CHAPTER 211
HB 1244 – FINAL VERSION
05Mar2008… 0448h
04/24/08 1225s
2008 SESSION
01/09
HOUSE BILL 1244
AN ACT relative to auditable basis policies.
SPONSORS: Rep. DeStefano, Merr 13; Rep. Spratt, Hills 3
This bill clarifies when audits shall be conducted on those policies issued on a auditable basis.
This bill was requested by the insurance department.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
05Mar2008… 0448h
04/24/08 1225s
08-2391
01/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eight
AN ACT relative to auditable basis policies.
Be it Enacted by the Senate and House of Representatives in General Court convened:
211:1 Auditable Basis Policies. Amend RSA 412:35 to read as follows:
412:35 Auditable Basis Policies.
I. All workers’ compensation policies issued in this state shall be issued on an auditable basis. A final premium shall be charged based upon actual exposure existing during the term of the policy coverage.
II. Audits shall be conducted by either physical inspection of an insured’s records and operations, or by telephone or mail request by the insurer to the insured.
III. Audits shall be completed promptly, no more than 120 days after the expiration or cancellation of the policy, provided that there is no bona fide dispute.
IV. In cases where there is a bona fide dispute, the insurer shall notify the insured in writing that there is a bona fide dispute and this notice shall toll the 120-day time period until the dispute is resolved. Upon resolution of the dispute, the insurer shall proceed to complete the audit within the time remaining in the 120-day time period. A bona fide dispute includes the insured's failure to cooperate with the audit, provided the insurer has notified the insured of:
(a) The acts or omissions that constitute the insured's failure to cooperate; and
(b) The consequences of the insured’s failure to cooperate, including delay in the completion of the audit.
V. Gross unearned premium shall be returned pursuant to RSA 402:81.
211:2 Insurance Premium Refunds. Amend RSA 402:81 to read as follows:
402:81 Insurance Premium Refunds.
I. Whenever an insurer owes a refund on an insurance premium paid, that insurer shall pay the refund within 30 days of the date when the refund becomes due.
(a) When an insurance policy is cancelled by a named insured, a refund shall be due from the company or its appointed producer [receiving] upon receipt of:
(1) The original policy to be cancelled; or
(2) A signed lost policy release; or
(3) A cancellation request from the insured which has been submitted in accordance with provisions of the policy or statute.
(b) When an insurance policy is cancelled by an insurer, a refund shall become due upon the date of cancellation as stated in the notice of cancellation.
(c) [No refund shall be required if the return premium is $1 or less.
(d)] For auditable policies[, gross unearned premium shall be returned within 30 days from the date of the completed audit.]:
(1) Audits shall be conducted promptly, no more than 120 days after the expiration or cancellation of the policy, provided that there is no bona fide dispute; and
(2) If there is no bona fide dispute, the refund of gross unearned premium shall become due on the date of the completed audit.
(3) In cases where the amount of refund is in bona fide dispute, the refund shall not become due until the dispute is resolved and the audit is completed. The insurer shall notify the insured in writing that there is a bona fide dispute and this notice shall toll the 120-day time period until the dispute is resolved. Upon resolution of the dispute, the insurer shall proceed to complete the audit within the time remaining in the 120-day time period.
(4) A bona fide dispute includes the insured's failure to cooperate with the audit, provided the insurer has notified the insured of:
(A) The acts or omissions that constitute the insured's failure to cooperate; and
(B) The consequences of the insured's failure to cooperate, including delay in the completion of the audit and payment of any refund due.
II. Whenever the premium refunds described in paragraph I are refunded to an authorized third party, such as an insurance producer or a party with cancellation power of attorney from the insured, the authorized third party shall credit the premium refund for the account of the named insured. In the event that crediting of return premiums to the account of the named insured results in a surplus over the amount owed the authorized third party by the named insured, the surplus shall be paid to the named insured within 10 days of receipt of the return premium, being credited to the third party, provided that no such refund shall be required if it amounts to less than $1.
III. For any refund that is not paid to the named insured within the specified period set forth in paragraph I, the party to whom the premium is owed shall be entitled to interest beginning on the first day after the expiration of the period, at the legal rate. Any interest developed because of late refunding shall ultimately benefit only the named insured. [In cases where the amount of refund is in bona fide dispute, the refund shall not become due until the dispute is resolved. In cases where the final premium amount is subject to audit, the refund shall become due upon audit. In any event, return of the unearned premium shall be made within 90 days from the date of expiration or cancellation of the policy.] This paragraph shall not apply to retrospectively rated policies.
211:3 Effective Date. This act shall take effect 60 days after its passage.
Approved: June 16, 2008
Effective Date: August 15, 2008