Nac: Chapter 686A - Insurance: Trade Practices And Frauds

Link to law: http://www.leg.state.nv.us/nac/NAC-686A.html
Published: 2015

[Rev. 1/14/2014 9:10:32 AM]

[NAC-686A Revised Date: 1-14]

CHAPTER 686A - INSURANCE: TRADE PRACTICES

AND FRAUDS

GENERAL PROVISIONS

686A.010         Definitions.

DISCRIMINATION

686A.110         Scope and applicability.

686A.120         Definitions.

686A.130         Availability of insurance;

restrictions; marital status.

686A.140         Prohibited practices.

686A.150         Rates.

686A.160         Blindness or partial blindness.

PROPERTY AND CASUALTY INSURANCE

686A.210         Transfer of property with existing

coverage.

686A.220         Insurer prohibited from taking

certain actions with respect to property or casualty insurance on basis of

status of person as victim or potential victim of domestic violence;

permissible bases for action; exceptions.

REPAIR OF MOTOR VEHICLES

686A.240         Disclosure when estimate of cost of

repair based on use of body part not manufactured for or by original

manufacturer of vehicle.

HEALTH CARE PRACTITIONERS

686A.270         Payment for services rendered.

HEALTH INSURANCE CLAIMS

686A.280         Definitions.

686A.282         “Clean claim” defined.

686A.284         “Health care practitioner” defined.

686A.286         “Payer” defined.

686A.288         Forms for submission of claims.

686A.290         Commencement of time for

adjudication and payment of claims.

686A.302         Claim by hospital or other

institutional provider: Prohibited use of field; optional inclusion of

additional data.

686A.303         Coverage for dental procedures for

children.

686A.304         Processing of claims: Duties of

payer; date of receipt of claim.

686A.306         Proof of compliance by payer.

FINANCIAL PLANNERS, AGENTS, BROKERS AND INSURANCE CONSULTANTS

686A.320         Definitions.

686A.330         Agreement for consultation or

related advice: Contents; copies; fee.

686A.335         Agreement for consultation or

related advice: Provisions for commissions and fees; written contract.

686A.340         Commission for services to be taxed

as premium.

SOLICITATION AND SALE OF LIFE INSURANCE

General Provisions

686A.410         Scope.

686A.415         Applicability.

686A.420         Definitions.

686A.425         General requirements.

686A.430         Insurer to provide buyer’s guide and

policy summary to applicant; exception.

686A.435         Policy summaries.

686A.440         Equivalent level death benefit.

686A.445         Cost indexes.

686A.450         Equivalent level annual dividend.

686A.455         Failure to comply.

Illustrations

686A.460         Definitions.

686A.4605       “Actuarial Standards Board” defined.

686A.461         “Basic illustration” defined.

686A.4615       “Contract premium” defined.

686A.462         “Currently payable scale” defined.

686A.4625       “Disciplined current scale” defined.

686A.463         “Generic name” defined.

686A.4635       “Guaranteed elements” defined.

686A.464         “Illustrated scale” defined.

686A.4645       “Illustration” defined.

686A.465         “In-force illustration” defined.

686A.4655       “Lapse-supported illustration”

defined.

686A.466         “Minimum assumed expenses” defined.

686A.4665       “Nonguaranteed elements” defined.

686A.467         “Nonterm group policy of life

insurance” defined.

686A.4675       “Policy owner” defined.

686A.468         “Premium outlay” defined.

686A.4685       “Self-supporting illustration”

defined.

686A.469         “Supplemental illustration” defined.

686A.4695       Applicability.

686A.470         Use of standards for determining

disciplined current scale established by Actuarial Standards Board.

686A.4705       Method for determining assumed

expenses; use of marginal expenses.

686A.471         Notification to Commissioner whether

or not policy includes illustration; quotation of potential value required with

nonterm group policy.

686A.4715       Required provisions of life

insurance illustration.

686A.472         Use of rate of interest to determine

nonguaranteed elements of policy.

686A.4725       Requirements for basic illustration.

686A.473         Contents of narrative summary in

basic illustration.

686A.4735       Contents of numeric summary of death

benefits and values of policy in basic illustration.

686A.474         Signed statements required if

illustration is provided at time of delivery of policy.

686A.4745       Information to be included in basic

illustration when premium outlay or contract premium changes; other information

required under certain circumstances.

686A.475         Supplemental illustration: When

authorized; format; notice referring to basic illustration required.

686A.4755       Solicitor to provide insurer and

applicant copy of basic illustration to which policy conforms; required

provisions of revised basic illustration; requirements when basic illustration

not used in connection with sale.

686A.476         Requirements when basic illustration

or revised basic illustration is delivered by mail; insurer to retain

illustration or certificate that illustration was not used.

686A.4765       Annual report on status of policy:

When required; contents.

686A.477         In-force illustration to be

furnished upon request.

686A.4772       Illustration actuary: Appointment

required; qualifications; notification to Commissioner of certain acts;

notification of change in status.

686A.4775       Illustration actuary to certify

illustration; required disclosure in certification.

686A.478         Annual certification by officer of

insurer that sells policies required.

686A.4785       Prohibited acts in connection with

sale of policy.

686A.479         Penalties.

Prohibited Acts and Practices Concerning Solicitation of or

Sale to Active Duty Service Members

686A.485         Applicability and effect.

686A.4855       Definitions.

686A.486         “Active duty service member”

defined.

686A.4865       “Department of Defense personnel”

defined.

686A.487         “Door-to-door” defined.

686A.4875       “General advertisement” defined.

686A.488         “Known” and “knowingly” defined.

686A.4885       “Life insurance product” defined.

686A.489         “Military installation” defined.

686A.4895       “MyPay” defined.

686A.490         “Side fund” defined.

686A.4905       “Solicit” defined.

686A.491         “Specific appointment” defined.

686A.4915       “United States Armed Forces”

defined.

686A.492         Engaging in certain acts or

practices while on military installation.

686A.4925       Engaging in corrupt practice or

improper influence or inducement while on military installation.

686A.493         Engaging in corrupt practice or

improper influence or inducement at any location.

686A.4935       Engaging in act or practice which

leads to confusion regarding source, sponsorship, approval or affiliation.

686A.494         Engaging in act or practice which

leads to confusion regarding premiums, costs or investment returns.

686A.4945       Engaging in certain acts or

practices relating to Servicemembers’ Group Life Insurance or Veterans’ Group

Life Insurance.

686A.495         Failure to disclose or provide certain

information.

686A.4955       Engaging in certain acts or

practices relating to side funds, compliance with standard nonforfeiture law or

exclusion of coverage.

LIFE INSURANCE AND ANNUITIES

Solicitation, Sale and Advice

686A.501         Definitions.

686A.502         Applicability.

686A.503         Producers of insurance: Use of

certain certifications or professional designations.

Replacement

686A.510         Definitions.

686A.513         “Agent” defined.

686A.516         “Direct response” defined.

686A.518         “Existing policy” defined.

686A.523         “Notice” defined.

686A.526         “Replacement” defined.

686A.528         “Replacing insurer” defined.

686A.530         “Sales proposal” defined.

686A.540         Exemptions.

686A.550         Duties of agents.

686A.555         Duties of replacing insurer.

686A.560         Duties of insurers who solicit sales

by direct response.

686A.563         Form of notice regarding replacement

of a policy.

686A.567         Explanation of notice.

686A.570         Right to replace policy; knowledge

of existing policy.

686A.573         Replacement of annuity contract:

Required statement and notice.

686A.577         Replacement of annuity contract:

Explanation of new contract.

UNFAIR PRACTICES

General Provisions

686A.600         Scope and applicability.

686A.610         Definitions.

686A.615         “Agent” defined.

686A.620         “Claimant” defined.

686A.625         “First-party claimant” defined.

686A.627         “Insurance policy or contract”

defined.

686A.630         “Insurer” defined.

686A.640         “Investigation” defined.

686A.645         “Notice of claim” defined.

686A.650         “Third-party claimant” defined.

Standards Concerning Claims

686A.660         Misrepresentation of provisions of a

policy.

686A.665         Insurer to acknowledge receipt of

claim notice within certain period; insurer, agent or administrator to respond

adequately and within certain period to inquiry from Division respecting claim

filed with Division; reply required within certain period to certain

communications from claimants.

686A.670         Investigation of claims.

686A.675         Standards applicable to all

insurers.

686A.680         Standards applicable to insurers

under automobile policies.

Standards Concerning Matters Other Than Claims

686A.690         Insurer, agent or administrator to

respond within certain period to inquiry from Division with respect to

complaint concerning matter other than claim.

USE OF CONSUMER CREDIT INFORMATION

686A.700         Definitions.

686A.710         Consumer credit reports and

insurance scores: Period of use.

 

 

GENERAL PROVISIONS

      NAC 686A.010  Definitions. (NRS 679B.130, 686A.015)  As used

in this chapter, unless the context otherwise requires:

     1.  “Broker” has the meaning ascribed to it

in NRS 683A.321.

     2.  “Commissioner” means the Commissioner of

Insurance.

     3.  “Division” means the Division of

Insurance of the Department of Business and Industry.

     (Supplied in codification; A by Div. of Insurance by

R089-98, 9-25-98; A by Comm’r of Insurance by R054-12, 11-1-2012)

DISCRIMINATION

      NAC 686A.110  Scope and applicability. (NRS 679B.130, 686A.015)  NAC 686A.110 to 686A.150,

inclusive:

     1.  Prohibit the denial of benefits or

coverage on the basis of sex or marital status in the terms and conditions of insurance

contracts and in the underwriting criteria of insurers.

     2.  Apply to all contracts delivered or

issued for delivery in Nevada on or after September 11, 1977.

     [Comm’r of Insurance, M-7 §§ 1 and 4, eff. 9-11-77]

      NAC 686A.120  Definitions. (NRS 679B.130, 686A.015)  As used

in NAC 686A.110 to 686A.150,

inclusive, unless the context otherwise requires:

     1.  “Contract” means any insurance policy,

plan or written agreement for or affecting insurance, by whatever name called,

and includes all clauses, riders or endorsements offered by any insurer.

     2.  “Insured” means any person who is insured

under a contract or who has made application for insurance.

     3.  “Insurer” means any insurance company,

association, reciprocal or interinsurance exchange, not-for-profit hospital or

professional health service plan administrator, health maintenance

organization, fraternal benefit society, beneficial association or other person

acting as an insurer.

     4.  “Person” means a natural person,

corporation, association, partnership or other entity.

     [Comm’r of Insurance, M-7 § 3, eff. 9-11-77]

      NAC 686A.130  Availability of insurance; restrictions; marital status. (NRS 679B.130,

686A.015)

     1.  Availability of insurance may not be

denied to an insured on the basis of sex or marital status. The amount of

benefits payable, conditions or types of coverage may not be restricted, modified,

excluded or reduced solely on the basis of sex or marital status of the

insured, except as a result of the application of rate differentials permitted

under the insurance code.

     2.  Restrictions of terms, conditions and

types of coverage, and other modifications, exclusions or reductions of the

benefits payable are permitted if established by agreement between the insured

and the insurer.

     3.  Marital status may be considered for the

purpose of determining eligibility for dependent or family coverage.

     [Comm’r of Insurance, M-7 part § 5, eff. 9-11-77]

      NAC 686A.140  Prohibited practices. (NRS 679B.130, 686A.015)  Practices

prohibited by NAC 686A.110 to 686A.150, inclusive, include, but are not limited to:

     1.  Denying coverage to women who are

gainfully employed at home, part-time or by relatives when coverage is offered

to men who are similarly employed.

     2.  Denying policy riders to women when the

riders are available to men.

     3.  Denying maternity coverage to an

unmarried woman who is seeking to purchase an individual contract when

comparable coverage is available to a married woman.

     4.  Denying dependent coverage under a group

contract to husbands of female employees when dependent coverage is available

to wives of male employees.

     5.  Denying disability income contracts to

employed women when coverage is offered to men who are similarly employed.

     6.  Treating complications of pregnancy

differently from any other illness or sickness under the contract.

     7.  Restricting, reducing, modifying or

excluding benefits relating to coverage involving the genital organs of only

one sex when the restriction, reduction, modification or exclusion is not

required for both sexes.

     8.  Offering lower maximum monthly benefits

under a disability income contract to women than to men who are in the same

classification.

     9.  Offering more restrictive benefit periods

and more restrictive definitions of disability under a disability income

contract to women than to men who are in the same classification.

     10.  Establishing different conditions under

which policyholders of different sexes may exercise benefit options contained

in the contract.

     11.  Limiting the amount of coverage

available for purchase based upon marital status, unless the limitation is for

the purpose of defining persons eligible for dependent benefits.

     12.  Denying equal consideration for coverage

for either spouse because of a change in marital status, including denying an

individual policy to a woman who is no longer eligible under her husband’s

policy when the husband is allowed to continue the existing policy.

     [Comm’r of Insurance, M-7 part § 5, eff. 9-11-77]

      NAC 686A.150  Rates. (NRS 679B.130, 686A.015)  No rate

differential may be applied on the basis of the sex or marital status of an

insured unless the rate differential is based on sound actuarial data. Any

justification for a rate differential based on sex or marital status must be

furnished to the Commissioner upon request.

     [Comm’r of Insurance, M-7 § 6, eff. 9-11-77]

      NAC 686A.160  Blindness or partial blindness. (NRS 679B.130, 686A.015, 686A.100)

     1.  With regard to any policy or contract of

life insurance, health insurance or annuity:

     (a) The following acts or practices constitute

unfair discrimination between persons of the same class:

          (1) Refusing to insure;

          (2) Refusing to continue to insure;

          (3) Limiting the amount, extent or kind of

coverage available to a person; or

          (4) Charging a person a different rate for the

same coverage,

Ê solely

because of blindness or partial blindness.

     (b) Acts and practices regarding other conditions

of a person who is blind or partially blind, including the underlying cause of

the blindness or partial blindness, must be based on the same sound actuarial

principles or actual or reasonably anticipated experience as for other persons.

     2.  For the purposes of subsection 1,

“refusing to insure”:

     (a) Includes the denial by an insurer of coverage

under a policy of disability insurance based on the ground that the policy

presumes disability if the insured loses his or her sight.

     (b) Does not include the exclusion from coverage of

disabilities consisting solely of blindness or partial blindness when such a condition

exists at the time the policy is issued.

     (Added to NAC by Comm’r of Insurance, eff. 8-31-84; A

12-15-94)

PROPERTY AND CASUALTY INSURANCE

      NAC 686A.210  Transfer of property with existing coverage. (NRS 679B.130,

686A.015)

     1.  No agent, broker or insurer may

participate in any transaction in which an insured is forced to cancel existing

coverage on property which the insured is transferring to another and purchase

other coverage on newly acquired property if the coverage is adequate for the

newly acquired property.

     2.  This section applies to all agents,

brokers and insurers, including, without limitation, lenders which issue

coverage as agents and agencies with which the lender is in any way connected.

     3.  As used in this section, “agent” has the

meaning ascribed to it in NRS

683A.321.

     [Comm’r of Insurance, PC-8, eff. 9-23-72]—(NAC A by

Div. of Insurance by R089-98, 9-25-98; A by Comm’r of Insurance by R054-12, 11-1-2012)

      NAC 686A.220  Insurer prohibited from taking certain actions with respect to

property or casualty insurance on basis of status of person as victim or

potential victim of domestic violence; permissible bases for action;

exceptions. (NRS 679B.130, 686A.015)

     1.  Except as otherwise provided in this

section, an insurer shall not:

     (a) Deny or refuse to accept an application for

property or casualty insurance;

     (b) Refuse to issue or renew a policy of property

or casualty insurance;

     (c) Cancel, restrict or otherwise terminate a

policy of property or casualty insurance; or

     (d) Charge a person a rate for property or casualty

insurance coverage that is different from the rate that the insurer charges

another person for the same coverage,

Ê solely

because the person applying for or covered by the policy of property or

casualty insurance is, has been or may be a victim of an act that constitutes

domestic violence pursuant to NRS

33.018.

