BULLETIN NO. 02-21

 

To: ALL INSURERS TRANSACTING PRIVATE PASSENGER

AUTOMOBILE INSURANCE IN THIS STATE

From: HOLLY C. BAKKE, COMMISSIONER

Re: UNDERWRITING INFORMATION FOR POLICYHOLDERS

NONRENEWED BY STATE FARM INDEMNITY COMPANY

 

This Bulletin provides information regarding proper procedures for handling and processing underwriting information in connection with applications and requests for quotations by persons nonrenewed by State Farm Indemnity Company ("SFI"), including those nonrenewed pursuant to Paragraph 1C of the Market Stabilization Order, Order A02-123 (hereafter "Market Stabilization Order nonrenewals").

Beginning the week of September 23, 2002, SFI began issuing nonrenewal notices for polices covering approximately 4,000 vehicles per month. Within two business days of issuance of the nonrenewal notice, SFI will separately mail to the nonrenewed policyholders a "Coverage Verification Form" that will provide certain details about the coverages and history of the policy. A sample of the Coverage Verification Form is attached to this Bulletin. Although not required to do so, SFI responded to a Department request to provide this information as a convenience to policyholders and insurers during the transition of policyholders from SFI to other insurers. The following describes the proper procedures for handling and processing inquiries or applications for insurance received from SFI nonrenewed policyholders. Insurers should advise their producers of the procedures set forth herein.

1. The Coverage Verification Form provides all necessary and reasonable information obtainable from SFI. Any additional information that an insurer or producer may require can be supplied by the insured/applicant or obtained by the insurer or producer from other sources. To protect the privacy of its policyholders, SFI will provide Coverage Verification Forms only to its policyholders and solely through the mail. Insurers cannot obtain Coverage Verification Forms from SFI.

2. SFI believes that the Coverage Verification Form is accurate based on its records. Insurers cannot receive additional information or the verification of information on the Coverage Verification Form by contacting SFI or State Farm agents, or by directing insureds/applicants to contact the company or its agents. The Coverage Verification Form is provided as a convenience to insurers and policyholders. It remains the responsibility of individual insurers to underwrite their policies, as they deem appropriate under the law.

3. The SFI Coverage Verification Form provides proof of prior insurance.

4. Insurers do not need the original Coverage Verification Form or nonrenewal notice, but may wish to retain copies of these documents for underwriting and rating. If there is reason to suspect that the documents are not authentic, the original Coverage Verification Form may be verified by a simulated watermark which may appear at any location on the paper and can best be viewed at a 45 degree angle. It is imprinted white-on-white, in 44 point, Swiss 721 Bold/Condensed Outline BT font and reads: State Farm Indemnity Company. The originals should always be returned immediately to the applicant if the insurerís agent seeks to authenticate them.

5. The Department has been provided with the formula for the Control Number for confirmation when an insurer requests exemption from further MAP distributions.

6. Insurers/producers remain subject to other laws and rules and should not require an insured/applicant to provide unreasonable levels of information or documentation. For example, the Coverage Verification Form provides evidence of continuous coverage with SFI, and therefore additional evidence of prior insurance or continuous coverage such as declaration pages is not necessary.

 

 

10/3/02 /s/ Holly C. Bakke

Date Holly C. Bakke, Commissioner