 4710. Violations.

(a) Penalties and remedies.--Upon a determination by hearing that this chapter has been violated, the commissioner may pursue one or more of the following courses of action:

(1) Issue an order requiring the person in violation to cease and desist from engaging in the violation.

(2) Suspend or revoke or refuse to issue or renew the certificate or license of the person in violation.

(3) Impose a civil penalty of not more than $5,000 for each violation.

(4) Impose any other penalty or remedy deemed appropriate by the commissioner, including restitution.

(b) Other remedies.--

(1) The enforcement remedies imposed under this section are in addition to any other remedies or penalties that may be imposed by any other applicable statute, including the act of July 22, 1974 (P.L.589, No.205), known as the Unfair Insurance Practices Act.

(2) A violation of this chapter is deemed and defined by the commissioner to be an unfair method of competition and an unfair or deceptive act or practice in accordance with the Unfair Insurance Practices Act.

§ 4711. Rules and regulations.

The commissioner may promulgate rules and regulations to administer and enforce this chapter.

Section 2. This act shall take effect in 180 days.

APPROVED--The 10th day of June, A.D. 2024.

JOSH SHAPIRO