Short and Long Term Policies Now Permitted
Section 9 of HB1320, effective July 1, 2013, amends Indiana Code § 22-3-5-5(c)(6). It provides that policies may now be written for periods other than just one or three years by adding the subsection wording “(C) the policy covers a period permitted in bureau rules under IC 27-7-2-20.”
The ICRB made an Item Filing, 01-IN-2013, effective July 1, 2013, with the Indiana Department of Insurance. It establishes the national rules on policy periods in Indiana. In summary, we now use the national rules, and the Indiana state exception rules no longer exist.
22-3-5-5. Insurance policy forms - Scope of coverage - Provisions - Approval
(6) This policy shall automatically expire one (1) year from the effective date of the policy unless:
(A) The policy covers a period of three (3) years, in which event, it shall automatically expire three (3) years from the effective date of the policy; or
(B) The policy is issued as a continuous policy, in which event it shall not expire until the earlier of one (1) year or the date terminated by the insured or the insurer in accord with applicable state law and applicable policy provisions.
The termination either of a one (1) year or a three (3) year policy, as provided in this subdivision, shall be effective as to the employees of the insured covered by the policy.
(C) the policy covers a period permitted in bureau rules under IC 27-7-2-20.
Assigned Risk Rule - no long term policies
Assigned risk rules permit short term policies, but not long term polices. So, for an insured who desires 15 months of coverage, the servicing carrier can write a one year policy and a three month policy. The rule doesn’t specify which term should come first.
The NCCI Assigned Risk Supplement (1.D – General Info) specifies the following:
A policy term in the assigned risk market is one year. A one-year policy is a policy issued for a one-year period and does not exceed one year and 16 days. In accordance with NCCI’s Basic Manual Rule 4-A-3-n, a short-term policy may only be obtained once within a twelve (12)-month period unless agreed to by the assigned carrier.
Prior to July 1, 2013
Prior to July 1, 2013, per IC 22-3-5-5 (c) (6), policies could only be written for one year, three years, or a continuously. The statute did not provide for short term policies. Note: A continuous policy (policy with no expiration date) is permitted in Indiana, per IC 22-3-5-5 (c) (6) effective either 5/5/95 under Public Law 2-1995 or 7/1/95 under Public Law 217-1995.
Accordingly, Basic Manual Rule 3-A-2, Table 3 on page R22 which allows a 16 day extension is NOT applicable in Indiana. The Indiana Rule was clarified in Filing 01-IN-2012.