     2.  Nothing in this section prohibits an

insurer from taking any of the actions described in subsection 1 upon the basis

of:

     (a) The historical loss experience of the applicant

or insured;

     (b) A medical condition with which the applicant or

insured is afflicted; or

     (c) Any other reason not otherwise prohibited by

law.

     3.  The prohibition set forth in subsection 1

does not apply with respect to the following lines of insurance:

     (a) Ocean marine insurance;

     (b) Workers’ compensation insurance;

     (c) Property insurance for business and commercial

risks; and

     (d) Casualty insurance for business and commercial

risks other than insurance covering the liability of a practitioner licensed

pursuant to chapters 630 to 640, inclusive, of NRS.

     (Added to NAC by Div. of Insurance by R089-98, eff. 9-25-98)

REPAIR OF MOTOR VEHICLES

      NAC 686A.240  Disclosure when estimate of cost of repair based on use of body

part not manufactured for or by original manufacturer of vehicle. (NRS 679B.130,

686A.015)

     1.  If an insurer or a representative of the

insurer bases an estimate of the cost of repairing the body of a motor vehicle

upon the use of a body part which was not manufactured for or by the original

manufacturer of the vehicle to be repaired, the insurer shall disclose or cause

the representative to disclose that fact to the claimant.

     2.  The disclosure must:

     (a) Be printed on or attached to the copy of the

estimate for repairs which is received by the claimant;

     (b) Be printed in not less than 10-point type; and

     (c) Contain the following statement:

 

THIS ESTIMATE IS BASED ON THE USE OF

BODY PARTS FOR YOUR MOTOR VEHICLE WHICH WERE NOT MANUFACTURED FOR OR BY THE

ORIGINAL MANUFACTURER OF THE MOTOR VEHICLE. ANY WARRANTIES PROVIDED FOR THESE

BODY PARTS ARE PROVIDED BY THE MANUFACTURER OR DISTRIBUTOR OF THESE PARTS, NOT

BY THE MANUFACTURER OF YOUR MOTOR VEHICLE. PLEASE CONTACT YOUR INSURER TO

DETERMINE YOUR RIGHTS REGARDING THE USE OF SUCH BODY PARTS.

 

     3.  As used in this section, “body part”

means a sheet metal, plastic, or composite part of a motor vehicle which is

nonmechanical and used to replace a part on the exterior of a motor vehicle.

The term includes the inner and outer panels of a motor vehicle.

     (Added to NAC by Comm’r of Insurance and Dep’t of Motor

Veh. & Pub. Safety, eff. 7-16-92)

HEALTH CARE PRACTITIONERS

      NAC 686A.270  Payment for services rendered. (NRS 679B.130, 686A.015)

     1.  If a benefit or medical service is

otherwise covered by a policy, the insurer shall pay for the service without

regard to the type of health care practitioner providing the service, if the

practitioner is:

     (a) Licensed in accordance with the law of this

State; and

     (b) Operating within the scope of the

practitioner’s authority.

     2.  If the fee or charge for the service is

otherwise payable as a benefit pursuant to a policy or contract of health

insurance, any exclusion or denial of payment for a service rendered by a

health care practitioner, solely because the service is rendered by a

particular type of practitioner, shall be deemed to be an unfair practice in

the business of insurance within the meaning of NRS 686A.020.

     3.  Nothing contained in this section shall

be construed to allow an insured to expand the field of health care

practitioners if the insurer has limited or restricted the field to a

preselected group pursuant to NRS

679B.152, 689B.061, 695B.180 or 695B.185 or NAC 695C.205.

     4.  As used in this section:

     (a) “Health care practitioner” means any physician,

any medical or other related facility, or any other person licensed or

otherwise authorized to provide health care services in this State.

     (b) “Insurer” means any:

          (1) Insurance company;

          (2) Nonprofit corporation for hospital,

medical or dental service;

          (3) Health maintenance organization;

          (4) Organization for dental care; or

          (5) Fraternal benefit society.

     (Added to NAC by Comm’r of Insurance, eff. 6-20-90)

HEALTH INSURANCE CLAIMS

      NAC 686A.280  Definitions. (NRS 679B.130, 686A.015)  As used

in NAC 686A.280 to 686A.306,

inclusive, unless the context otherwise requires, the words and terms defined

in NAC 686A.282, 686A.284

and 686A.286 have the meanings ascribed to them in

those sections.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002)

      NAC 686A.282  “Clean claim” defined. (NRS 679B.130, 686A.015)  A “clean

claim” means a claim:

     1.  That contains the information required to

be included for the applicable use of a form prescribed in NAC 686A.288; and

     2.  For which any additional information that

has been requested pursuant to subsection 2 of NRS 683A.0879, 689A.410, 689B.255, 689C.485, 695B.2505 or 695C.185 because of any

particular or unusual circumstances that would have impeded the payer from

paying the claim has been received.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002;

A by R026-12, 9-14-2012)

      NAC 686A.284  “Health care practitioner” defined. (NRS 679B.130,

686A.015)  “Health

care practitioner” means a person licensed to practice one of the health

professions regulated by title 54 of NRS.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002)

      NAC 686A.286  “Payer” defined. (NRS 679B.130, 686A.015)  “Payer”

includes administrators, individual health insurers, group health insurers,

nonprofit hospitals, medical and dental service corporations and health

maintenance organizations who pay claims under any contract for health

insurance.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002)

      NAC 686A.288  Forms for submission of claims. (NRS 679B.130, 679B.138, 686A.015)

     1.  The payer of a claim under a contract for

health insurance:

     (a) Shall accept a claim submitted on a form that:

          (1) Has been approved by the United States

Department of Health and Human Services for the filing of a claim under a

contract for health insurance; and

          (2) Contains the information necessary to

constitute a clean claim.

     (b) Shall not require the completion of any other

form for the purpose of processing the claim.

     2.  For the purposes of this section, a “form

that has been approved by the United States Department of Health and Human

Services” means:

     (a) For claims submitted by a hospital or other

institutional provider, Centers for Medicare and Medicaid Services Form

CMS-1450, which is commonly referred to as UB-04, or its successor form; and

     (b) For claims submitted by a health care

practitioner or other person entitled to reimbursement, Centers for Medicare

and Medicaid Services Form CMS-1500, or its successor form.

     3.  Form CMS-1450, also known as the UB-04

claim form, published by the National Uniform Billing Committee, is available

from the American Hospital Association on the Internet at http://aha.org/,

by telephone at (800) 242-2626, or by mail at 155 North Wacker Drive, Chicago,

Illinois 60606, at the price of $46 for members and $56 for nonmembers. Copies

of the form may also be available through office supply stores.

     4.  Form CMS-1500, published by the National

Uniform Claim Committee, is available from the United States Government

Printing Office on the Internet website http://bookstore.gpo.gov, by

mail at P.O. Box 979050, St. Louis, Missouri 63197-9000, or by toll-free

telephone at (866) 512-1800, at the price of $29. Copies of the form may also

be available through local printing companies and office supply stores.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002;

A by R026-12, 9-14-2012)

      NAC 686A.290  Commencement of time for adjudication and payment of claims. (NRS 679B.130,

686A.015)  The time

for a payer to adjudicate and pay claims pursuant to NRS 683A.0879, 689A.410, 689B.255, 689C.485, 695B.2505 and 695C.185 begins when the payer

receives a clean claim.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002)

      NAC 686A.302  Claim by hospital or other institutional provider: Prohibited use

of field; optional inclusion of additional data. (NRS 679B.130,

679B.138, 686A.015)

     1.  A payer shall not use or require a

hospital or other institutional provider to use any field for purposes that are

inconsistent with the data required for the submission of a clean claim, or in

addition to the applicable standard code set.

     2.  A hospital or other institutional

provider may elect to include data in addition to the data required for the

submission of a clean claim.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002;

A by R026-12, 9-14-2012)

      NAC 686A.303  Coverage for dental procedures for children. (NRS 679B.130,

686A.015)

     1.  A policy or contract of health insurance

issued pursuant to chapter 689A, 689B, 689C, 695B or 695C of NRS which is delivered or

issued for delivery in this State and which provides coverage for medically

required hospital services must not deny coverage for a dependent child covered

by that policy or contract who is referred by a dentist to a hospital, a

surgical center for ambulatory patients, an independent center for emergency

medical care or a rural clinic, licensed pursuant to chapter 449 of NRS, for general

anesthesia and associated care and is being referred because, in the opinion of

the dentist, the child:

     (a) Has a physical, mental or medically

compromising condition;

     (b) Has dental needs for which local anesthesia is

ineffective because of an acute infection, an anatomic anomaly or an allergy;

     (c) Is extremely uncooperative, unmanageable or

anxious; or

     (d) Has sustained extensive orofacial and dental

trauma to a degree that would require unconscious sedation.

     2.  An insurer may:

     (a) Require prior authorization for the provision

of general anesthesia and for hospitalization or the use of a surgical center for

ambulatory patients for dental procedures in the same manner that the insurer

requires prior authorization for hospitalization for the provision of general

anesthesia for other diseases or conditions covered by the policy or contract

of health insurance;

     (b) Require that the benefits paid be adjusted

according to the policy or contract of health insurance if the services are

rendered by a provider who is not designated by or associated with the insurer,

if applicable; and

     (c) Restrict coverage to include only general

anesthesia provided during procedures performed by:

          (1) A qualified specialist in pediatric

dentistry;

          (2) A dentist who is qualified, by virtue of

education, in a recognized dental specialty for which hospital privileges are

granted; or

          (3) A dentist who is certified by a hospital,

by virtue of completion of an accredited program of postgraduate hospital

training, and is granted hospital privileges.

     3.  The failure of an insurer to comply with

the provisions of this section constitutes an unfair trade practice pursuant to

NRS 686A.170.

     4.  A policy or contract of health insurance

subject to the provisions of this section that is delivered, issued for

delivery or renewed on or after April 24, 2003, has the legal effect of

including the coverage required by this section, and any provision of such a

policy or contract that conflicts with the provisions of this section is void.

     (Added to NAC by Comm’r of Insurance by R088-02, eff. 4-24-2003)

      NAC 686A.304  Processing of claims: Duties of payer; date of receipt of claim. (NRS 679B.130,

679B.136, 679B.138, 686A.015)

     1.  Each payer shall establish a tracking

system to monitor the timeliness of the payer’s processing of a claim.

     2.  Each payer shall:

     (a) Maintain a written or electronic record of the

date of receipt of a claim;

     (b) For receipt of a written claim, date-stamp the

claim with the date received; and

     (c) For receipt of an electronic claim, assign the

document a batch number that includes the date received.

     3.  Except as otherwise provided in

subsection 5, a claim is deemed to have been received by a payer on the date of

receipt of the claim stated in the written or electronic record required

pursuant to subsection 2.

     4.  A payer shall provide, within 20 working

days after a request by a health care practitioner, hospital, institutional

provider or person entitled to reimbursement, verification of the date of

receipt of a claim as stated in the written or electronic record pursuant to

subsection 2, in:

     (a) Electronic form, if the request was for

electronic verification; or

     (b) Written form, including microfilm, if the

request was for written verification.

     5.  A claim shall be deemed received by a

payer:

     (a) Five working days after the date the health

care practitioner, hospital, institutional provider or person entitled to

reimbursement placed the claim in the United States mail, if the health care

practitioner, hospital, institutional provider or person entitled to reimbursement

possesses the receipt of mailing the claim; or

     (b) On the date the receipt of the claim is

recorded by a courier, if the claim was delivered by a courier.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002)

      NAC 686A.306  Proof of compliance by payer. (NRS 679B.130, 679B.136, 679B.138, 686A.015)  The

Commissioner, when deemed appropriate, will require a payer to report

substantial compliance with the provisions of NAC

686A.280 to 686A.306, inclusive. Proof that

claims are being paid by a payer within the specified limits includes, without

limitation, records demonstrating that a tracking system required by NAC 686A.304 has been developed and implemented.

     (Added to NAC by Comm’r of Insurance by R175-01, eff. 5-23-2002;

A by R129-03, 4-16-2004)

FINANCIAL PLANNERS, AGENTS, BROKERS AND INSURANCE

CONSULTANTS

      NAC 686A.320  Definitions. (NRS 679B.130, 686A.015)  As used

in NAC 686A.320 to 686A.340,

inclusive, unless the context otherwise requires:

     1.  “Agent” has the meaning ascribed to it in

NRS 683A.321.

     2.  “Financial planner” means an agent or

broker who has successfully completed a course of instruction required for

designation as a financial planner by a recognized professional association of

financial planners.

     3.  “Health insurance” includes any:

     (a) Contract for hospital, medical or dental

services entered into pursuant to chapter

695B of NRS;

     (b) Health care plan provided pursuant to chapter 695C of NRS;

     (c) Plan for dental care provided pursuant to chapter 695D of NRS; or

     (d) Plan for prepaid limited health service

provided pursuant to chapter 695F of

NRS.

     (Added to NAC by Comm’r of Insurance, eff. 8-12-88; A 3-28-96;

A by Div. of Insurance by R089-98, 9-25-98; A by Comm’r of Insurance by R054-12,

11-1-2012)

      NAC 686A.330  Agreement for consultation or related advice: Contents; copies;

fee. (NRS 679B.130, 686A.015, 686A.230)

     1.  Any agreement for consultation or related

advice which is entered into by a financial planner, life or health insurance

agent or broker, or insurance consultant must be in writing and must contain:

     (a) The name and address of the financial planner,

life or health insurance agent or broker, or insurance consultant;

     (b) The name and address of any person or entity

licensed pursuant to title 57 of NRS which he or she represents;

     (c) A description of any license he or she holds;

     (d) A description of the fee to be charged and the

services to be provided under the agreement;

     (e) A provision allowing the client, without

penalty, to rescind the agreement within 10 days after it is entered into; and

     (f) A statement of whether the financial planner or

life or health insurance agent or broker is to receive any commission or other

compensation for services in addition to the fee paid by the client.

     2.  Each client or prospective client of a

financial planner, life or health insurance agent or broker, or insurance

consultant must be provided with a copy of the agreement.

     3.  A financial planner, life or health

insurance agent or broker, or insurance consultant shall not charge a fee

pursuant to this section except with respect to:

     (a) Group life or group annuity products provided

pursuant to chapter 688A or 688B of NRS; and

     (b) Group health products provided pursuant to chapter 689B of NRS.

     (Added to NAC by Comm’r of Insurance, eff. 8-12-88; A 3-28-96;

A by Div. of Insurance by R089-98, 9-25-98)

      NAC 686A.335  Agreement for consultation or related advice: Provisions for

commissions and fees; written contract. (NRS 679B.130, 686A.015, 686A.230)

     1.  Except as otherwise provided in

subsection 2, an agreement for consultation or related advice which is entered

into by an agent who is also licensed as a broker of casualty, property or

surety insurance may, with respect to property, casualty or surety insurance

that the agent sells to businesses, provide for the agent to receive:

     (a) A commission paid by the insurer;

     (b) A fee paid by the client; or

     (c) A combination of a commission paid by the

insurer and a fee paid by the client.

