23-79-307. Standards — Definition.

23-79-307. Standards — Definition. (a) In addition to other applicable provisions of the Arkansas Insurance Code, insurers and insurance policies subject to the provisions of this subchapter shall meet the following standards: (1) Notice of claim given by or on behalf of the named insured to any authorized agent of the insurer with specific information to identify the insured is deemed notice of claim to the insurer; (2) Policies may be issued for a term in excess of twelve (12) months with the premium adjustable on an annual basis if the policy contains an express provision to that effect. At least thirty (30) days' advance notice in writing of the premium to be charged on the policy anniversary date must be given to the insured and the agent of record if the insured has furnished the information necessary to calculate the premium; (3) Forms or endorsements that reduce, restrict, or modify the original policy coverage shall be accepted and signed by the named insured if those forms or endorsements were issued: (A) After the policy inception date but before renewal of the policy; and (B) Not at the request of the named insured; (4) Any policy providing an aggregate limit of liability within the schedule of limits must include a notice specifying that the policy limit is an “aggregate”. The aggregate limit provision must be clearly defined within the policy; (5)(A) Policies containing provisions that would reduce the limit of liability available for judgments or settlements by the amount of payment made for defense cost or claim expenses shall not be approved by the Insurance Commissioner unless a separate limit for defense costs equal to one hundred percent (100%) of the annual aggregate limit of liability stated in the policy for judgments or settlements is offered for defense costs or claims expenses to the insured. However, no policy covering automobile liability insurance may contain the defense within the limits concept. (B) This subsection does not apply to policies or contracts that the commissioner may exempt by order upon a finding that this subsection may not practically be applied or that its application is not necessary or desirable for the protection of the public; (6)(A) When an insurer revises its rates or rules and the revision results in a premium increase equal to or greater than twenty-five percent (25%) on any renewal policy issued for a term of twelve (12) months or less, the insurer shall mail or deliver to the insured's agent not less than thirty (30) days prior to the effective date of renewal, and to the insured not less than ten (10) days prior to the effective date of renewal, notice specifically stating the insurer's intention to increase the premium by an amount equal to or greater than twenty-five percent (25%). (B) If the notice is not given as stated in subdivision (a)(6)(A) of this section, the insurer is required to extend the existing policy thirty (30) days from the date the notice is mailed or delivered. The premium for the policy as extended in such circumstances shall be no more than the pro rata premium of the existing policy; (7) Except in the case of nonpayment of premium, an insurer shall renew a policy unless a written notice of nonrenewal is mailed at least sixty (60) days prior to the expiration date of the policy or, for a policy for a term longer than one (1) year and not having a fixed expiration date, sixty (60) days prior to the anniversary date; and (8) Policies containing an exclusion for punitive damages must include a definition of punitive damages substantially similar to the following: “Punitive damages” are damages that may be imposed to punish a wrongdoer and to deter others from similar conduct. (b) As used in this section, “renewal” or “renew” means the issuance and delivery by an insurer of a policy superseding a policy previously issued by the insurer at the end of the previously issued policy period if the policy is delivered by: (1) The same insurer; or (2) An affiliate or subsidiary, as those terms are defined in § 23-63-503, that has a financial strength rating that is: (A) Issued by an industry-recognized independent insurance rating company; and (B) At least as good as the insurer issuing the superseded policy. (c) This section does not repeal or supersede any requirements of the Insurance Holding Company Regulatory Act, § 23-63-501 et seq., including without limitation the provisions of § 23-63-515 that are applicable to material transactions between an insurer and an insurer's affiliates.