New Consumer Protection Law in MA
While companies continue to wrestle with the implications of MA's new unisex law for annuities, there is another new law that may impact the application process, underwriting and claims.
MA has amended Chapter 175, sections 186 and 186A to add a materiality requirement when there is a purported misrepresentation as well as to add clarity in when it can be deemed that there is a material misrepresentation. Section 186A now states that in litigation, where there is a factual issue regarding the health of the insured at policy issuance, there is a presumption that the insured was in good health if the insurer in fact delivered the policy. Section 186 (b) states that a "misrepresentation or warranty shall be deemed material if knowledge or ignorance of it would otherwise have influenced the insurer in making the contract at all, or in estimating the degree and character of the risk, or in fixing the rate of premium."
This change appears to put a greater burden on an insurer at policy delivery to inquire as to the insured's good health. However, an open question seems to be how much inquiry into health status can be made at that time, particularly if money was collected with the application.