     2.  The provisions of subsection 1 do not

authorize an agent to receive a commission or fee that is otherwise prohibited

by a different agreement between the agent and insurer.

     3.  If an agent and a client enter into an

agreement pursuant to subsection 1 that provides for the agent to receive a

fee, the agreement must be expressed in the form of a written contract. The

written contract must:

     (a) Set forth the full amount of compensation that

the agent will receive pursuant to the agreement;

     (b) Be signed by the agent and the client before

the completion of any transaction that will, pursuant to the agreement, entitle

the agent to receive compensation; and

     (c) Be retained by the agent for not less than 5

years.

     (Added to NAC by Div. of Insurance by R089-98, eff. 9-25-98)

      NAC 686A.340  Commission for services to be taxed as premium. (NRS 679B.130,

686A.015)  Any

commission received by a financial planner, agent or broker for services

related to the sale of insurance shall be deemed a premium for purposes of the

tax imposed by chapter 680B of NRS.

     (Added to NAC by Comm’r of Insurance, eff. 8-12-88; A 3-28-96)

SOLICITATION AND SALE OF LIFE INSURANCE

General Provisions

      NAC 686A.410  Scope. (NRS 679B.130, 686A.015)

     1.  This regulation requires insurers to

deliver to purchasers of life insurance, information which will:

     (a) Improve the buyer’s ability to select the most

appropriate plan of life insurance for his or her needs;

     (b) Improve the buyer’s understanding of the basic

features of the policy which has been purchased or which is under

consideration; and

     (c) Improve the ability of the buyer to evaluate

the relative costs of similar plans of life insurance.

     2.  This regulation does not prohibit the use

of additional material which is not in violation of this regulation or any

other Nevada law or regulation.

     [Comm’r of Insurance, LH-6 § II, eff. 11-22-78]

      NAC 686A.415  Applicability. (NRS 679B.130, 686A.015)

     1.  This regulation applies to:

     (a) Any solicitation, negotiation, or procurement

of life insurance occurring within this State; and

     (b) Any issuer of life insurance contracts,

including fraternal benefit societies.

     2.  Unless they are otherwise specifically

included, this regulation does not apply to:

     (a) Annuities.

     (b) Credit life insurance.

     (c) Group life insurance.

     (d) Life insurance policies issued in connection

with pension and welfare plans subject to the Federal Employee Retirement Income

Security Act of 1974 (ERISA) (29 U.S.C. §§ 1001 et seq.).

     (e) Variable life insurance under which the death

benefits and cash values vary in accordance with unit values of investments

held in a separate account.

     3.  This regulation applies to all solicitations

of life insurance which begin on or after January 1, 1979.

     [Comm’r of Insurance, LH-6 §§ III and XII, eff. 11-22-78]

      NAC 686A.420  Definitions. (NRS 679B.130, 686A.015)  As used

in NAC 686A.410 to 686A.455,

inclusive, unless the context otherwise requires, the following words and terms

have the meanings ascribed to them:

     1.  “Agent” has the meaning ascribed to it in

NRS 683A.321.

     2.  “Buyer’s guide” means a document which

contains, and is limited to, the language contained in the appendix* to this

regulation or language approved by the Commissioner.

     3.  “Cash dividend” means the current

illustrated dividend which can be applied toward payment of the gross premium.

     4.  “Generic name” means a short title which

is descriptive of the premium and benefit pattern of a policy or a rider.

     5.  This “regulation” means NAC 686A.410 to 686A.455,

inclusive.

     *The appendix is not codified but is available in the

Office of the Secretary of State or the Division.

     [Comm’r of Insurance, LH-6 § IV, eff. 11-22-78]—(NAC A

5-27-92; A by Div. of Insurance by R089-98, 9-25-98; A by Comm’r of Insurance

by R054-12, 11-1-2012)

      NAC 686A.425  General requirements. (NRS 679B.130, 679B.137, 686A.015)

     1.  Each insurer shall maintain at its home

office or principal office, a complete file containing one copy of each

document which it has authorized for use pursuant to this regulation. The file

must contain one copy of each authorized form for a period of 3 years following

the date of the last authorized use of the form.

     2.  An agent shall inform the prospective

purchaser, prior to commencing a life insurance sales presentation, that he or

she is acting as a life insurance agent and of the full name of the insurance

company which he or she is representing. In sales situations in which an agent

is not involved, the insurer shall identify its full name.

     3.  Terms such as “financial planner,”

“investment adviser,” “financial consultant” or “financial counseling” may not

be used in a way which implies that the insurance agent is generally engaged in

an advisory business in which compensation is unrelated to sales, unless that

is actually the case.

     4.  Any reference to policy dividends must include

a statement that dividends are not guaranteed.

     5.  A system or presentation which does not

recognize the time value of money through the use of appropriate interest

adjustments may not be used for comparing the cost of two or more life

insurance policies. Such a system may not be used to demonstrate the cash-flow

pattern of a policy if the presentation is accompanied by a statement

disclosing that the presentation does not recognize that, because of inflation,

a dollar in the future may have less value.

     6.  A presentation of benefits may not

display guaranteed benefits and benefits which are not guaranteed as a single

sum unless they are shown separately in close proximity to the single sum.

     7.  A statement regarding the use of the life

insurance cost indexes must include an explanation to the effect that the

indexes are useful only for the comparison of the relative costs of two or more

similar policies.

     8.  A life insurance cost index which

reflects dividends or an equivalent level annual dividend must be accompanied

by a statement that it is based on the company’s current dividend scale and is

not guaranteed.

     9.  For the purposes of this regulation, the

annual premium for a basic policy or rider for which the company reserves the

right to change the premium must be the maximum annual premium.

     [Comm’r of Insurance, LH-6 § VIII, eff. 11-22-78]

      NAC 686A.430  Insurer to provide buyer’s guide and policy summary to applicant;

exception. (NRS 679B.130, 686A.015)

     1.  Except as otherwise provided in

subsection 4, an insurer shall provide a buyer’s guide and a policy summary to

each applicant before accepting the applicant’s initial premium or premium

deposit, unless the policy summary or the policy for which application is made

contains a provision for an unconditional refund of at least 12 days, in which

event the buyer’s guide and policy summary must be delivered with the policy or

before the delivery of the policy.

     2.  The insurer shall provide a buyer’s guide

and a policy summary to any prospective purchaser upon request.

     3.  The requirement to provide policy

summaries for policies whose equivalent level death benefit, calculated as

required by NAC 686A.440, does not exceed $5,000

is satisfied by delivery of a written statement containing the information

described in paragraphs (b), (c) and (d), subparagraphs (1), (2) and (3) of

paragraph (e), and paragraphs (f), (g), (j), and (k) of subsection 1 of NAC 686A.435.

     4.  The policy summary required pursuant to

subsection 1 is not required if an illustration that conforms with the

provisions of NAC 686A.460 to 686A.479, inclusive, is provided.

     [Comm’r of Insurance, LH-6 § V, eff. 11-22-78]—(NAC by

A R089-97, 1-14-98)

      NAC 686A.435  Policy summaries. (NRS 679B.130, 686A.015)

     1.  Policy summaries required by NAC 686A.430 must contain:

     (a) A prominently placed title as follows:

Statement of Policy Cost and Benefit Information.

     (b) The name and address of the insurance agent,

or, if no agent is involved, a statement of the procedure to be followed in

order to receive responses to inquiries regarding the policy summary.

     (c) The full name and home office or administrative

office address of the company in which the life insurance policy is to be or

has been written.

     (d) The generic name of the basic policy and each

rider.

     (e) The following amounts, where applicable, for

the first 5 policy years and representative policy years thereafter, sufficient

to clearly illustrate the premium and benefit patterns, including, but not

necessarily limited to, the years for which life insurance cost indexes are

displayed, and at least one age from 60 through 65, or maturity, whichever is

earlier:

          (1) The annual premium for the basic policy.

          (2) The annual premium for each optional

rider.

          (3) The guaranteed amount payable upon death

at the beginning of the policy year, regardless of the cause of death, other

than suicide or other specifically enumerated exclusions, which is provided by

the basic policy and each optional rider, with benefits provided under the

basic policy and each rider shown separately.

          (4) Total guaranteed cash surrender values at

the end of the year, with values shown separately for the basic policy and each

rider.

          (5) Cash dividends payable at the end of the

year with values shown separately for the basic policy and each rider.

(Dividends need not be displayed beyond the 20th policy year.)

          (6) Guaranteed endowment amounts payable under

the policy which are not included under guaranteed cash surrender values above.

     (f) The effective policy loan annual percentage

interest rate, if the policy contains this provision, specifying whether this

rate is applied in advance or in arrears. If the policy loan interest rate is

variable, the policy summary must include the maximum annual percentage rate.

     (g) Life insurance cost indexes for 10 and 20

years, but not beyond the premium paying period. Separate indexes are displayed

for the basic policy and for each optional term life insurance rider. These

indexes need not be included for:

          (1) Optional riders which are limited to

benefits such as coverage for accidental death, disability waiver of premium,

preliminary term life insurance coverage of less than 12 months, and guaranteed

insurability; or

          (2) Basic policies or optional riders covering

more than one life.

     (h) The equivalent level annual dividend, in the

case of participating policies and participating optional term life insurance

riders, under the same circumstances and for the same durations at which life

insurance costs indexes are displayed.

     (i) A policy summary which includes dividends must

also include a statement that dividends are based on the company’s scale and

are not guaranteed, and a statement printed close to the equivalent level

annual dividend as follows:

     “An explanation of the intended use of the equivalent

level annual dividend is included in the life insurance buyer’s guide.”

     (j) A statement printed near the life insurance

cost indexes as follows:

     “An explanation of the intended use of these indexes is

provided in the life insurance buyer’s guide.”

     (k) The date on which the policy summary is

prepared.

     2.  The policy summary must be a separate

document. All required information must be set out in a manner which does not

minimize or render any portion of the information obscure. Any amounts which

remain level for 2 or more years of the policy may be represented by a single

number if it is clearly indicated which amounts are applicable for each policy

year. Amounts in paragraph (e) of subsection 1 of this section must be listed

in total, not on a per thousand or per unit basis. If more than one insured is

covered under one policy or rider, guaranteed death benefits must be displayed

separately for each insured or for each class of insureds if death benefits do

not differ within the class. Zero amounts must be displayed as zero and may not

be displayed as blank spaces.

     [Comm’r of Insurance, LH-6 § VI, eff. 11-22-78]

      NAC 686A.440  Equivalent level death benefit. (NRS 679B.130, 686A.015)  The

equivalent level death benefit of a policy or term life insurance rider is an

amount calculated as follows:

     1.  Accumulate the guaranteed amount payable

upon death, regardless of the cause of death, at the beginning of each policy

year for 10 and 20 years at 5 percent interest compounded annually to the end

of the 10th and 20th policy years respectively.

     2.  Divide each accumulation obtained in

subsection 1 by an interest factor that converts it into one equivalent level

annual amount which, if paid at the beginning of each year, would accrue to the

value obtained in subsection 1 over the respective periods stipulated in

subsection 1. If the period is 10 years, the factor is 13.207. If the period is

20 years, the factor is 34.719.

     [Comm’r of Insurance, LH-6 § VII, eff. 11-22-78]

      NAC 686A.445  Cost indexes. (NRS 679B.130, 686A.015)

     1.  The life insurance surrender cost index

is calculated by:

     (a) Determining the guaranteed cash surrender

value, if any, available at the end of the 10th and 20th policy years.

     (b) For participating policies, adding the terminal

dividend payable upon surrender, if any, to the accumulation of the annual cash

dividends at 5 percent interest compounded annually to the end of the period

selected and add this sum to the amount determined in paragraph (a).

     (c) Dividing the result obtained in paragraph (b)

(or paragraph (a) for guaranteed cost policies) by an interest factor which

converts it into an equivalent level annual amount which, if paid at the

beginning of each year, would accrue to the value obtained in paragraph (b) (or

paragraph (a) for guaranteed cost policies) over the periods stipulated in

paragraph (a). If the period is 10 years, the factor is 13.207. If the period

is 20 years, the factor is 34.719.

     (d) Determining the equivalent level premium by

accumulating each annual premium payable for the basic policy or rider at 5

percent interest compounded annually to the end of the period stipulated in

paragraph (a) and dividing the result by the respective factors stated in

paragraph (c). (This amount is the annual premium payable for a level premium

plan.)

     (e) Subtracting the result obtained in paragraph

(c) from that of paragraph (d).

     (f) Dividing the result obtained in paragraph (e)

by the number of thousands of the equivalent level death benefit to arrive at

the life insurance surrender cost index.

     2.  The life insurance net payment cost index

is calculated in the same manner as the comparable life insurance cost index

except that the cash surrender value and any terminal dividend are set at zero.

     [Comm’r of Insurance, LH-6 § IX, eff. 11-22-78]

      NAC 686A.450  Equivalent level annual dividend.

(NRS 679B.130, 686A.015)  The

equivalent level annual dividend is calculated by:

     1.  Accumulating the annual cash dividend at

5 percent interest compounded annually to the end of the 10th and 20th policy

years.

     2.  Dividing each accumulation of subsection

1 by an interest factor which converts it into one equivalent level annual

amount which, if paid at the beginning of each year, would accrue to the values

obtained in subsection 1 over the respective periods in subsection 1. If the period

is 10 years, the factor is 13.207. If the period is 20 years, the factor is

34.719.

     3.  Dividing the results obtained in

subsection 2 by the number of thousands of the equivalent level death benefit

to arrive at the equivalent level annual dividend.

     [Comm’r of Insurance, LH-6 § X, eff. 11-22-78]

      NAC 686A.455  Failure to comply. (NRS 679B.130, 686A.015, 686A.030)  Failure

of an insurer to provide or deliver a buyer’s guide or a policy summary as

required by NAC 686A.430 constitutes an omission

which misrepresents the benefits, advantages, conditions or terms of an

insurance policy.

     [Comm’r of Insurance, LH-6 § XI, eff. 11-22-78]

Illustrations

      NAC 686A.460  Definitions. (NRS 679B.130, 686A.015)  As used

in NAC 686A.460 to 686A.479,

inclusive, unless the context otherwise requires, the words and terms defined

in NAC 686A.4605 to 686A.469,

inclusive, have the meanings ascribed to them in those sections.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4605  “Actuarial Standards Board” defined. (NRS 679B.130,

686A.015)  “Actuarial

Standards Board” means the Board established by the American Academy of

Actuaries to develop and adopt standards of actuarial practice.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.461  “Basic illustration” defined. (NRS 679B.130, 686A.015)  “Basic

illustration” means a ledger or proposal used in connection with the sale of a

policy of life insurance that sets forth the guaranteed and nonguaranteed

elements of the policy.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4615  “Contract premium” defined. (NRS 679B.130, 686A.015)  “Contract

premium” means the premium that is required to be paid pursuant to a policy of

life insurance that requires the payment of fixed premiums, including, without

limitation, a premium for a rider for which benefits are set forth in the

illustration for the policy.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.462  “Currently payable scale” defined. (NRS 679B.130,

686A.015)  “Currently

payable scale” means a scale of nonguaranteed elements that:

     1.  Are in effect for a policy form on the

date of the preparation of the illustration; or

     2.  Will be effective within 95 days after

that date.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4625  “Disciplined current scale” defined. (NRS 679B.130,

686A.015)  “Disciplined

current scale” means a scale of nonguaranteed elements constituting a limit on

illustrations currently being used by an insurer that is reasonably based on

actual recent historical experience and is certified annually by an

illustration actuary designated by the insurer.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.463  “Generic name” defined. (NRS 679B.130, 686A.015)  “Generic

name” means a term that is descriptive of a policy of life insurance being

illustrated, including, without limitation, the terms “whole life,” “term life”

or “flexible premium adjustable life.”

