§ 3454 — Sponsored group personal insurance

§ 3454. Sponsored group personal insurance. (a) For purposes of this\nsection, the following definitions shall apply:\n (1) "Certificate" or "certificate of insurance" means any policy,\ncontract or other evidence of insurance, or rider or endorsement\nthereto, issued to a group member under a group policy.\n (2) "Conditional renewal" means any change of limits, change in type\nof coverage, reduction or elimination of coverage, increased deductible\nor addition of exclusion, or increased premiums in excess of ten percent\n(exclusive of any premium increase generated as a result of experience\nrating, loss rating or retrospective rating).\n (3) "Personal excess insurance" means insurance as defined in\nparagraph thirteen or fourteen of subsection (a) of section one thousand\none hundred thirteen of this chapter, written as an excess insurance\npolicy.\n (4) "Personal property floater insurance" means insurance as defined\nin subparagraph (C) of paragraph seven of subsection (a) of section one\nthousand one hundred thirteen of this chapter.\n (5) "Group policy" means a group insurance policy providing personal\nexcess insurance, personal property floater insurance, renters'\ninsurance, and vintage vehicle insurance, or any combination thereof,\ninsuring sponsor group members.\n (6) "Group policyholder" means a sponsor.\n (7) "Renters' insurance" means insurance insuring residential property\ntenants, housing cooperative shareholders, or condominium owners against\nthe contingencies described in subparagraphs (A), (B) and (C), or (B)\nand (C) of paragraph two of subsection (a) of section three thousand\nfour hundred twenty-five of this article.\n (8) "Vintage vehicle insurance" means insurance insuring against\nlosses or liabilities arising out of the ownership, operation, or use of\na motor vehicle, and covering a motor vehicle that is antique, classic,\nor made from a kit. For the purposes of this paragraph:\n (A) an "antique" motor vehicle means a private passenger motor vehicle\nthat is at least twenty-five years old, and is maintained primarily for\nuse in exhibitions, club activities, parades, or other functions of\npublic interest, and occasionally used for other purposes; and\n (B) a "classic" motor vehicle is a private passenger motor vehicle\nthat is at least ten years old, may be used on a regular basis, and the\nmotor vehicle's value is significantly higher than the average value of\nother motor vehicles of the same make and model year.\n (9) "Sponsor" means:\n (A) an association, organization, labor union, federation, fraternity,\nclub or similar entity:\n (i) in which the members are engaged in a common pursuit or\nenterprise;\n (ii) that was formed for purposes other than obtaining insurance;\n (iii) that has been in existence for more than three years;\n (iv) that has twenty-five or more members; and\n (v) that has adopted by-laws or similar governance rules, and a method\nto enroll or register members; or\n (B) a bank, corporation, partnership, trust company, or trustee of a\ntrust that owns twenty-five or more residential properties or living\nunits or a tenants' association, condominium association, or similar\norganization, with respect to renters' insurance sold to lessees or\noccupants of residential properties or living units owned by the bank,\ncorporation, partnership or trust, or who are members of the tenants'\nassociation, condominium association, or similar organization.\n (10) "Sponsor group member" means:\n (A) an enrolled member, officer, or director of a sponsor;\n (B) any domestic partner of the enrolled member, officer, or director;\n (C) any person related to the enrolled member, officer, or director by\nblood, marriage, adoption, or operation of law, who resides in the same\nhousehold (including a ward or foster child) or who is a dependent child\naway at school; or\n (D) a lessee or occupant of a residential property or living unit\nowned by a bank, corporation, partnership or trust when the bank,\ncorporation, partnership, trust company, or trustee of the trust is the\nsponsor, or when the sponsor is a tenants' association, condominium\nassociation, or similar organization.\n (b) A group policy written pursuant to this section may be issued or\nissued for delivery in this state only in compliance with the provisions\nof this section.\n (c) The premium for the group policy, including certificates, shall be\npaid by the sponsor group members. An insurer shall not provide coverage\nin regard to a group policy that requires the purchase of insurance as a\ncondition of sponsor group membership or imposes any penalty upon a\nsponsor group member if the sponsor group member does not purchase\ninsurance. If so authorized by the insurer, the sponsor group may\naggregate the group members' premiums and remit them to the insurer or\nto the licensed insurance agent or broker representing the sponsor\ngroup. If an insurer authorizes a sponsor group to aggregate and remit\nthe premiums of sponsor group members, then payment to the sponsor group\nby a sponsor group member shall be deemed to be payment to the insurer.\n (d) (1) Any policy dividend, retrospective premium credit, or\nretrospective premium refund not distributed shall be:\n (A) applied to reduce future premiums and, accordingly, future\ncontributions, of existing or future group sponsor members, or both; or\n (B) paid or refunded to those sponsor group members insured on the\ndate the payment or refund is made to the group policyholder, if\ndistributed by the group policyholder, or on the date of mailing, if\ndistributed directly by the insurer, subject to the following\nrequirements:\n (i) the insurer shall be responsible for determining the allocation of\nthe payment or refund to the sponsor group members;\n (ii) if the group policyholder distributes the payment or refund, the\ninsurer shall be responsible for audit to ascertain that the payment or\nrefund is actually made in accordance with the allocation procedure; and\n (iii) if the group policyholder fails to make the payment or refund,\nthe insurer shall make the payment or refund directly or use the method\nprovided in subparagraph (A) of this paragraph.