Insurers to Receive More Oversight on Policy Cancellations

Tighter regulations on policy cancellations by health insurance providers will begin Aug. 18, the California Department of Insurance announced. The regulations come in response to insurers who have exploited vagueness in the state’s current laws and regulations in order to improperly rescind policies, the department said. The new regulations require the use of new and improved insurance applications approved by the department before insurers can rescind policies, more flexibility for applicants who cannot remember the answers to particular health history questions, the ability for customers to receive copies of their applications to check for mistakes and transparency by agents assisting customers in filling out applications. The new regulations prohibit insurers from rescinding policies when they are not in compliance with specified underwriting practice regulations, and they restrict health condition and history questions to only those that are necessary for medical underwriting. The new rules ban insurers from using confusing phrasing in application questions, such as double-negatives and certain compound questions. They prohibit insurers from conducting certain rescission-focused investigations long after becoming aware of possible misrepresentations or omissions on applications, and from relying solely on self-reported health history when possible. “Keeping your health insurance can literally be the matter of life and death, and I have zero tolerance for insurers who use pretexts to illegally rescind policies,” said Insurance Commissioner Steve Poizner. Jessica Selva