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4635  “Guaranteed elements” defined. (NRS 679B.130, 686A.015)  “Guaranteed

elements” means the premiums, benefits, values, credits or charges under a

policy of life insurance that are guaranteed and determined at the time the

policy is issued.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.464  “Illustrated scale” defined. (NRS 679B.130, 686A.015)  “Illustrated

scale” means a scale of nonguaranteed elements that is not more favorable to

the policy owner than the lesser of the disciplined current scale or the

currently payable scale.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4645  “Illustration” defined. (NRS 679B.130, 686A.015)  “Illustration”

means a presentation or depiction of the nonguaranteed elements of a policy of

life insurance over a period of years. The term includes, without limitation, a

basic illustration, an in-force illustration or a supplemental illustration.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.465  “In-force illustration” defined. (NRS 679B.130, 686A.015)  “In-force

illustration” means an illustration furnished at any time after the policy

being illustrated has been in force for 1 year or more.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4655  “Lapse-supported illustration” defined. (NRS 679B.130,

686A.015)  “Lapse-supported

illustration” means an illustration that:

     1.  Is not a self-supporting illustration;

and

     2.  Uses persistency rates underlying the

disciplined current scale for the first 5 years of the policy being illustrated

and a 100 percent policy persistency rate thereafter.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.466  “Minimum assumed expenses” defined. (NRS 679B.130,

686A.015)  “Minimum

assumed expenses” means the minimum expenses that may be used in the

calculation of the disciplined current scale for a policy form.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4665  “Nonguaranteed elements” defined. (NRS 679B.130,

686A.015)  “Nonguaranteed

elements” means the premiums, benefits, values, credits or charges under a

policy of life insurance that are not guaranteed or not determined at the time

the policy is issued.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.467  “Nonterm group policy of life insurance” defined. (NRS 679B.130,

686A.015)  “Nonterm

group policy of life insurance” means a group policy or an individual policy of

life insurance issued to the members of a group of employees or another

authorized group of persons if:

     1.  Every plan of coverage was selected by

the employer or group representative;

     2.  A portion of the premium is paid by the

group or through payroll deduction; and

     3.  Group underwriting or simplified

underwriting is used.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4675  “Policy owner” defined. (NRS 679B.130, 686A.015)  “Policy

owner” means:

     1.  The owner named in an individual policy

of life insurance; or

     2.  If the policy of life insurance is a

group policy, the certificate holder.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.468  “Premium outlay” defined. (NRS 679B.130, 686A.015)  “Premium

outlay” means the amount of premium for a policy of life insurance that is paid

out of pocket by the policy owner or any other person.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4685  “Self-supporting illustration” defined. (NRS 679B.130,

686A.015)  “Self-supporting

illustration” means an illustration for which the accumulated value of the

policy cash flows equals or exceeds the total policy owner value available:

     1.  When using experience assumptions

underlying the disciplined current scale; and

     2.  For illustrated points in time on or

after the 15th anniversary of the policy, or the 20th anniversary of a policy

that provides for the payment of death benefits upon the death of a second or

subsequent person insured under the policy, commonly referred to as a

second-or-later-to-die policy, or upon the expiration of the policy, whichever

occurs first. For the purposes of this subsection, the policy owner value

includes, without limitation, the cash surrender value of a policy and any

other illustrated benefits available at the election of the policy owner.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.469  “Supplemental illustration” defined. (NRS 679B.130,

686A.015)  “Supplemental

illustration” means an illustration that is furnished in addition to a basic

illustration and complies with the applicable requirements of NAC 686A.460 to 686A.479,

inclusive.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4695  Applicability. (NRS 679B.130, 686A.015)

     1.  Except as otherwise provided in

subsection 2, the provisions of NAC 686A.460 to 686A.479, inclusive, apply to all group and

individual policies and certificates of life insurance issued or delivered on

or after January 1, 1998.

     2.  NAC 686A.460

to 686A.479, inclusive, do not apply to:

     (a) Variable life insurance;

     (b) Individual and group annuity contracts;

     (c) Credit life insurance; or

     (d) Policies of life insurance that do not have

illustrated death benefits for any person which exceed $10,000.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.470  Use of standards for determining disciplined current scale

established by Actuarial Standards Board. (NRS 679B.130, 686A.015)  Standards

for determining a disciplined current scale established by the Actuarial

Standards Board may be used if such standards:

     1.  Are consistent with the provisions of NAC 686A.460 to 686A.479,

inclusive;

     2.  Limit the disciplined current scale to

reflect only actions that have been taken or events that have occurred;

     3.  Do not permit the disciplined current

scale to include any projected trends of improvements in experience or any

assumed improvements in experience beyond the illustration date; and

     4.  Do not permit the assumed expenses to be

less than the minimum assumed expenses.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4705  Method for determining assumed expenses; use of marginal

expenses. (NRS 679B.130, 686A.015)

     1.  An insurer may, pursuant to the

provisions of subsection 2, designate each year the method of determining

assumed expenses for all policy forms from among the following methods:

     (a) Fully allocated expenses;

     (b) Marginal expenses; and

     (c) A generally recognized expense table that is

based on fully allocated expenses that are representative of a significant

portion of insurance companies and is approved by the Commissioner.

     2.  Marginal expenses may be used to

determine assumed expenses only if they are greater than a generally recognized

expense table. If a generally recognized expense table is not approved by the

Commissioner, fully allocated expenses must be used.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.471  Notification to Commissioner whether or not policy includes

illustration; quotation of potential value required with nonterm group policy. (NRS 679B.130,

686A.015)

     1.  An insurer selling policies of life

insurance shall notify the Commissioner in writing whether a policy form will

be sold with or without an illustration. Any notice may be changed by filing an

amended notice with the Commissioner.

     2.  If a policy form is designated pursuant

to subsection 1 as one to be sold:

     (a) Without an illustration, an illustration must

not be used for any policy using that form before the first anniversary of the

policy.

     (b) With an illustration, the basic illustration

must be prepared and delivered in accordance with NAC

686A.460 to 686A.479, inclusive, except that a

basic illustration is not required to be provided to individual members of a

group or to persons insured under coverage issued to a single applicant on

multiple lives unless the coverage is sold to such persons. An illustration

furnished to an applicant for a group policy of life insurance or a policy

issued to a single applicant on multiple lives may be an individual or

composite illustration representative of the coverage for the lives of members

of the group or the multiple lives covered.

     3.  An insurer shall furnish to potential enrollees

of a nonterm group policy of life insurance a quotation with the enrollment

materials. The quotation must show the potential values of the policy for

sample ages and policy years on a guaranteed and nonguaranteed basis

appropriate to the group and the coverage. The quotation is not an illustration

for the purposes of this section, but all information provided in the quotation

must be consistent with the illustrated scale.

     4.  An insurer shall provide a basic

illustration upon delivery of the certificate to enrollees of a nonterm group

policy of life insurance who enroll for more than the minimum premium necessary

to provide death benefits only. The insurer shall make a basic illustration

available to such an enrollee upon request.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4715  Required provisions of life insurance illustration. (NRS 679B.130,

686A.015)  An

illustration must be clearly labeled as a “life insurance illustration” and set

forth the:

     1.  Name of the insurer;

     2.  Name and business address of the insurer’s

agent, broker or other authorized representative;

     3.  Name, age and gender of the proposed

insured, unless a composite illustration is permitted pursuant to NAC 686A.460 to 686A.479,

inclusive;

     4.  Underwriting or rating classification

upon which the illustration is based;

     5.  Generic name and form number of the

policy;

     6.  The product name of the company if it is

different from the generic name;

     7.  Amount of the initial death benefit; and

     8.  Election of a dividend option or the

application of nonguaranteed elements.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.472  Use of rate of interest to determine nonguaranteed elements of

policy. (NRS 679B.130, 686A.015)  If a

rate of interest used to determine the nonguaranteed elements of a policy is

shown in an illustration, the rate must not be greater than the earned rate of

interest underlying the disciplined current scale.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4725  Requirements for basic illustration. (NRS 679B.130,

686A.015)  A basic

illustration must conform with the following:

     1.  The illustration must include the date on

which it was prepared.

     2.  Each page of the illustration, including,

without limitation, any explanatory notes or pages, must be numbered in a

manner that shows its relationship to the total number of pages in the

illustration.

     3.  The assumed dates of payment of premiums

and benefits within a policy year must be clearly identified.

     4.  If the age of the proposed insured is

shown as a component of the tabular detail, it must be his or her age upon

issuance of the policy plus the number of years the policy is assumed to be in

force.

     5.  The assumed payments on which the

illustrated benefits and values are based must be identified as the premium

outlay or contract premium. For policies that do not require a contract

premium, the illustrated payment of premiums must be identified as premium

outlay.

     6.  Guaranteed death benefits and cash

surrender values of the policy, if any, for the illustrated premium outlay or

contract premium must be shown and clearly labeled as guaranteed.

     7.  If the illustration shows any

nonguaranteed elements, they must not be based on a scale more favorable to the

policy owner than the insurer’s illustrated scale at any time during the term

of the contract. Such elements must be clearly labeled as nonguaranteed.

     8.  The guaranteed elements must be shown

before corresponding nonguaranteed elements and must be specifically referred

to on any page of an illustration that shows or describes only the

nonguaranteed elements.

     9.  If the account or accumulation value of

the policy being illustrated is depicted, it must be identified by the name

this value is given in the policy and shown in close proximity to the

corresponding cash surrender value.

     10.  The cash surrender value of the policy

being illustrated must be identified by the name the cash surrender value is

given in the policy and must be the amount available to the policy owner in a

lump sum after deduction of any charges for surrendering the policy, policy

loans and interest on policy loans.

     11.  The illustration may show policy

benefits and values in a graph or chart in addition to a tabular form.

     12.  An illustration of nonguaranteed

elements must be accompanied by a statement that the:

          (a) Benefits and values are not guaranteed;

          (b) Assumptions on which they are based are

subject to change by the insurer; and

          (c) Actual results may be more or less

favorable than is illustrated.

     13.  If the illustration shows that the payer

of the premium has the option to allow policy charges to be paid using

nonguaranteed elements, the illustration must clearly set forth that a charge

continues to be required and that, depending on actual results, the payer of

the premium may need to continue or resume premium outlays. A similar

disclosure must be made for premium outlay of lesser amounts or shorter

durations than the contract premium. If a contract premium is due, the display

of the premium outlay must not be left blank or show zero unless it is

accompanied by an asterisk or similar mark to draw attention to the fact that

the policy has not been paid up.

     14.  If an applicant plans to use dividends

or guaranteed or nonguaranteed policy values for any purpose, including,

without limitation, to pay for all or a portion of the contract premium or

policy charges, the illustration must set forth the impact of the use of the

dividends and values on future policy benefits and values.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.473  Contents of narrative summary in basic illustration. (NRS 679B.130,

686A.015)  A basic

illustration must contain a narrative summary which must include, without

limitation, each of the following:

     1.  A brief description of the policy being

illustrated, including, without limitation, a statement that it is a policy of

life insurance.

     2.  A brief description of the premium outlay

or contract premium for the policy. If a policy does not require the payment of

a contract premium, the illustration must show the premium outlay that must be

paid to guarantee coverage for the term of the contract, subject to maximum

premiums allowable to qualify as a policy of life insurance under the

applicable provisions of the Internal Revenue Code.

     3.  A brief description of any guaranteed or

nonguaranteed elements, policy features, riders or options that are shown in

the basic illustration and the impact they may have on the benefits and values

of the policy.

     4.  An identification and a brief definition

of column headings and key terms used in the illustration.

     5.  A statement in substantially the

following form:

 

This illustration assumes that the

currently illustrated nonguaranteed elements will continue unchanged for all of

the years shown. This is not likely to occur and actual results may be more or

less favorable than those shown.

 

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4735  Contents of numeric summary of death benefits and values of

policy in basic illustration. (NRS 679B.130, 686A.015)

     1.  A basic illustration must include after

the narrative summary a numeric summary of the death benefits and values of the

policy being illustrated, and the premium outlay or contract premium. If the

policy provides for a contract premium, the guaranteed death benefits and

values must be based on the contract premium. This summary must be shown for

policy years 5, 10 and 20, and at the age of 70 years of the insured. For a

policy issued to a single applicant on multiple lives, commonly referred to as

a multiple-life policy, the summary must be shown for policy years 5, 10, 20

and 30.

     2.  A numeric summary for any policy must

include, without limitation:

     (a) The guaranteed elements of the policy;

     (b) The illustrated scale; and

     (c) The illustrated scale with the nonguaranteed

elements reduced as follows:

          (1) Dividends at 50 percent of the dividends

contained in the illustrated scale used;

          (2) Nonguaranteed credited interest at rates

that are the average of the guaranteed rates and the rates contained in the

illustrated scale used; and

          (3) All nonguaranteed charges, including, but

not limited to, charges for term insurance, mortality and expenses, at rates

that are the average of the guaranteed rates and the rates contained in the

illustrated scale used.

     3.  If coverage will cease before the policy

reaches maturity or the insured reaches the age of 100 years, the year in which

coverage ceases must be identified for each base required to be included in the

numeric summary pursuant to subsection 2.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.474  Signed statements required if illustration is provided at time of

delivery of policy. (NRS 679B.130, 686A.015)  The

following statements must be included on the same page as the numeric summary

and must be signed by the applicant, or the policy owner if an illustration is

provided at the time of the delivery of the policy, and the insurance agent or

broker. The statements must be in substantially the following form:

 

I, the applicant or policy owner,

have received a copy of this illustration and understand that any nonguaranteed

elements illustrated are subject to change and could be higher or lower. The

insurance agent or broker has informed me they are not guaranteed.

 

I, the insurance agent or broker,

certify that this illustration has been presented to the applicant or policy

owner and that I have explained that any nonguaranteed elements illustrated are

subject to change. I have made no statements that are inconsistent with the

illustration.

 

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4745  Information to be included in basic illustration when premium

outlay or contract premium changes; other information required under certain

circumstances. (NRS 679B.130, 686A.015)

     1.  A basic illustration must include,

without limitation, the following information for each policy year from years 1

to 10, inclusive, for every fifth policy year thereafter ending at the age of

100 years of the insured, or upon maturity or final expiration of the policy,

and except for term insurance beyond the 20th year, for any year in which the

premium outlay or contract premium changes:

     (a) The premium outlay or contract premium, and the

method by which the applicant intends to pay the premium;

     (b) The corresponding guaranteed death benefit; and

     (c) The corresponding guaranteed cash surrender

value of the policy.

     2.  If the policy provides for a contract

premium, the guaranteed death benefit and cash surrender value of the policy

must correspond to the contract premium.

     3.  Nonguaranteed elements may be shown if

they are described in the contract. If the basic illustration is for a policy

on which the insurer intends to credit terminal dividends, the nonguaranteed

elements may be shown if the insurer’s current practice is to pay terminal

dividends. If any nonguaranteed elements are shown, they must be shown at the

same durations as the corresponding guaranteed elements. If no guaranteed

benefit or value is available at any duration for which a nonguaranteed benefit

or value is shown, a zero must be displayed in the column for guaranteed

benefits.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.475  Supplemental illustration: When authorized; format; notice

referring to basic illustration required. (NRS 679B.130, 686A.015)

     1.  A supplemental illustration may be

provided if:

     (a) It is appended to, accompanied by or preceded

by a basic illustration that complies with the provisions of NAC 686A.460 to 686A.479,

inclusive;

     (b) The nonguaranteed elements depicted are not

more favorable to the policy owner than the corresponding elements based on the

illustrated scale used in the basic illustration;

     (c) It contains a statement that the nonguaranteed

elements are not guaranteed; and

     (d) The contract premium or premium outlay

underlying the supplemental illustration is equal to the contract premium or

premium outlay depicted in the basic illustration.