\n (2) Notwithstanding paragraph one of this subsection, if a dividend\naccrues upon termination of coverage under a group policy, then the\ngroup policyholder shall pay or refund the dividend to the sponsor group\nmembers insured on the date the payment or refund is made to the group\npolicyholder.\n (e) The insurer shall treat in like manner all eligible sponsor group\nmembers of the same class and sponsor status.\n (f) A group policy or certificate written pursuant to this section\nshall not be eligible for placement by an excess line broker licensed\npursuant to article twenty-one of this chapter.\n (g) A group policy written pursuant to this section shall provide\nseparate limits of coverage under the certificate issued to a sponsor\ngroup member.\n (h)(1) The insurer shall be responsible for the mailing or delivery of\na certificate of insurance to each sponsor group member insured under\nthe group policy. The insurer also shall be responsible for the mailing\nor delivery to each sponsor group member of any amended certificate of\ninsurance, or endorsement to the certificate, whenever there is a change\nof limits; change in type of coverage; addition, reduction, or\nelimination of coverage; or addition of an exclusion, under the group\npolicy or certificate. If so authorized by the insurer, the sponsor\ngroup may mail or deliver certificates, endorsements and other coverage\nnotices to the sponsor group members on behalf of the insurer.\n (2) The certificate shall contain in substance all material terms and\nconditions of coverage afforded to the sponsor group member, unless the\ngroup policy is incorporated by reference and a copy of the group policy\naccompanies the certificate.\n (3) If the coverage afforded to a sponsor group member is excess of\nother applicable insurance coverage, then the certificate shall contain\na notice advising the sponsor group member that, if the member has other\ninsurance coverage, specified coverages under the group policy shall be\nexcess over the other insurance.\n (i) A group policyholder shall comply with the provisions of section\ntwo thousand one hundred twenty-two of this chapter, in the same manner\nas an insurance producer, in any advertisement, sign, pamphlet,\ncircular, card, or other public announcement referring to coverage under\na group policy or certificate.\n (j) A group policy or certificate shall not be subject to section\nthree thousand four hundred twenty-five or section three thousand four\nhundred twenty-six of this article. The following requirements shall\napply in regard to termination of coverage:\n (1) An insurer may cancel a group policy or certificate only if\ncancellation is based on one or more of the reasons set forth in\nparagraph one of subsection (c) of section three thousand four hundred\ntwenty-six of this article; provided, however, that an act or omission\nby a sponsor group member that would constitute the basis for\ncancellation of an individual certificate shall not constitute the basis\nfor cancellation of the group policy.\n (2)(A) An insurer's cancellation of a group policy, including all\ncertificates, shall not become effective until forty-five days, or\ntwenty days if based upon non-payment of premium, after the insurer\nmails or delivers written notice of cancellation to the group\npolicyholder at the mailing address shown in the policy, and to the\nsponsor group member at the sponsor group member's mailing address.\n (B) An insurer's cancellation of an individual certificate shall not\nbecome effective until forty-five days after the insurer mails or\ndelivers written notice of cancellation to the sponsor group member at\nthe sponsor group member's mailing address and to the group policyholder\nat the mailing address shown in the group policy.\n (C) (i) A group policyholder may cancel a group policy, including all\ncertificates, or any individual certificate, for any reason, upon ninety\ndays written notice to the insurer and each sponsor group member.\n (ii) The group policyholder shall mail or deliver written notice to\neach affected group member of the group policyholder's cancellation of\nthe group policy or certificate and the effective date of cancellation.\nThe group policyholder shall mail or deliver the written notice to the\nsponsor group member's mailing address at least ninety days prior to the\neffective date of the cancellation.\n (3)(A) Unless the group policy provides for a longer policy period,\nthe policy and all certificates shall be issued or renewed for a\none-year policy period.\n (B) The sponsor group member shall be entitled to renew the\ncertificate upon timely payment of the premium billed to the sponsor\ngroup member for the renewal, unless:\n (i) the insurer mails or delivers to the sponsor group member written\nnotice of nonrenewal or conditional renewal; and\n (ii) the insurer mails or delivers written notice at least ninety, but\nnot more than two hundred forty days prior to the expiration date\nspecified in the policy or, if the policy does not specify a date, then\nthe next anniversary date of the policy.\n (4) Where the group policyholder nonrenews the group policy, the group\npolicyholder shall mail or deliver written notice to each sponsor group\nmember advising the sponsor group member of nonrenewal of the group\npolicy and the effective date of nonrenewal. The group policy holder\nshall mail or deliver the written notice at least ninety days prior to\nthe nonrenewal.\n (5) Every notice of cancellation, nonrenewal, or conditional renewal\nshall contain the specific reason or reasons for cancellation,\nnonrenewal, or conditional renewal.\n (6)(A) An insurer shall not be required under this subsection to give\nnotice to a sponsor group member if the insurer has been advised by\neither the group policyholder or another insurer that substantially\nsimilar coverage has been obtained from the other insurer without lapse\nof coverage.\n (B) A group policyholder shall not be required under this subsection\nto give notice to sponsor group member if substantially similar coverage\nhas been obtained from another insurer without lapse of coverage.\n (k) If an insurer cancels or nonrenews a renters' insurance group\npolicy, then the insurer shall offer to convert a certificate to an\nindividual insurance policy, using the insurer's filed rates and forms\nfor individual policies, for any remaining part of the required policy\nperiod set forth in section three thousand four hundred twenty-five of\nthis article.\n