Readability of consumer insurance policies

Generally, under the bill, consumer insurance policies must comply with all of the following: if printed, the print of the policy is in not less than ten-point type with spacing between the lines at least as high as the height of the font with some exceptions; if electronic, the policy appears in final format in not less than ten-point type with some exceptions; the policy is appropriately divided and captioned and presented in a meaningful sequence, the language ensures effective communication for individuals with a disability or with limited English proficiency, and the style, arrangement, and overall appearance of the policy enhances its understandability;

if the policy contains more than 3,000 words or more than three pages, it has a table of contents or an index of principal sections; the policy contains a single section listing exclusions and limitations and any exclusions or limitations also appearing within the form are given at least equal prominence with the rest of the language;

the policy defines words and expressions not commonly understood and words and expressions of which the commonly understood meaning is not intended by the policy language; cross-references between policy sections are minimized; and the policy contains words and phrases written in active voice. Certain property and casualty policies; individual and group annuities; life insurance policies; disability income policies; and long-term care policies are exempt from the requirement to contain a section listing exclusions and limitations and give equal prominence to exclusion and limitation language and the requirement to have the words and phrases in the policy in active voice. The bill specifies a method for calculating a Flesch reading ease test score for a consumer insurance policy. The requirements of the bill do not apply to any policy that is a security subject to federal jurisdiction; any group policy, except any certificate issued under a group policy; and any group annuity contract that funds a pension, profit-sharing, or deferred compensation plan.

The bill requires an officer of the insurer to certify that the consumer insurance policy that is the subject of the filing meets the minimum reading ease score or has a score lower than the minimum required score but should be approved under an exemption. The commissioner may approve a consumer insurance policy with a lower score than is required if the commissioner finds that the lower score is caused by certain language that is drafted to conform to state law or rule. The officer of the insurer is also required by the bill to provide to the commissioner the actual readability score and the method or computer program used to determine the score.

The bill also requires any insurer authorized to offer a consumer insurance policy to provide information on its Internet site describing how an insured may request or access a paper or electronic copy of a policy. Upon a request by an insured, an insurer must provide, in the format requested, a complete copy of the consumer insurance policy that is in force and any modifications, amendments, riders, and amendatory endorsements attached as that policy is filed with the commissioner. An insurer that offers a consumer insurance policy except for an individual or group annuity, or a life, disability income, or long-term care insurance policy, must advise each policyholder that a printed or electronic copy of the consumer insurance policy with all modifications, amendments, riders, and amendatory endorsements attached as filed with the commissioner will be provided to the policy within five business days of the request if in electronic format or within ten business days of the request if by mail. As in current law, a violation of the provisions of the bill does not void or render voidable any portion of a consumer insurance policy and is not a defense to an action under the consumer insurance policy.