     2.  A supplemental illustration may be

presented in a format differing from the basic illustration, but it may only

depict a scale of nonguaranteed elements that is permitted in a basic

illustration.

     3.  The supplemental illustration must

include a notice referring to the basic illustration for guaranteed elements.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4755  Solicitor to provide insurer and applicant copy of basic

illustration to which policy conforms; required provisions of revised basic

illustration; requirements when basic illustration not used in connection with

sale. (NRS 679B.130, 686A.015)

     1.  If a basic illustration is used by an

insurer’s agent, broker or other authorized representative in connection with

the sale of a policy of life insurance and the policy is applied for as

illustrated, the agent, broker or authorized representative shall submit a copy

of that illustration, signed in accordance with NAC

686A.460 to 686A.479, inclusive, to the

insurer and the applicant at the time the applicant applies for the policy.

     2.  If the policy is issued other than as

applied for, the agent, broker or authorized representative shall deliver a

revised basic illustration conforming to the policy as issued to the applicant

or policy owner at the time the policy is delivered. The revised illustration

must:

     (a) Conform to the requirements of NAC 686A.460 to 686A.479,

inclusive, that apply to basic illustrations;

     (b) Be labeled “Revised Illustration”;

     (c) Be signed and dated by the applicant or policy

owner and the insurer’s agent, broker or other authorized representative of the

insurer no later than the date on which the policy is delivered; and

     (d) Be provided to the insurer and the applicant or

policy owner.

     3.  If an illustration is not used by an

agent, broker or other authorized representative of an insurer in connection

with the sale of a policy of life insurance or if the policy is applied for

other than as illustrated, the agent, broker or authorized representative shall

certify to that effect in writing on a form provided by the insurer. On the

same form, the applicant shall acknowledge that no illustration conforming to

the policy applied for was provided and that an illustration conforming to the

policy as issued will be provided to the applicant no later than at the time of

the delivery of the policy. This form must be submitted to the insurer at the

time the applicant applies for the policy.

     4.  If the policy is issued, the agent,

broker or authorized representative shall deliver a basic illustration

conforming to the policy as issued with the policy. The basic illustration must

be signed no later than the date on which the policy is delivered. A copy must

be provided to the insurer and the policy owner.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.476  Requirements when basic illustration or revised basic

illustration is delivered by mail; insurer to retain illustration or

certificate that illustration was not used. (NRS 679B.130, 679B.137, 686A.015)

     1.  If a basic illustration or a revised

basic illustration is delivered by an insurer to an applicant or policy owner

by mail, it must include instructions for the applicant or policy owner to sign

a duplicate copy of the page of the illustration containing the numeric summary

and return the signed copy to the insurer. An insurer shall be deemed to have

complied with the provisions of this subsection if it can demonstrate that it

has made a diligent effort to secure a signed copy of the page containing the numeric

summary. An insurer shall be deemed to have made a diligent effort if it

includes in the mailing a self-addressed postage paid envelope with

instructions for the return of the signed copy of the page containing the

numeric summary.

     2.  A copy of a basic illustration, a revised

basic illustration or a certification that an illustration was not used in

connection with the sale of a policy or that a policy was applied for other

than as illustrated, which is signed by the policy owner, must be retained by

the insurer for not less than 3 years after the policy is no longer in force. A

copy does not need to be retained if no policy is issued.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4765  Annual report on status of policy: When required; contents. (NRS 679B.130,

686A.015)

     1.  Except as otherwise provided in

subsection 2, if a policy is designated pursuant to NAC

686A.471 as one for which an illustration will be used, the insurer shall

provide each policy owner with an annual report on the status of the policy. The

report must set forth:

     (a) For a policy of universal life insurance:

          (1) The beginning and end date of the current

reporting period;

          (2) The value of the policy at the end of the

previous reporting period and at the end of the current reporting period;

          (3) The total amounts that have been credited

to or debited from the value of the policy during the current reporting period,

identifying each by type, including, without limitation, credits and debits

related to interest, mortality, expenses and riders;

          (4) The death benefit at the end of the

current reporting period for each life covered by the policy;

          (5) The net cash surrender value of the policy

at the end of the current reporting period;

          (6) The amount of outstanding loans, if any,

at the end of the current reporting period;

          (7) If the policy requires the payment of

fixed premiums and the policy’s net cash surrender value will not maintain

insurance in force until the end of the next reporting period, a notice to this

effect; and

          (8) If the policy allows the payment of

flexible premiums and the policy’s net cash surrender value will not maintain

insurance in force until the end of the next reporting period unless additional

premiums are paid, a notice to this effect.

     (b) For any other policy:

          (1) The current death benefit;

          (2) The annual contract premium;

          (3) The current cash surrender value of the

policy;

          (4) The current dividend;

          (5) The application of the current dividend;

and

          (6) The amount of any outstanding loan.

     2.  If the policy does not build nonforfeiture

values, an annual report is required only for those years in which a change has

been made to nonguaranteed elements by the insurer.

     3.  If an adverse change in nonguaranteed

elements that could affect the policy has been made by the insurer since the

last annual report, the annual report must contain a notice of that fact and

the nature of the change. The notice must be prominently displayed.

     4.  If the annual report does not include an

in-force illustration, it must contain a statement in substantially the

following form:

 

IMPORTANT

NOTICE TO THE POLICY OWNER

You should consider requesting more

detailed information about your policy to understand how it may perform in the

future. You should not consider replacement of your policy or make changes in

your coverage without requesting a current illustration. You may annually

request such an illustration, without charge, by calling your insurer’s

telephone number, writing to the insurer or contacting your agent. If you do

not receive a current illustration of your policy within 30 days after your

request, you should contact the insurance division of your state.

 

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.477  In-force illustration to be furnished upon request. (NRS 679B.130,

686A.015)  Upon the

request of a policy owner, an insurer shall furnish an in-force illustration of

current and future benefits and values for the policy based on the insurer’s

present illustrated scale. This illustration must comply with the requirements

of NAC 686A.4715, 686A.472,

686A.4725 and 686A.4745.

A signature or other acknowledgment of receipt of this illustration is not

required.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4772  Illustration actuary: Appointment required; qualifications;

notification to Commissioner of certain acts; notification of change in status. (NRS 679B.130,

686A.015)

     1.  Each insurer that sells policies of life

insurance shall appoint at least one illustration actuary.

     2.  The illustration actuary must:

     (a) Be a member in good standing of the American

Academy of Actuaries;

     (b) Be familiar with the standard of practice

regarding illustrations for policies of life insurance; and

     (c) Not have been found by the Commissioner, after

notice and a hearing, to have:

          (1) Violated any provision of, or failed to

satisfy any obligation imposed by, the laws of this State relating to insurance

in the course of his or her dealings as an illustration actuary;

          (2) Been convicted of a crime involving fraud

or dishonesty;

          (3) Demonstrated incompetence, lack of

cooperation or untrustworthiness to act as an illustration actuary; or

          (4) Resigned or been removed as an

illustration actuary within the past 5 years as a result of acts or omissions

indicated in any adverse report on an examination or as a result of a failure

to adhere to generally acceptable actuarial standards.

     3.  An illustration actuary shall notify the

Commissioner of any determination made by the regulatory authority of another

state that the illustration actuary has engaged in an activity set forth in

paragraph (c) of subsection 2.

     4.  If an insurer changes the illustration

actuary responsible for all or a portion of the insurer’s policy forms, the

insurer shall notify the Commissioner of that fact promptly and disclose the

reason for the change.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4775  Illustration actuary to certify illustration; required disclosure

in certification. (NRS 679B.130, 686A.015)

     1.  An illustration actuary shall certify

that:

     (a) The disciplined current scale used in

illustrations authorized by the insurer comply with the “Actuarial Standard of

Practice for Compliance with the NAIC Model Regulation on Life Insurance

Illustrations” adopted by the Actuarial Standards Board; and

     (b) The illustrated scales used in illustrations

authorized by the insurer comply with the requirements of NAC 686A.460 to 686A.479,

inclusive.

     2.  The illustration actuary shall file the

certification with the insurer and the Commissioner:

     (a) Annually for all policy forms for which

illustrations are used on a date determined by the insurer; and

     (b) Before a new policy form is illustrated.

     3.  The illustration actuary shall disclose

in the certification:

     (a) Whether, since the last certification, a

currently payable scale applicable for business issued within the previous 5

years and within the scope of the certification has been reduced for reasons

other than changes in the experience factors underlying the disciplined current

scale. If nonguaranteed elements illustrated for new policies are not

consistent with those illustrated for similar policies that are in force, this

fact must be disclosed in the certification. If nonguaranteed elements

illustrated for new policies and policies that are in force are not consistent

with the nonguaranteed elements actually being paid, charged or credited to the

same or similar forms, this fact must be disclosed in the certification.

     (b) The method used to allocate overhead expenses

for all illustrations from one of the following methods:

          (1) The fully allocated expense method;

          (2) The marginal expense method; or

          (3) A generally recognized expense table

method based on fully allocated expenses that are representative of a

significant portion of insurers in this State and is approved by the

Commissioner.

     4.  If an error in a previous certification

is discovered, the illustration actuary shall notify the insurer and the

Commissioner promptly.

     5.  If an illustration actuary is unable to

certify the disciplined current scale for an illustration the insurer intends

to use, the actuary shall notify the insurer and the Commissioner promptly of

his or her inability to certify that scale.

     6.  For the purposes of this section, the

“Actuarial Standard of Practice for Compliance with the NAIC Model Regulation

on Life Insurance Illustrations,” adopted by the Actuarial Standards Board, is

hereby adopted by reference. A copy of the standard may be obtained from the

American Academy of Actuaries, 1850 M Street N.W., Suite 300, Washington, D.C.

20036, (202) 223-8196, and on the Internet at http://www.actuary.org/index.asp

free of charge.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.478  Annual certification by officer of insurer that sells policies

required. (NRS 679B.130, 686A.015)  An

officer of an insurer that sells policies of life insurance, other than the

illustration actuary, shall certify annually that:

     1.  The formats for the illustrations the

insurer intends to use comply with the requirements of NAC

686A.460 to 686A.479, inclusive;

     2.  The scales used in illustrations

authorized by the insurer are those scales certified by the illustration

actuary; and

     3.  The insurer has provided its agents and

brokers with information about the method that is used by the insurer to

allocate expenses in its illustrations and is disclosed as required in

subsection 3 of NAC 686A.4775.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.4785  Prohibited acts in connection with sale of policy. (NRS 679B.130,

686A.015)  If an

insurer or its agent, broker or other authorized representative is using an

illustration in connection with the sale of a policy of life insurance, the insurer,

agent, broker or authorized representative shall not:

     1.  Represent the policy as anything other

than a policy of life insurance;

     2.  Use or describe nonguaranteed elements in

a manner that is misleading or has the capacity or tendency to mislead;

     3.  State or imply that the payment or amount

of nonguaranteed elements is guaranteed;

     4.  Use an illustration that does not comply

with the requirements of NAC 686A.460 to 686A.479, inclusive;

     5.  Use an illustration that at any time

during the term of the contract depicts policy performance more favorable to

the policy owner than that produced by the illustrated scale of the insurer

whose policy is being illustrated;

     6.  Provide an applicant with an incomplete

illustration;

     7.  Represent in any way that the payment of

premiums will not be required for each year of the policy in order to maintain

the illustrated death benefits, unless the representation is true;

     8.  Use a term that implies that the policy

will become paid up, including, without limitation, the terms, “vanish” or

“vanishing premium,” to describe a plan for using nonguaranteed elements to pay

for any portion of a future premium;

     9.  Except for policies that can never

develop a nonforfeiture value, use a lapse-supported illustration; or

     10.  Use an illustration that is not a

self-supporting illustration.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

      NAC 686A.479  Penalties. (NRS 679B.130, 686A.015)  An

insurer, agent, broker or other authorized representative of an insurer who

violates any provision of NAC 686A.460 to 686A.4785, inclusive, shall be deemed to have violated

the provisions of NRS 686A.030

or 686A.040, or both, and, in

addition to any other penalties provided by law, is subject to the penalties

set forth in NRS 686A.183.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)

Prohibited Acts and Practices Concerning Solicitation of

or Sale to Active Duty Service Members

REVISER’S NOTE.

      The regulation of the Commissioner of Insurance filed

with the Secretary of State on August 31, 2007 (LCB File No. R031-07), the

source of NAC 686A.485 to 686A.4955,

inclusive, (sections 2 to 23, inclusive, of the regulation), became effective

on September 1, 2007, and contains the following provision not included in NAC:

      “The amendatory

provisions of this regulation apply to an act or practice which occurs on or

after September 1, 2007.”

      NAC 686A.485  Applicability and effect. (NRS 679B.130, 686A.015)

     1.  NAC 686A.485

to 686A.4955, inclusive, apply to the solicitation

or sale of a life insurance product by an insurer or producer of insurance to

an active duty service member.

     2.  Nothing in NAC

686A.485 to 686A.4955, inclusive, abrogates

the ability of nonprofit organizations, or any other organization, to educate

active duty service members in accordance with Department of Defense

Instruction 1344.07, “Personal Commercial Solicitation on DoD Installations,”

or any successor directive.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4855  Definitions. (NRS 679B.130, 686A.015)  As used

in NAC 686A.485 to 686A.4955,

inclusive, unless the context otherwise requires, the words and terms defined

in NAC 686A.486 to 686A.4915,

inclusive, have the meanings ascribed to them in those sections.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.486  “Active duty service member” defined. (NRS 679B.130,

686A.015)  “Active

duty service member” means:

     1.  Any commissioned or warrant officer or

enlisted member of the United States Armed Forces who is on full-time duty in

the active military service of the United States; or

     2.  A member of a reserve component of the

United States Armed Forces or the National Guard while the member is serving

under published orders for active duty or full-time training.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4865  “Department of Defense personnel” defined. (NRS 679B.130,

686A.015)  “Department

of Defense personnel” means all active duty service members and all civilian

employees, including, without limitation, nonappropriated fund employees and

special government employees, of the Department of Defense.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.487  “Door-to-door” defined. (NRS 679B.130, 686A.015)  “Door-to-door”

means a solicitation or sales method whereby a producer of insurance proceeds

randomly or selectively from household to household without prior specific

appointment.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4875  “General advertisement” defined.

(NRS 679B.130, 686A.015)  “General

advertisement” means an advertisement having as its sole purpose the promotion

of interest in the concept of insurance or the promotion of the insurer or the

producer of insurance who is the subject of the advertisement.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.488  “Known” and “knowingly” defined.

(NRS 679B.130, 686A.015)  “Known”

or “knowingly” means that the insurer or producer of insurance had actual

awareness, or with the exercise of ordinary care, would have been aware, at the

time of the act or practice complained of, that the person solicited is an

active duty service member.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4885  “Life insurance product” defined.

(NRS 679B.130, 686A.015)  “Life

insurance product” has the meaning ascribed to it in the Military Personnel

Financial Services Protection Act, Public Law 109-290, 120 Stat. 1317-26.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.489  “Military installation” defined.

