What’s on Your Adverse Action Notices? | Wolters Kluwer Financial Services
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  • What’s on Your Adverse Action Notices?

    Heidi Zibel

    by Heidi A. Zibel, Esq., Senior Insurance Compliance Analyst, Insurance Compliance Solutions

    Published December 06, 2012

    What needs to be “on” an adverse decision notice is frequently evaluated in market conduct actions. Typical types of information required on some cancellation and nonrenewal notices are replacement insurance eligibility and right to file a complaint or request a hearing with the state insurance department.

    Two examples of state requirements concerning replacement insurance eligibility information are shown below:

    • Maryland requires that both commercial and personal lines mid-term cancellation and nonrenewal notices must give the policyholder a valid notice “of the possible right to replace the insurance under the Maryland Property Insurance Availability Act, through the Maryland Automobile Insurance Fund, or through another plan for which the insured may be eligible.” Insurance Code Section 27-603 applies to commercial lines and Section 27-602 applies to personal lines.
    • Pennsylvania Insurance Code Section 40-29-105 (40 P.S. Section 1171.5) requires insurers cancelling owner-occupied private residential properties to include information advising the insured of possible eligibility for insurance under “The Pennsylvania Fair Plan Act.”

    States requiring cancellation notices to provide the right to complain to the insurance department include:

    • For personal automobile policies in Arizona, an insurer’s nonrenewal and cancellation notices must contain the insured’s right to complain to the insurance director under to Arizona Insurance Code Section 20-1632.
    • Colorado’s 3 CCR 702 Reg. 5-2-12 s 5 requires insurers intending to cancel, nonrenew, increase premium or reduce coverage prominently display the insured’s right to submit a complaint to the Division of Insurance and the following information on the notice form: “If you have concerns regarding this intended action, you have the right to file a complaint with the Colorado Division of Insurance. Complaints may be submitted through the mail or electronically. Please contact [your producer, (agent) or the company at (phone number)], for further information.”

    Editor’s Recommendation: Keep current with state regulatory guidance regarding adverse actions in OneSumX NILS INsource, the OneSumX NILS Matrices and OneSumX NILS Cancellation and Nonrenewal.

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