AN ACT RELATIVE TO CERTAIN COMMERCIAL CONTRACTS OF INSURANCE.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. The first paragraph of section 168 of chapter 175 of the General Laws, as appearing in the 2002 Official Edition, is hereby amended by inserting after the fifth sentence the following 2 sentences:- The affidavit shall not be required in connection with a transaction with an exempt commercial risk or policyholder as defined in section 224, if the commercial risk or policyholder acknowledges in writing its understanding, that: (1) the company from which insurance is procured is not admitted to transact insurance in the commonwealth; and (2) in the event of the insolvency of the company, a loss shall not be paid by the Massachusetts Insurers Insolvency Fund under chapter 175D. Each licensed special insurance broker shall maintain a copy of the acknowledgement for inspection by the commissioner with respect to all policies of insurance so procured by the licensee for exempt commercial risks or policyholders.
SECTION 2. Said chapter 175 is hereby further amended by adding the following 2 sections:-
Section 224. (a) For the purposes of this section, the following words shall have the following meanings:
"Contract of insurance", a contract of insurance as defined in section 2 providing for property or casualty insurance coverages or any combination thereof.
"Large commercial policyholder", the holder of a contract of insurance which is a corporation, partnership, trust, sole proprietorship or other business or public entity, has aggregate property and casualty insurance premiums of $30,000 excluding workers' compensation, which has certified that it elects to be treated as a large commercial policyholder and understands the limited regulatory oversight that the election connotes and has certified that it meets 2 of the following criteria:
(1) net worth of $10,000,000;
(2) net revenue or sales of $5,000,000;
(3) more than 25 employees per individual company or more than 50 employees per holding company aggregate;
(4) nonprofit or public entity with an annual budget or assets of $25,000,000 or more;
(5) municipality with a population of 20,000 or more; or
(6) retains a risk manager who shall be a full-time employee or a person retained by a large commercial policyholder, either of which shall be licensed and shall be 1 of the following:- (i) a certified insurance counselor; (ii) a chartered property and casuality underwriter; (iii) an associate in risk management; (iv) a certified risk manager; or (v) a licensed insurance advisor in property and casuality insurance.
(b) As they relate to the regulation of policy form and content and the filing, approval and fixing and establishing of rates, section 6 of chapter 174A, chapter 175, including, but not limited to sections 22A, 157, 193F, 193G, and 193H, chapter 175A, chapter 175B, chapter 175C, chapter 175D and chapter 176H shall not apply to a contract of insurance issued to a large commercial policyholder. Notwithstanding other requirements of this section, an insurer issuing a contract of insurance to a large commercial policyholder shall maintain underwriting files, premium, loss and expense statistics, financial and other records with regard to the contract of insurance which shall be subject to examination by the commissioner pursuant to section 4.
Section 225. (a) A policy issued pursuant to the commercial risks provisions of section 224 shall contain the following disclosure notice to the policyholder:- The policy applied for is not subject to all insurance laws that apply to other commercial lines products and may contain significant differences from a policy that is subject to all insurance laws. The notice shall also clearly set forth policy conditions and endorsements. The notice shall include, but not be limited to, reference to claims-made versus occurrence triggers, perils, exclusions, location or territory limitations, and defense within limits or outside of limits. The disclosure notice shall also include a policyholder's acknowledgement statement, to be signed and dated by the first named insured before the effective date of coverage. The first named insured shall sign and date a similar notice before each renewal of the policy, except if there are no material changes to the policy. The original and subsequent signed notice, if any, shall be retained in the company underwriting file. The notice shall state: I hereby acknowledge that I have read the above disclosure notice and have received a copy of the same.
(b) The requirements for commercial risk policies issued pursuant to section 224 shall only apply once, at the inception of the policy, except that the requirements shall apply to a renewal of policy where there are material changes to the policy form.
The policy shall be delivered: (1) at least 10 days before the effective date; or (2) permit the insured to terminate the policy, on a pro-rata basis and without penalty, within 20 days of the receipt of the policy.