(NRS 679B.130, 686A.015)  “Military

installation” means any base, reservation, post, camp, building or other

facility to which active duty service members are assigned for duty and which

is owned, leased or operated by the United States Government. The term

includes, without limitation, barracks, transient housing and family quarters.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4895  “MyPay” defined. (NRS 679B.130, 686A.015)  “MyPay”

means the system of the Defense Finance and Accounting Service which enables an

active duty service member to process discretionary pay transactions or update

personal information data elements without using paper forms.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.490  “Side fund” defined. (NRS 679B.130, 686A.015)  “Side

fund” means a fund or reserve that is part of, or otherwise attached to, a life

insurance policy, other than an individually issued annuity, by any means,

including, without limitation, by rider, endorsement or any other mechanism

which accumulates premiums or deposits with interest. The term does not

include:

     1.  Accumulated value, cash value or

secondary guarantees provided by a universal life policy;

     2.  Cash values provided by a whole life

policy which are subject to standard nonforfeiture law for life insurance; or

     3.  A premium deposit fund which:

     (a) Contains only premiums paid in advance which

accumulate at interest;

     (b) Imposes no penalty for withdrawal;

     (c) Does not permit funding beyond future required

premiums;

     (d) Is not marketed or intended as an investment;

and

     (e) Does not carry commission, either paid or

calculated.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4905  “Solicit” defined. (NRS 679B.130, 686A.015)  “Solicit”

has the meaning ascribed to it in NRS

683A.074.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.491  “Specific appointment” defined. (NRS 679B.130, 686A.015)  “Specific

appointment” means a prearranged appointment agreed upon by both parties and

definite as to place and time.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4915  “United States Armed Forces” defined. (NRS 679B.130,

686A.015)  “United

States Armed Forces” means all components of the Army, Navy, Air Force, Marine

Corps and Coast Guard.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.492  Engaging in certain acts or practices while on military

installation. (NRS 679B.130, 686A.015)  An

insurer or producer of insurance engages in an unfair or deceptive act or

practice in violation of NRS

686A.020 if, while on a military installation, the insurer or producer of

insurance:

     1.  Knowingly solicits the purchase of a life

insurance product door-to-door or without first establishing a specific

appointment for each meeting with the prospective purchaser.

     2.  Solicits the purchase of a life insurance

product from active duty service members in a group or mass audience or in a

captive audience where attendance is not voluntary.

     3.  Knowingly makes appointments with, or

solicits the purchase of a life insurance product from, an active duty service

member during the normally scheduled duty hours of the active duty service

member.

     4.  Makes appointments with, or solicits the

purchase of a life insurance product from, an active duty service member in

barracks, day rooms, unit areas, transient personnel housing or other areas

where the commander of the military installation has prohibited solicitation.

     5.  Solicits the purchase of any life

insurance product without first obtaining permission from the commander of the

military installation or the designee of the commander.

     6.  Posts bulletins, notices or

advertisements without authorization from the commander of the military

installation or the designee of the commander.

     7.  Fails to present DD Form 2885, “Personal

Commercial Solicitation Evaluation,” to an active duty service member solicited

by the insurer or producer of insurance or encourages an active duty service

member not to complete or submit a DD Form 2885.

     8.  Knowingly accepts an application for a

life insurance product from, or issues a policy of life insurance on the life

of, an enlisted member of the United States Armed Forces without first

obtaining for the files of the insurer or producer of insurance a completed

copy of any required form which confirms that the enlisted member has received

counseling or fulfilled any other similar requirement for the sale of a life

insurance product established by the regulations, directives or rules of the

Department of Defense or the branch of the United States Armed Forces in which

the enlisted member serves.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4925  Engaging in corrupt practice or improper influence or inducement

while on military installation. (NRS 679B.130, 686A.015)  An

insurer or producer of insurance engages in a corrupt practice, or an improper

influence or inducement, which constitutes an unfair or deceptive act or

practice in violation of NRS

686A.020 if, while on a military installation, the insurer or producer of

insurance:

     1.  Uses Department of Defense personnel,

directly or indirectly, as a representative or agent in any official or

business capacity, with or without compensation, with respect to the

solicitation or sale of a life insurance product to active duty service

members.

     2.  Uses a producer of insurance to

participate in any education or orientation program sponsored by the United

States Armed Forces.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.493  Engaging in corrupt practice or improper influence or inducement

at any location. (NRS 679B.130, 686A.015)  An

insurer or producer of insurance engages in a corrupt practice, or an improper

influence or inducement, which constitutes an unfair or deceptive act or

practice in violation of NRS

686A.020 if, at any location, the insurer or producer of insurance:

     1.  Except as otherwise provided in this

subsection, submits, processes or assists in the submission or processing of

any allotment form or similar device used by the United States Armed Forces to

direct the pay of an active duty service member to a third party for the

purchase of a life insurance product. Violations of this subsection include,

without limitation, using, or assisting in the use of, the myPay account of an

active duty service member or other similar Internet or electronic medium for

such purposes. An insurer or producer of insurance does not violate this

subsection if the insurer or producer of insurance only provides to an active

duty service member insurer or premium information which is necessary to

complete an allotment form.

     2.  Knowingly receives funds for the payment

of a premium of an active duty service member from a depository institution

with which the active duty service member has no formal banking relationship.

     3.  Employs any device or method, or enters

into any agreement, whereby funds for the payment of the insurance premium of

an active duty service member, which are received by allotment from a

depository institution with which the service member has no formal banking

relationship, are identified on the Leave and Earnings Statement of an active

duty service member, or an equivalent or successor form, as “savings” or

“checking.”

     4.  Enters into any agreement with a

depository institution, for the purpose of receiving funds from an active duty

service member, whereby the depository institution, with or without

compensation, agrees to accept direct deposits from an active duty service

member with whom it has no formal banking relationship.

     5.  Uses Department of Defense personnel,

directly or indirectly, as a representative or agent in any official or

unofficial capacity, with or without compensation, with respect to the

solicitation or sale of a life insurance product to an active duty service

member who is junior in rank or grade, or to the family members of such an

active duty service member.

     6.  Offers or gives anything of value,

directly or indirectly, to Department of Defense personnel to procure

assistance in encouraging, assisting or facilitating the solicitation or sale

of a life insurance product to an active duty service member.

     7.  Knowingly offers or gives anything of

value to an active duty service member for his or her attendance at any event

where an application for a life insurance product is solicited.

     8.  Advises an active duty service member to

change his or her income tax withholding or state of legal residence for the

sole purpose of increasing disposable income to purchase a life insurance

product.

     9.  For the purposes of this section, a

formal banking relationship is established when the depository institution:

     (a) Provides the active duty service member a

deposit agreement and periodic statements and makes the disclosures required by

the Truth in Savings Act, 12 U.S.C. §§ 4301 et seq., and any regulations

adopted pursuant thereto; and

     (b) Allows the active duty service member to make

deposits and withdrawals unrelated to the payment or processing of insurance

premiums.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4935  Engaging in act or practice which leads to confusion regarding

source, sponsorship, approval or affiliation. (NRS 679B.130, 686A.015)  An

insurer or producer of insurance engages in an act or practice which leads to

confusion regarding source, sponsorship, approval or affiliation, and which

constitutes an unfair or deceptive act or practice in violation of NRS 686A.020, if the insurer or

producer of insurance:

     1.  Makes any representation, or uses any

device, title, descriptive name or identifier, that has the tendency or

capacity to confuse or mislead an active duty service member into believing

that the insurer, producer of insurance or life insurance product offered is

affiliated, connected or associated with, or endorsed, sponsored, sanctioned or

recommended by, the United States Government, the United States Armed Forces,

any state or federal agency or any other governmental entity. The titles

prohibited by this subsection include, without limitation, “Battalion Insurance

Counselor,” “Unit Insurance Advisor,” “Servicemembers’ Group Life Insurance

Conversion Consultant” or “Veteran’s Benefits Counselor.” This subsection does

not prohibit a person from using a professional designation awarded after the

successful completion of a course of instruction in the business of insurance

by an accredited institution of higher education, including, without limitation,

“Chartered Life Underwriter” (CLU), “Chartered Financial Consultant” (ChFC),

“Certified Financial Planner” (CFP), “Master of Science in Financial Services”

(MSFS) or “Master of Science in Financial Planning” (MS).

     2.  Solicits the purchase of a life insurance

product through the use of, or in conjunction with, any third-party

organization that promotes the welfare or assists members of the United States

Armed Forces in a manner that has the tendency or capacity to confuse or

mislead an active duty service member into believing that the insurer, producer

of insurance or life insurance product is affiliated, connected or associated

with, or endorsed, sponsored, sanctioned or recommended by, the United States

Government or the United States Armed Forces.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.494  Engaging in act or practice which leads to confusion regarding

premiums, costs or investment returns. (NRS 679B.130, 686A.015)  An

insurer or producer of insurance engages in an act or practice which leads to

confusion regarding premiums, costs or investment returns, and which constitutes

an unfair or deceptive act or practice in violation of NRS 686A.020, if the insurer or

producer of insurance:

     1.  Uses or describes the credited interest

rate on a life insurance policy in a manner that implies that the credited

interest rate is a net return on premium paid.

     2.  Misrepresents the mortality costs of a

life insurance product other than an individually issued annuity. Violations of

this subsection include, without limitation, stating or implying that a life

insurance product costs nothing or is free.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4945  Engaging in certain acts or practices relating to Servicemembers’

Group Life Insurance or Veterans’ Group Life Insurance. (NRS 679B.130,

686A.015)  An

insurer or producer of insurance engages in an unfair or deceptive act or

practice in violation of NRS

686A.020 if the insurer or producer of insurance:

     1.  Makes any false, misleading or deceptive

representation regarding the availability, suitability, amount or cost of, or

exclusions or limitations to, coverage provided to an active duty service

member or the dependents of an active duty service member by Servicemembers’

Group Life Insurance or Veterans’ Group Life Insurance.

     2.  Makes any false, misleading or deceptive

representation regarding the requirements to convert to a private insurer,

including, without limitation, the costs of, or exclusions or limitations to,

coverage of Servicemembers’ Group Life Insurance or Veterans’ Group Life

Insurance.

     3.  Suggests or recommends to an active duty

service member that the active duty service member cancel or terminate his or

her policy with Servicemembers’ Group Life Insurance, or encourages an active

duty service member to cancel or terminate his or her policy with

Servicemembers’ Group Life Insurance.

     4.  Issues a life insurance policy which

replaces an existing life insurance policy with Servicemembers’ Group Life

Insurance, unless the replacement life insurance policy takes effect upon or

after the separation of the active duty service member from the United States

Armed Forces.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.495  Failure to disclose or provide certain information. (NRS 679B.130,

686A.015)  An

insurer or producer of insurance engages in an unfair or deceptive act or

practice in violation of NRS

686A.020 if the insurer or producer of insurance:

     1.  Deploys, uses or contracts for any

lead-generating material which is designed exclusively for use with active duty

service members and which does not clearly and conspicuously disclose that the

recipient of the material will be contacted by a producer of insurance, if that

is the case, for the purpose of soliciting the purchase of a life insurance

product.

     2.  Fails to disclose, at the time of

establishing a specific appointment for an in-person, face-to-face meeting with

an active duty service member, that a solicitation for the purchase of a life

insurance product will be made at the specific appointment.

     3.  Except as otherwise provided in this

subsection, fails to clearly and conspicuously disclose the fact that the

product being sold is a life insurance product. This subsection does not apply

to the sale of an individually issued annuity.

     4.  Fails to make to a person known to be an

active duty service member, at the time of sale of, or an offer to sell, a life

insurance product, the written disclosures required by section 10 of the

Military Personnel Financial Services Protection Act, Public Law 109-290, 120

Stat. 1317-26.

     5.  When the sale of a life insurance

product, other than an individually issued annuity, is conducted in person,

face-to-face with a person known to be an active duty service member, fails to

provide to the active duty service member at the time an application for the

life insurance product is taken:

     (a) An explanation of any free look period with

instructions on how to cancel a policy if a policy is issued; and

     (b) A copy of the application or a written

disclosure. The copy of the application or the written disclosure must clearly

and concisely set forth the type of life insurance product being sold, the

death benefit for which the active duty service member applied and the expected

first year cost. A basic illustration that meets the requirements of NAC 686A.460 to 686A.479,

inclusive, and a buyer’s guide is sufficient to meet the requirements of this

paragraph. As used in this paragraph, “basic illustration” has the meaning

ascribed to it in NAC 686A.461.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

      NAC 686A.4955  Engaging in certain acts or practices relating to side funds,

compliance with standard nonforfeiture law or exclusion of coverage. (NRS 679B.130,

686A.015)  An

insurer or producer of insurance engages in an unfair or deceptive act or

practice in violation of NRS

686A.020 if, in connection with the sale of a life insurance product to an

active duty service member, the insurer or producer of insurance:

     1.  Recommends to an active duty service

member the purchase of, or offers to sell or sells to an active duty service

member, a life insurance product, other than an individually issued annuity,

which includes a side fund, unless the insurer or producer of insurance has

reasonable grounds to believe that the life insurance death benefit, standing

alone, is suitable. If an active duty service member is currently enrolled in

Servicemembers’ Group Life Insurance, a life insurance death benefit is

presumed unsuitable, unless, after the completion of a needs assessment, the

insurer or producer of insurance demonstrates that the death benefit of the

Servicemembers’ Group Life Insurance, together with any other military survivor

benefits, savings and investments, survivor income and other life insurance, is

insufficient to meet the insurable needs for life insurance of the active duty

service member. As used in this subsection:

     (a) “Insurable needs” means the risk associated

with premature death taking into consideration the financial obligations and

immediate and future cash needs of the estate, survivors and dependents of the

service member.

     (b) “Other military survivor benefits” includes,

without limitation, the Death Gratuity, Funeral Reimbursement, Transition

Assistance, Survivor and Dependents’ Educational Assistance, Dependency and

Indemnity Compensation, TRICARE Healthcare benefits, Survivor Housing Benefits

and Allowances, Federal Income Tax Forgiveness and Social Security Survivor

Benefits.

     2.  Offers for sale or sells a life insurance

product, other than an individually issued annuity, that includes a side fund

which, by default, diverts or transfers funds accumulated in the side fund to

pay, reduce or offset any premiums due, unless:

     (a) Interest credited accrues from the date of

deposit to the date of withdrawal and allows withdrawals without limit or

penalty; and

     (b) At least once each policy year during the first

10 policy years and every fifth policy year thereafter, ending at the age of

100, policy maturity or final expiration, whichever is later, the policyholder

will be provided with a schedule of effective rates of return which is based on

cash flows of the combined product. The effective rate of return must consider

all premiums and cash contributions made by the policyholder and all cash

accumulations and cash surrender values available to the policyholder in

addition to life insurance coverage.

     3.  Offers for sale or sells a life insurance

product, other than an individually issued annuity, which does not comply with

standard nonforfeiture law for life insurance after considering all policy

benefits, including, without limitation, endowment, return of premium and persistency.

     4.  Sells to a person known to be an active

duty service member any life insurance product that excludes coverage if the

death of the insured service member is related to a declared or undeclared war

or any other act related to military service other than an accidental death.

     (Added to NAC by Comm’r of Insurance by R031-07, 8-31-2007,

eff. 9-1-2007)

LIFE INSURANCE AND ANNUITIES

Solicitation, Sale and Advice

      NAC 686A.501  Definitions. (NRS 679B.130, 686A.015)  For the

purposes of this section and NAC 686A.502 and 686A.503:

     1.  “Older person” has the meaning ascribed

to it in NRS 200.5092.

     2.  “Producer of insurance” has the meaning

ascribed to it in NRS 679A.117.

