215 ILCS 5/355a

(215 ILCS 5/355a) (from Ch. 73, par. 967a)

Sec. 355a. Standardization of terms and coverage.

(1) The purposes of this Section shall be (a) to provide reasonable standardization and simplification of terms and coverages of individual accident and health insurance policies to facilitate public understanding and comparisons; (b) to eliminate provisions contained in individual accident and health insurance policies which may be misleading or unreasonably confusing in connection either with the purchase of such coverages or with the settlement of claims; and (c) to provide for reasonable disclosure in the sale of accident and health coverages.

(2) Definitions applicable to this Section are as follows:

(a) "Policy" means all or any part of the forms constituting the contract between the insurer and the insured, including the policy, certificate, subscriber contract, riders, endorsements, and the application if attached, which are subject to filing with and approval by the Director.

(b) "Service corporations" means voluntary health and dental corporations organized and operating respectively under the Voluntary Health Services Plans Act and the Dental Service Plan Act.

(c) "Accident and health insurance" means insurance written under Article XX of this Code, other than credit accident and health insurance, and coverages provided in subscriber contracts issued by service corporations. For purposes of this Section such service corporations shall be deemed to be insurers engaged in the business of insurance.

(3) The Director shall issue such rules as he shall deem necessary or desirable to establish specific standards, including standards of full and fair disclosure that set forth the form and content and required disclosure for sale, of individual policies of accident and health insurance, which rules and regulations shall be in addition to and in accordance with the applicable laws of this State, and which may cover but shall not be limited to: (a) terms of renewability; (b) initial and subsequent conditions of eligibility; (c) non-duplication of coverage provisions; (d) coverage of dependents; (e) pre-existing conditions; (f) termination of insurance; (g) probationary periods; (h) limitation, exceptions, and reductions; (i) elimination periods; (j) requirements regarding replacements; (k) recurrent conditions; and (l) the definition of terms, including, but not limited to, the following: hospital, accident, sickness, injury, physician, accidental means, total disability, partial disability, nervous disorder, guaranteed renewable, and non-cancellable.

The Director may issue rules that specify prohibited policy provisions not otherwise specifically authorized by statute which in the opinion of the Director are unjust, unfair or unfairly discriminatory to the policyholder, any person insured under the policy, or beneficiary.

(4) The Director shall issue such rules as he shall deem necessary or desirable to establish minimum standards for benefits under each category of coverage in individual accident and health policies, other than conversion policies issued pursuant to a contractual conversion privilege under a group policy, including but not limited to the following categories: (a) basic hospital expense coverage; (b) basic medical-surgical expense coverage; (c) hospital confinement indemnity coverage; (d) major medical expense coverage; (e) disability income protection coverage; (f) accident only coverage; and (g) specified disease or specified accident coverage.

Nothing in this subsection (4) shall preclude the issuance of any policy which combines two or more of the categories of coverage enumerated in subparagraphs (a) through (f) of this subsection.

No policy shall be delivered or issued for delivery in this State which does not meet the prescribed minimum standards for the categories of coverage listed in this subsection unless the Director finds that such policy is necessary to meet specific needs of individuals or groups and such individuals or groups will be adequately informed that such policy does not meet the prescribed minimum standards, and such policy meets the requirement that the benefits provided therein are reasonable in relation to the premium charged. The standards and criteria to be used by the Director in approving such policies shall be included in the rules required under this Section with as much specificity as practicable.

The Director shall prescribe by rule the method of identification of policies based upon coverages provided.

(5) (a) In order to provide for full and fair disclosure in the sale of individual accident and health insurance policies, no such policy shall be delivered or issued for delivery in this State unless the outline of coverage described in paragraph (b) of this subsection either accompanies the policy, or is delivered to the applicant at the time the application is made, and an acknowledgment signed by the insured, of receipt of delivery of such outline, is provided to the insurer. In the event the policy is issued on a basis other than that applied for, the outline of coverage properly describing the policy must accompany the policy when it is delivered and such outline shall clearly state that the policy differs, and to what extent, from that for which application was originally made. All policies, except single premium nonrenewal policies, shall have a notice prominently printed on the first page of the policy or attached thereto stating in substance, that the policyholder shall have the right to return the policy within 10 days of its delivery and to have the premium refunded if after examination of the policy the policyholder is not satisfied for any reason.

(b) The Director shall issue such rules as he shall deem necessary or desirable to prescribe the format and content of the outline of coverage required by paragraph (a) of this subsection. "Format" means style, arrangement, and overall appearance, including such items as the size, color, and prominence of type and the arrangement of text and captions. "Content" shall include without limitation thereto, statements relating to the particular policy as to the applicable category of coverage prescribed under subsection (4); principal benefits; exceptions, reductions and limitations; and renewal provisions, including any reservation by the insurer of a right to change premiums. Such outline of coverage shall clearly state that it constitutes a summary of the policy issued or applied for and that the policy should be consulted to determine governing contractual provisions.

(c) (Blank).

(d) (Blank).

(e) (Blank).

(f) (Blank).

(6) Prior to the issuance of rules pursuant to this Section, the Director shall afford the public, including the companies affected thereby, reasonable opportunity for comment. Such rulemaking is subject to the provisions of the Illinois Administrative Procedure Act.

(7) When a rule has been adopted, pursuant to this Section, all policies of insurance or subscriber contracts which are not in compliance with such rule shall, when so provided in such rule, be deemed to be disapproved as of a date specified in such rule not less than 120 days following its effective date, without any further or additional notice other than the adoption of the rule.

(8) When a rule adopted pursuant to this Section so provides, a policy of insurance or subscriber contract which does not comply with the rule shall, not less than 120 days from the effective date of such rule, be construed, and the insurer or service corporation shall be liable, as if the policy or contract did comply with the rule.

(9) Violation of any rule adopted pursuant to this Section shall be a violation of the insurance law for purposes of Sections 370 and 446 of this Code.

(Source: P.A. 102-775, eff. 5-13-22.)