A Bill for an Act
Page 1, Line 101Concerning a model act to provide a framework that allows
Page 1, Line 102insurance companies to give rebates that meet specified
Page 1, Line 103criteria to maintain consumer protections.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)
The bill creates the "Model Rebate Reform Act" to modernize the law concerning insurance rebates by recognizing new insurance products while maintaining necessary consumer protections. The bill allows an insurer or insurance producer to give a gift valued under $250 in connection with the marketing, purchase, or retention of an insurance contract and to conduct a free raffle or drawing with prizes valued up to $500.
Additionally, the bill provides that an insurer or insurance producer may give a free or discounted product or service in conjunction with or related to an insurance contract if the product or service:
- Is intended to educate about, assess, monitor, control, mitigate, or protect an individual against loss of life, health, or property; or
- Has a nexus to or enhances the value of the insurance benefits.
Next, the bill provides that an insurer or insurance producer may provide an additional free or discounted service if the service is at least tangentially related to an insurance contract or the administration of an insurance contract, the receipt of the service is not contingent on the purchase of insurance, and the service is offered on the same terms to all potential insurance customers. Before the purchase of insurance, receipt of a quote for insurance, or designation of an agent of record, the insurer or insurance producer providing the service shall disclose in writing to the recipient that receipt of the service is not contingent on the purchase of insurance.
Lastly, the bill permits the commissioner of insurance to adopt rules as necessary to effectuate the provisions of the bill, including adjusting the financial limitations on gifts and prizes as necessary for inflation.
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. In Colorado Revised Statutes, 10-3-1104, amend
Page 2, Line 3(1)(g) and (2) introductory portion; and add (2)(e), (2.1), (2.2), (2.3), (2.4), (2.5), (2.6), (2.7), and (6) as follows:
Page 2, Line 410-3-1104. Unfair methods of competition - unfair or deceptive
Page 2, Line 5practices - rules - definitions. (1) The following are defined as unfair
Page 2, Line 6methods of competition and unfair or deceptive acts or practices in the business of insurance:
Page 2, Line 7(g) Rebates: Except as otherwise provided in this section and
Page 2, Line 8as otherwise expressly provided by law, knowingly permitting, or
Page 2, Line 9offering to make, or making any contract of insurance or agreement as to
Page 3, Line 1such contract, other than as plainly expressed in the insurance contract
Page 3, Line 2issued thereon, or paying,
orPage 3, Line 3allow, or give, directly or indirectly, as inducement to such insurance or
Page 3, Line 4annuity, any rebate of premiums payable on the contract, or any special
Page 3, Line 5favor or advantage in the dividends or other benefits
thereonPage 3, Line 6contract or annuity, or any valuable consideration or inducement
Page 3, Line 7whatever not specified in the contract; or giving,
orPage 3, Line 8or offering to give, sell, or purchase, as inducement to such insurance
Page 3, Line 9contract or annuity or in connection
therewithPage 3, Line 10contract or annuity, any stocks, bonds, or other securities of any
Page 3, Line 11insurance company or other corporation, association, or partnership, or
Page 3, Line 12any dividends or profits accrued
thereonPage 3, Line 13other securities, or anything of value whatsoever not specified in the contract;
Page 3, Line 14(2) Nothing in
paragraph (f) or (g) of subsection (1)Page 3, Line 15(1)(f) or (1)(g) of this section shall be construed as including within the definition of discrimination or rebates any of the following practices:
Page 3, Line 16(e) Offering or providing, by or through an employee,
Page 3, Line 17affiliate, or third-party representative of an insurer or
Page 3, Line 18insurance producer, a value-added product or service at no cost
Page 3, Line 19or reduced cost, when the product or service is not specified in the insurance policy, if the product or service:
Page 3, Line 20(I) Relates to the insurance coverage; and
Page 3, Line 21(II) Is primarily aimed to achieve one or more of the following:
Page 3, Line 22(A) Provide loss mitigation or loss control;
Page 3, Line 23(B) Reduce claim costs or claim settlement costs;
Page 4, Line 1(C) Provide education about liability risk or risk of loss to individuals or property;
Page 4, Line 2(D) Monitor or assess risk, identify sources of risk, or develop strategies for eliminating or reducing risk;
Page 4, Line 3(E) Enhance health;
Page 4, Line 4(F) Promote financial wellness through items such as educational or financial planning services;
Page 4, Line 5(G) Provide post-loss services;
Page 4, Line 6(H) Encourage behavioral changes to improve the health or reduce the risk of death or disability of a customer; or
Page 4, Line 7(I) Assist in the administration of employee or retiree benefit insurance coverage.
Page 4, Line 8(2.1) The cost to an insurer or insurance producer
Page 4, Line 9offering a product or service to a customer pursuant to
Page 4, Line 10subsection (2)(e) of this section must be reasonable in comparison to that customer's premiums or insurance coverage.