     (Added to NAC by Comm’r of Insurance by R086-10, 12-16-2010,

eff. 7-1-2011)

      NAC 686A.502  Applicability. (NRS 679B.130, 686A.015)  This section and NAC 686A.501 and 686A.503

apply to any solicitation, sale or purchase of, or advice made in connection

with, an annuity or policy of life insurance by a producer of insurance.

     (Added to NAC by Comm’r of Insurance by R086-10, 12-16-2010,

eff. 7-1-2011)

      NAC 686A.503  Producers of insurance: Use of certain certifications or

professional designations. (NRS 679B.130, 686A.015)

     1.  A producer of insurance engages in an

unfair or deceptive act or practice in violation of NRS 686A.020 if, without

limitation, the producer of insurance uses a certification or professional

designation that:

     (a) Indicates or implies that the producer of

insurance has special certification or training in advising or providing

services to older persons in connection with the solicitation, sale or purchase

of an annuity or policy of life insurance or in providing advice as to the

value of or advisability of purchasing or selling an annuity or policy of life

insurance, either directly or indirectly, through publications or writings or

by issuing or publishing analyses or reports related to an annuity or policy of

life insurance if the producer of insurance does not have such special

certification or training;

     (b) The producer of insurance has not earned or is

otherwise ineligible to use;

     (c) Is nonexistent;

     (d) The producer of insurance conferred upon

itself;

     (e) Indicates or implies a level of occupational

qualifications obtained through education, training or experience that the

producer of insurance using the certification or professional designation has

not obtained; or

     (f) Was obtained from a certifying or designating

organization that, except as otherwise provided in subsection 2:

          (1) Is primarily engaged in the business of

instruction in sales or marketing;

          (2) Does not have reasonable standards or

procedures for ensuring the competency of its certificate holders or designees;

          (3) Does not have reasonable standards or

procedures for monitoring and disciplining its certificate holders or designees

for conduct that is improper or unethical; or

          (4) Does not have reasonable requirements for

continuing education for its certificate holders or designees in order to

maintain the certificate or designation.

     2.  There is a rebuttable presumption that

paragraph (f) of subsection 1 does not include a certification or professional

designation that:

     (a) Does not primarily apply to sales or marketing;

and

     (b) Was conferred by a certifying or designating

organization that has been accredited by:

          (1) The American National Standards Institute;

          (2) The National Commission for Certifying

Agencies; or

          (3) An organization that is on the list

provided by the United States Department of Education entitled “Accrediting

Agencies Recognized for Title IV Purposes.” A copy of the list may be obtained

at the Internet address http://www2.ed.gov/admins/finaid/accred/accreditation_pg9.html.

     3.  In determining whether a combination of

words or an acronym standing for a combination of words constitutes a

certification or professional designation indicating or implying that a person

has special certification or training in advising or providing services to

older persons, factors to be considered will include, without limitation:

     (a) The use of one or more words such as “elder,”

“retirement,” “senior” or similar words combined with one or more words such as

“chartered,” “certified,” “registered,” “advisor,” “consultant,” “planner” or

“specialist” or similar words in the name of the certification or professional

designation; and

     (b) The manner in which those words are combined.

     4.  For the purposes of this section, a title

of a job within an organization that is licensed or registered by a financial

services regulatory agency of this State, any other state or the Federal

Government is not a certification or professional designation if the title is

not used in a manner that would confuse or mislead a reasonable consumer and

the title:

     (a) Indicates seniority or standing within the

organization; or

     (b) Specifies a person’s area of specialization

within the organization.

     5.  For the purposes of subsection 4, the

term “financial services regulatory agency” includes, without limitation, an

agency that regulates insurers, producers of insurance, broker-dealers,

investment advisors or investment companies as defined in the Investment

Company Act of 1940, 15 U.S.C. § 80a-3.

     (Added to NAC by Comm’r of Insurance by R086-10, 12-16-2010,

eff. 7-1-2011)

Replacement

      NAC 686A.510  Definitions. (NRS 679B.130, 686A.015)  For the

purposes of NAC 686A.510 to 686A.577, inclusive, the words and terms defined in NAC 686A.513 to 686A.530,

inclusive, have the meanings ascribed to them in those sections.

     [Comm’r of Insurance, LH-3 § 3, eff. 1-4-80]—(NAC A 10-26-84;

A by Div. of Insurance by R089-98, 9-25-98)

      NAC 686A.513  “Agent” defined. (NRS 679B.130, 686A.015)  “Agent”

has the meaning ascribed to it in NRS

683A.321.

     (Added to NAC by Div. of Insurance by R089-98, eff. 9-25-98;

A by Comm’r of Insurance by R054-12, 11-1-2012)

      NAC 686A.516  “Direct response” defined. (NRS 679B.130, 686A.015)  “Direct

response” means a response from a prospective purchaser of life insurance made

directly to the insurer where the insurer does not use an agent in the sale or

delivery of the policy.

     [Comm’r of Insurance, LH-3 § 6, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.518  “Existing policy” defined. (NRS 679B.130, 686A.015)

     1.  “Existing policy” means:

     (a) A policy, presently effective, including a

policy subject to a binding or conditional receipt; or

     (b) A policy issued with a period for an

unconditional refund.

     2.  The term does not include a policy

obtained through the exercise of a dividend option.

     [Comm’r of Insurance, LH-3 § 7, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.523  “Notice” defined. (NRS 679B.130, 686A.015)  “Notice”

means the notice regarding the replacement of a policy.

     (Added to NAC by Comm’r of Insurance, eff. 10-26-84)

      NAC 686A.526  “Replacement” defined. (NRS 679B.130, 686A.015)  “Replacement”

means a transaction in which a new policy is to be purchased and the agent or

insurer who proposes the replacement knows or should know, by reason of the

transaction, that an existing policy has been or will be:

     1.  Terminated;

     2.  Converted to reduced paid-up insurance, continued

as extended term insurance or otherwise reduced in value by the use of

nonforfeiture benefits or other values in the policy;

     3.  Amended to reduce benefits or to reduce

the term for which coverage would otherwise remain in force;

     4.  Reissued with any reduction in the cash

value of the policy; or

     5.  Pledged as collateral or subjected to

borrowing for an aggregate amount that exceeds 25 percent of the loan value set

forth in the policy.

     [Comm’r of Insurance, LH-3 § 10, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.528  “Replacing insurer” defined. (NRS 679B.130, 686A.015)  “Replacing

insurer” means an insurance company which issues a new policy as a replacement

for an existing policy.

     [Comm’r of Insurance, LH-3 § 11, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.530  “Sales proposal” defined. (NRS 679B.130, 686A.015)

     1.  “Sales proposal” means any written aid to

a sale, excluding any policy summary which is used by an insurer, agent or

broker to compare an existing policy to a proposed policy in support of a

recommendation to replace or retain an existing policy.

     2.  The term does not include any aid of a

generally descriptive nature which is maintained in the insurer’s advertising

file.

     [Comm’r of Insurance, LH-3 § 12, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.540  Exemptions. (NRS 679B.130, 686A.015)  The

provisions of NAC 686A.510 to 686A.577, inclusive, do not apply to any:

     1.  Individual policy of credit life

insurance.

     2.  Except as provided in this subsection,

policies of group life insurance, group credit life insurance or life insurance

issued in connection with a pension, profit-sharing or other benefit plan that

qualifies for tax deductibility of premiums. As to any replacement of a plan

described in this subsection, each agent shall make a full disclosure of all

material facts to the person in charge of any plan to be replaced.

     3.  Policy of variable life insurance under

which the death benefits and cash values vary in accordance with the unit

values of investments held in a separate account.

     4.  Application made to an insurer under an

existing policy for a contractual change or the exercise of a privilege of

conversion.

     5.  Existing policy which is a

nonconvertible, term policy, will expire in 5 years or less and cannot be

renewed.

     6.  Proposed life insurance which is to

replace life insurance under a binding or conditional receipt issued by the

same company.

     7.  Policy solicited through direct response

with a face value of $5,000 or less.

     [Comm’r of Insurance, LH-3 § 13, eff. 1-4-80]—(NAC A 10-26-84;

10-30-85)

      NAC 686A.550  Duties of agents. (NRS 679B.130, 686A.015)  Each agent

shall on each application for life insurance:

     1.  Indicate on the application in the

appropriate space, whether or not an existing policy will be replaced.

     2.  Where a replacement is involved:

     (a) Present the notice to the applicant;

     (b) Sign the notice, obtain the applicant’s

signature on a copy of the notice and furnish a copy to the applicant; and

     (c) Retain a copy of the notice and copies of any

sales proposals for at least 3 years after signing the notice.

     [Comm’r of Insurance, LH-3 § 14, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.555  Duties of replacing insurer. (NRS 679B.130, 679B.137, 686A.015)

     1.  Each replacing insurer shall:

     (a) Inform its agents of the requirements of NAC 686A.510 to 686A.577,

inclusive.

     (b) Furnish to each agent who may solicit the

replacement of a policy, three copies of the notice.

     (c) Retain copies of the notice and copies of the

policy summary for at least 3 years after the applicant signs the notice or

until the conclusion of the next succeeding regular examination by the

department of insurance of its state of domicile, whichever is later.

     (d) If it is not the insurer for the existing

policy, within 3 working days after receiving the application, send to the

insurer under any existing policy, a copy of the notice.

     2.  The replacing insurer shall not issue a

policy until a signed copy of the notice is attached to the application.

     [Comm’r of Insurance, LH-3 § 15, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.560  Duties of insurers who solicit sales by direct response. (NRS 679B.130,

679B.137, 686A.015)

     1.  Each insurer who solicits sales by direct

response shall:

     (a) Inform its personnel who are engaged in making

such sales of the requirements of the provisions of NAC

686A.510 to 686A.577, inclusive.

     (b) Require with each completed application for

life insurance a statement, signed by the applicant, declaring whether or not

an existing policy will be replaced.

     (c) Require the applicant to list existing policies

that will be replaced and the names of the insurers under those existing

policies.

     (d) Within 5 days after receiving an application,

mail three copies of the notice to the applicant to be signed and returned.

     (e) If it is not the insurer for the existing

policy, within 3 working days after receiving the signed notice and list of

existing policies, send to the insurer under any existing policy, a copy of the

notice.

     (f) Retain copies of the notice and copies of the

policy summary given to the applicant for at least 3 years after the applicant

signs the notice or until the conclusion of the next succeeding regular

examination by the department of insurance of its state of domicile, whichever

is later.

     2.  The insurer shall not issue a policy

until a signed copy of the notice has been received from the applicant.

     [Comm’r of Insurance, LH-3 § 16, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.563  Form of notice regarding replacement of a policy. (NRS 679B.130,

686A.015)  The

notice referred to in NAC 686A.523, 686A.555 and 686A.560

must be in substantially the following form:

 

IMPORTANT NOTICE

REGARDING THE

REPLACEMENT OF YOUR

POLICY OF LIFE INSURANCE

 

     You have been offered a policy to replace all or part of

your existing policy of life insurance.

     Before you replace your existing policy, you should

consider whether you could suffer a FINANCIAL LOSS under the new policy because

of your AGE or the condition of your HEALTH. You should also consider whether

you will pay more for premiums because of your age or health.

     You WILL incur additional costs to acquire the new

policy, including the payment of commissions to the agent advocating the

replacement of your existing policy.

     To make an informed decision about the replacement of

your policy, you should discuss the provisions of your existing policy with

your agent or the company which issued it to determine whether your policy can

be changed to meet your present needs.

     Your new policy provides 30 days for you to decide

whether you wish to keep it.

     The agent who is offering to replace your existing policy

is required to obtain your signature on this notice. Also, the agent will be

notifying your existing insurance company that you are considering the

replacement of your policy.

     I have read this notice and received a copy of it for my

records.

 

                                                      .........................................             .........................................

                                                                   Applicant                                          Date

 

 

                                                      .........................................             .........................................

                                                                      Agent                                             Date

 

     (Added to NAC by Comm’r of Insurance, eff. 10-26-84; A

by R027-12, 9-14-2012)

      NAC 686A.567  Explanation of notice. (NRS 679B.130, 686A.015)  When an

agent recommends the replacement of a policy and presents the notice, the agent

shall explain, if requested by the applicant, the provisions of that notice but

shall not be critical of its provisions.

     (Added to NAC by Comm’r of Insurance, eff. 10-26-84)

      NAC 686A.570  Right to replace policy; knowledge of existing policy. (NRS 679B.130,

686A.015)

     1.  The provisions of NAC

686A.510 to 686A.577, inclusive, are not

intended to limit the right of a policyholder to replace existing policies.

     2.  If an existing policy is to be replaced,

an agent shall be deemed to have knowledge of the existence of such a policy,

whether or not the policyholder indicates that there is a replacement, if the

agent:

     (a) Replaces the policy more than once; or

     (b) Engages in a pattern of conduct which indicates

a disregard for the existence of such a policy.

     [Comm’r of Insurance, LH-3 § 18, eff. 1-4-80]—(NAC A 10-26-84)

      NAC 686A.573  Replacement of annuity contract: Required statement and notice. (NRS 679B.130,

686A.015)  An

insurer or producer of insurance who replaces, offers to replace or proposes to

replace an existing individual fixed deferred annuity contract with a new

annuity contract shall provide to the prospective buyer:

     1.  A written, signed and dated statement

which compares the terms, conditions and benefits of the existing annuity

contract with the new annuity contract. The statement must include, without

limitation, any penalties, premium tax implications, bonus vesting schedule and

other additional costs.

     2.  A notice of annuity replacement, which

must be in substantially the following form:

 

IMPORTANT NOTICE

REGARDING THE

REPLACEMENT OF YOUR

ANNUITY CONTRACT

 

     You have been offered a new annuity contract to replace

your existing annuity contract.

     Before you replace your existing annuity contract, you

should consider the financial gains and losses of replacement.

     You may incur additional costs to acquire the new annuity

contract.

     To make an informed decision about the replacement of

your existing annuity contract, you should discuss the provisions of that

contract with the producer of insurance or the insurance company which issued

it to determine whether your existing annuity contract may be revised to meet

your present needs.

     Your new annuity contract provides 30 days for you to

decide if you wish to keep it.

     The producer of insurance or insurance company which is

offering to replace your existing annuity contract is required to obtain your

signature on this notice and to notify your existing insurance company that you

are considering the replacement of your existing annuity contract.

     I have read this notice and received a copy of it for my

records. I have also received a copy of the written comparison of the proposed

annuity contract and my existing annuity contract.

 

                                                                        ...................................             ................................

                                                                            Prospective

Buyer                           Date

 

                                                                        ...................................             ................................

                                                                        Producer

of Insurance                        Date

 

     (Added to NAC by Comm’r of Insurance by R109-07, 1-30-2008,

eff. 4-1-2008; A by R027-12, 9-14-2012)

      NAC 686A.577  Replacement of annuity contract: Explanation of new contract. (NRS 679B.130,

686A.015)  An

insurer or producer of insurance who recommends the replacement of an existing

annuity contract shall explain the provisions of the new annuity contract

without inaccurately describing or otherwise misrepresenting the provisions of

the existing annuity contract.

     (Added to NAC by Comm’r of Insurance by R109-07, 1-30-2008,

eff. 4-1-2008)

UNFAIR PRACTICES

General Provisions

      NAC 686A.600  Scope and applicability. (NRS 679B.130, 686A.015)

     1.  NAC 686A.600

to 686A.680, inclusive, define certain minimum

standards, violations of which, with a frequency which indicates a general

business practice, will be deemed to constitute unfair claims settlement practices.

     2.  NAC 686A.600

to 686A.690, inclusive, apply to all persons and

to all insurance contracts or policies except policies of surety insurance.

     3.  Acts not specified in NAC 686A.600 to 686A.690,

inclusive, may also be deemed to be violations of NRS 686A.310.

     [Comm’r of Insurance, M-9 § 3, eff. 2-21-80]—(NAC A by

Div. of Insurance by R089-98, 9-25-98)

      NAC 686A.610  Definitions. (NRS 679B.130, 686A.015)  As used

in NAC 686A.600 to 686A.680,

inclusive, unless the context otherwise requires, the words and terms defined

in NAC 686A.615 to 686A.650,

inclusive, have the meanings ascribed to them in those sections.

     [Comm’r of Insurance, M-9 § 4, eff. 2-21-80]

      NAC 686A.615  “Agent” defined. (NRS 679B.130, 686A.015)  “Agent”

means any person, corporation, association, partnership, or other legal entity

authorized by the insurer to represent it with respect to a claim.

     [Comm’r of Insurance, M-9 § 4a, eff. 2-21-80]

      NAC 686A.620  “Claimant” defined. (NRS 679B.130, 686A.015)  “Claimant”

includes a first-party claimant, a third-party claimant, or both, and

designated legal representatives and members of the claimant’s immediate family

designated by the claimant.

     [Comm’r of Insurance, M-9 § 4b, eff. 2-21-80]

      NAC 686A.625  “First-party claimant” defined. (NRS 679B.130, 686A.015)  “First-party

claimant” means a person, corporation, association, partnership or other legal

entity asserting a right to payment under an insurance contract or policy

arising out of the occurrence of the contingency or loss covered by the

contract or policy. “First-party claimant” does not include a person who

provides service to an injured party.

     [Comm’r of Insurance, M-9 § 4c, eff. 2-21-80]

      NAC 686A.627  “Insurance policy or contract” defined. (NRS 679B.130,

686A.015)  “Insurance

policy or contract” means any insurance policy, plan or written agreement for

or affecting insurance by whatever name called and includes all clauses, riders

or endorsements offered by any person or entity engaged in the business of

insurance in this State.

     [Comm’r of Insurance, M-9 § 4e, eff. 2-21-80]—(Substituted

in revision for NAC 686A.635)

      NAC 686A.630  “Insurer” defined. (NRS 679B.130, 686A.015)  “Insurer”

means a person licensed to issue, or who issues, any insurance contract or

policy in this State.

     [Comm’r of Insurance, M-9 § 4d, eff. 2-21-80]

      NAC 686A.640  “Investigation” defined. (NRS 679B.130, 686A.015)  “Investigation”

means all activities of an insurer directly or indirectly related to the

determination of liabilities under coverage afforded by an insurance contract

or policy.

     [Comm’r of Insurance, M-9 § 4f, eff. 2-21-80]

      NAC 686A.645  “Notice of claim” defined. (NRS 679B.130, 686A.015)  “Notice

of claim” means any notice, whether in writing or otherwise, to an insurer or

its agent, by a claimant, which reasonably apprises the insurer of the facts

pertinent to a claim.

     [Comm’r of Insurance, M-9 § 4g, eff. 2-21-80]

      NAC 686A.650  “Third-party claimant” defined. (NRS 679B.130, 686A.015)  “Third-party

claimant” means any person, corporation, association, partnership or other

legal entity asserting a claim against any person, corporation, association,

partnership or other legal entity insured under an insurance contract or

policy. “Third-party claimant” does not include a person who provides service

to an injured party.

     [Comm’r of Insurance, M-9 § 4h, eff. 2-21-80]

Standards Concerning Claims

      NAC 686A.660  Misrepresentation of provisions of a policy. (NRS 679B.130,

686A.015, 686A.310)

     1.  Each insurer shall fully disclose to

first-party claimants all pertinent benefits, coverages or other provisions of

an insurance contract or policy under which a claim is presented.

     2.  No agent may conceal from a first-party

claimant any of the benefits, coverages or other provisions of any insurance

contract or policy when pertinent to a claim.

     3.  No insurer may deny a claim for failure

to exhibit the property without proof of demand and unfounded refusal by a

claimant.

     4.  No insurer may, except where there is a

time limit specified in the insurance contract or policy, require a claimant to

give written notice of loss or proof of loss within a specified time or seek to

relieve the insurer of the obligations if the requirement is not complied with,

unless the failure to comply prejudices the insurer’s rights.

     5.  No insurer may request a first-party

claimant to sign a release which extends beyond the condition or occurrence

which gave rise to the claim payment.

     6.  No insurer may issue a check or draft in

partial settlement of a loss or claim under a specific coverage if the check or

draft contains language which releases the insurer or its insured from its

total liability.

     [Comm’r of Insurance, M-9 § 5, eff. 2-21-80]

      NAC 686A.665  Insurer to acknowledge receipt of claim notice within certain

period; insurer, agent or administrator to respond adequately and within

certain period to inquiry from Division respecting claim filed with Division;

reply required within certain period to certain communications from claimants. (NRS 679B.130,

686A.015, 686A.310)

     1.  Every insurer shall acknowledge the

receipt of a claim notice within 20 working days after receipt of the claim

notice unless payment of the claim is made within that time. If acknowledgment

is made by means other than writing, an appropriate dated notation of the

acknowledgment must be made in the claim file of the insurer. Notice given to

an agent of an insurer is notice to the insurer.

     2.  Each insurer, agent or administrator,

upon receipt of any inquiry from the Division respecting a claim filed with the

Division shall, within 10 working days after receipt of the inquiry, furnish

the Division with an adequate response to the inquiry. The Division will not

consider an acknowledgment of the receipt of an inquiry to be an adequate

response to the inquiry. An insurer, agent or administrator who has received

such an inquiry may request an extension of time, not to exceed 20 working

days, to submit an adequate response. The request for an extension must be

furnished to the Division within 10 working days after the insurer, agent or

administrator received the inquiry.

     3.  An appropriate reply must be made within

20 working days after receipt of any other pertinent communication from a

claimant if the communication reasonably suggests that a response is expected.

     4.  Each insurer, upon receiving notification

of claim, shall promptly provide necessary claim forms, instructions and

reasonable assistance so that first-party claimants can comply with the policy

conditions and the insurer’s reasonable requirements. Compliance with this

subsection within 20 working days after receipt of notification of a claim

constitutes compliance with subsection 1.

     5.  As used in this section, “administrator”

has the meaning ascribed to it in NRS

683A.025.

     [Comm’r of Insurance, M-9 § 6, eff. 2-21-80]—(NAC A 5-27-92;

A by Div. of Insurance by R089-98, 9-25-98)

      NAC 686A.670  Investigation of claims. (NRS 679B.130, 686A.015, 686A.310)

     1.  Each insurer shall establish procedures

to begin an investigation of any claim within 20 working days of receipt of

notice of the claim. Each insurer shall mail or otherwise provide to each

claimant, a notice of all items, statements and forms, if any, which the

insurer reasonably believes will be required of the claimant, within 20 working

days after receiving notice of the claim.

     2.  Each insurer shall complete an

investigation of each claim within 30 days after receiving notice of the claim,

unless the investigation cannot reasonably be completed within that time.

     [Comm’r of Insurance, M-9 § 7, eff. 2-21-80]

      NAC 686A.675  Standards applicable to all insurers. (NRS 679B.130,

686A.015, 686A.310)

     1.  Within 30 working days after receipt by

the insurer of properly executed proofs of loss, the first-party claimant must

be advised of the acceptance or denial of the claim by the insurer. No insurer

may deny a claim on the grounds of a specific policy provision, condition or

exclusion unless reference to that provision, condition or exclusion is

included in the denial. The denial must be given to the claimant in writing and

filed and retained in the insurer’s claim file. If the claim of the first-party

claimant is accepted, the insurer shall pay the claim within 30 days after it

is accepted. If the accepted claim is not paid within that period, the insurer

shall pay interest on the claim at the rate of interest established pursuant to

NRS 99.040. The interest must be

calculated from the date on which the payment is due until the claim is paid.

     2.  If a claim is denied for reasons other

than those described in subsection 1, and is made by any means other than

writing, an appropriate notation must be made in the claim file of the insurer.

     3.  If the insurer needs more time to

determine whether a claim of a first-party claimant should be accepted or

denied, it must so notify the claimant within 30 working days after receipt of

the proof of loss giving reasons that more time is needed. If the investigation

remains incomplete, the insurer shall, 30 days after the date of the initial

notification and every 30 days thereafter, send to the claimant a letter

setting forth the reasons that additional time is needed for investigation.

     4.  Insurers may not fail to settle

first-party claims on the basis that responsibility for payment should be

assumed by others except as provided by policy provisions.

     5.  Insurers may not delay settlement of a

claim directly with a claimant who is not an attorney or represented by an

attorney by extending negotiations until the claimant’s rights may be affected

by a statute of limitations or a time limit which is part of an insurance

contract or policy, without giving the claimant written notice that the time

limit may be expiring and may affect the claimant’s rights. Notice must be

given 60 days before the date on which a time limit may expire.

     6.  No insurer may make statements which

indicate that the rights of a third-party claimant may be impaired if a form or

release is not completed within a given time, unless the statement is given for

the purpose of notifying the third-party claimant of the provision of a statute

of limitations.

     7.  Except for a claim involving health

insurance, any case involving a claim in which there is a dispute over any

portion of the insurance policy coverage, payment for the portion or portions

not in dispute must be made notwithstanding the existence of the dispute where

payment can be made without prejudice to any interested party.

     [Comm’r of Insurance, M-9 § 8, eff. 2-21-80]—(NAC A by

Div. of Insurance by R089-98, 9-25-98)

      NAC 686A.680  Standards applicable to insurers under automobile policies. (NRS 679B.130,

686A.015)

     1.  When an insurance policy provides for the

adjustment and settlement of first-party automobile total losses on the basis

of actual cash value or replacement with another of like kind and quality, one

of the following methods must be applied:

     (a) The insurer may elect to offer a replacement

automobile which is a specific comparison automobile available to the insured,

with all applicable taxes, license fees and other fees incident to transfer of

evidence of ownership of the automobile paid, at no cost other than any

deductible provided in the policy. The insurer may prorate license fees and

limit payment to the unused period of the fees. The offer and any rejection of

the offer must be documented in the claim file.

     (b) The insurer may elect to make a cash settlement

based upon the actual cost, less any deductible provided in the policy, to

purchase a comparable automobile including all applicable taxes, license fees

and other fees incident to transfer of evidence of ownership of a comparable

automobile. The cost must be determined by an evaluation of:

          (1) The cost of two or more comparable

automobiles in the local market area which are currently available or were

available within the most previous 90 days to consumers in the local market

area;

          (2) If the cost cannot be determined pursuant

to subparagraph (1), the cost of two or more comparable automobiles that are

currently available or were available in the most previous 90 days to consumers

in areas, both within and without this State, which are geographically

proximate to the local market area; or

          (3) If the cost cannot be determined pursuant

to subparagraph (1) or (2), two or more quotations obtained by the insurer from

two or more licensed dealers located within the local market area.

     (c) When a first-party automobile total loss is

settled on a basis which deviates from the methods described in paragraphs (a)

and (b) of this subsection, the deviation must be supported by documents giving

particulars of the condition of the automobile. Any deductions from the cost,

including a deduction for salvage, must be measurable, discernible, itemized

and specified as to the amount and must be appropriate in amount. The basis for

the settlement must be fully explained to the first-party claimant.

     2.  Where liability and damages are

reasonably clear, an insurer may not recommend that a third-party claimant make

a claim under his or her own policies solely to avoid paying claims under the

insurer’s insurance contract or policy.

     3.  An insurer may not require a claimant to

travel unreasonably to inspect a replacement automobile, to obtain a repair

estimate or to have the automobile repaired at a specific repair shop.

     4.  An insurer shall, upon the claimant’s

request, include the first-party claimant’s deductible, if any, in subrogation

demands. A subrogation recovery must be shared on a proportionate basis with

the first-party claimant, unless the deductible amount has been otherwise

recovered. No deduction for expenses may be made from the deductible recovery

unless an outside attorney is retained to collect the recovery. The deduction

may then be for no more than a pro rata share of the allocated loss adjustment

expense.

     5.  If an insurer prepares an estimate of the

cost of automobile repairs, the estimate must be in an amount for which it may

be reasonably expected the damage can be satisfactorily repaired. The insurer

shall give a copy of the estimate to the claimant and may furnish to the

claimant the names of one or more conveniently located repair shops. Any such

repair shop must be operated by a person having a license issued by the

Department of Motor Vehicles, if such a license is required by NRS 487.610.

     6.  When the amount claimed is reduced

because of betterment or depreciation, all information supporting the reduction

must be contained in the claim file. The deductions must be itemized and

specified as to amount, and must be appropriate in amount.

     7.  When the insurer elects to repair and

designates a specific repair shop for automobile repairs:

     (a) The repair shop must be operated by a person

having a license issued by the Department of Motor Vehicles, if such a license

is required by NRS 487.610; and

     (b) The insurer shall cause the damaged automobile

to be restored to its condition before the loss at no additional cost to the

claimant, other than as stated in the policy, within a reasonable time.

     8.  The insurer may not use, as a basis for

cash settlement with a first-party claimant, an amount which is less than the

amount which the insurer would pay if repairs were made, other than in total

loss situations, unless the amount is agreed to by the insured.

     [Comm’r of Insurance, M-9 § 9, eff. 2-21-80]—(NAC A 12-15-88;

3-28-96)

Standards Concerning Matters Other Than Claims

      NAC 686A.690  Insurer, agent or administrator to respond within certain period

to inquiry from Division with respect to complaint concerning matter other than

claim. (NRS 679B.130, 686A.015)  Each

insurer, agent or administrator, upon receipt of an inquiry from the Division

with respect to a complaint filed with the Division concerning any matter other

than a claim shall, within 20 working days after receipt of the inquiry,

furnish the Division with an adequate response to the inquiry. The Division

will not consider an acknowledgment of the receipt of an inquiry to be an

adequate response to the inquiry. An insurer, agent or administrator who has

received such an inquiry may request an extension of time, not to exceed 20

working days, to submit an adequate response. The request for an extension must

set forth the reasons why an adequate response cannot be provided within the

specified period and must be furnished to the Division within 20 working days

after the insurer, agent or administrator received the inquiry.

     (Added to NAC by Div. of Insurance by R089-98, eff. 9-25-98)

USE OF CONSUMER CREDIT INFORMATION

      NAC 686A.700  Definitions. (NRS 679B.130, 686A.015)  As used

in this section and NAC 686A.710, unless the

context otherwise requires, the words and terms defined in NRS 686A.610 to 686A.660, inclusive, have the

meanings ascribed to them in those sections.

     (Added to NAC by Comm’r of Insurance by R111-04, eff. 5-24-2005)

      NAC 686A.710  Consumer credit reports and insurance scores: Period of use. (NRS 679B.130,

686A.015, 686A.680)

     1.  For the purposes of subsection 6 of NRS 686A.680, if a company issues

more than one policy under a line of business based on the same credit

information and the policies have different effective dates, the 90-day period

described in subsection 6 of NRS

686A.680 shall be deemed to apply to the policy with the earliest effective

date.

     2.  If there is an addition or renewal of a

policy under the line of business, the consumer credit report or insurance

score used on the policy with the earliest effective date may be used at the

addition or renewal of policies under the line of business provided that the

credit information is not more than 36 months old.

     (Added to NAC by Comm’r of Insurance by R111-04, eff. 5-24-2005)
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