Page 4, Line 11(2.2) If an insurer or insurance producer is offering a
Page 4, Line 12product or service pursuant to subsection (2)(e) of this section,
Page 4, Line 13the insurer or insurance producer shall provide a customer with
Page 4, Line 14contact information to assist the customer with questions regarding the product or service.
Page 4, Line 15(2.3) To ensure consumer protection while implementing
Page 4, Line 16the permitted practices set forth in subsection (2) of this section,
Page 4, Line 17the commissioner may adopt rules to implement and enforce subsections (2) to (2.7) of this section.
Page 4, Line 18(2.4) The availability of a product or service offered
Page 4, Line 19pursuant to subsection (2)(e) of this section must be:
Page 5, Line 1(a) Based on documented, objective criteria that is
Page 5, Line 2maintained by the insurer or insurance producer and must be produced upon request by the division; and
Page 5, Line 3(b) Offered in a manner that is not unfairly discriminatory.
Page 5, Line 4(2.5) (a) If an insurer or insurance producer does not have
Page 5, Line 5sufficient evidence but has a good faith belief that a product or
Page 5, Line 6service meets the criteria set forth in subsections (2)(e)(II)(A) to
Page 5, Line 7(2)(e)(II)(I) of this section, the insurer or insurance producer
Page 5, Line 8shall provide the product or service in a manner that is not
Page 5, Line 9unfairly discriminatory as part of a pilot or testing program for no more than one year.
Page 5, Line 10(b) (I) An insurer or insurance producer shall notify and
Page 5, Line 11receive approval from the division for a pilot or testing program prior to launching the program.
Page 5, Line 12(II) The division shall approve or deny a pilot or testing
Page 5, Line 13program no later than thirty days after receiving notification pursuant to subsection (2.5)(b)(I) of this section.
Page 5, Line 14(2.6) (a) An insurer or insurance producer may:
Page 5, Line 15(I) Offer or give a noncash gift, item, or service, including
Page 5, Line 16a meal or charitable donation, to or on behalf of a customer in
Page 5, Line 17connection with the marketing, sale, purchase, or retention of
Page 5, Line 18an insurance contract if the cost does not exceed an amount
Page 5, Line 19determined to be reasonable by the commissioner per policy year per term; or
Page 5, Line 20(II) Offer or give a noncash gift, item, or service,
Page 5, Line 21including a meal or charitable donation, to or on behalf of a
Page 6, Line 1customer, including a commercial or institutional customer, in
Page 6, Line 2connection with the marketing, sale, purchase, or retention of an insurance contract if:
Page 6, Line 3(A) The cost is reasonable in comparison to the premium or proposed premium; and
Page 6, Line 4(B) The cost of the gift, item, or service is not included in any amount charged to another person or entity.
Page 6, Line 5(b) (I) Any offer or gift made pursuant to this subsection
Page 6, Line 6(2.6) must be offered in a manner that is not unfairly discriminatory.
Page 6, Line 7(II) An insurer or insurance producer shall not require a
Page 6, Line 8customer to purchase, continue, or renew an insurance policy in
Page 6, Line 9exchange for a gift, item, or service received pursuant to this subsection (2.6).
Page 6, Line 10(2.7) Except as applied to an insurer or insurance
Page 6, Line 11producer's offer of a value-added product or service, an insurer or insurance producer shall not:
Page 6, Line 12(a) Offer or provide insurance as an inducement to the purchase of another policy; or
Page 6, Line 13(b) Use the words "free" or "no cost" or words of similar import in an advertisement.
Page 6, Line 14(6) As used in this section, unless the context otherwise requires:
Page 6, Line 15(a) "Customer" includes a policyholder, potential
Page 6, Line 16policyholder, certificate holder, potential certificate holder, insured, potential insured, or applicant.
Page 6, Line 17(b) "Insurance producer" has the meaning set forth in section 10-2-103 (6).
Page 7, Line 1SECTION 2. Act subject to petition - effective date -
Page 7, Line 2applicability. (1) This act takes effect at 12:01 a.m. on the day following
Page 7, Line 3the expiration of the ninety-day period after final adjournment of the
Page 7, Line 4general assembly; except that, if a referendum petition is filed pursuant
Page 7, Line 5to section 1 (3) of article V of the state constitution against this act or an
Page 7, Line 6item, section, or part of this act within such period, then the act, item,
Page 7, Line 7section, or part will not take effect unless approved by the people at the
Page 7, Line 8general election to be held in November 2026 and, in such case, will take
Page 7, Line 9effect on the date of the official declaration of the vote thereon by the governor.
Page 7, Line 10(2) This act applies to conduct occurring on or after the applicable effective date of this act.