California Insurance Commissioner Steve Poizner wants to limit the ability of individual health insurers in the state to review the applications of enrollees who file claims.

Poizner has proposed regulations that would discourage state-regulated health insurers from rescinding policies based on findings that insureds had lied about their health on application forms, or had failed to provide relevant information.

The three carriers that serve 85% of the California individual health insurance market already have accepted settlement agreements that impose similar rescission rules, Poizner says.

The proposed regulations would apply to the insurers that serve the remaining 15% of the California individual health market.

The proposed regulations would require insurers to:

- Show that they have met all underwriting standards before they can consider rescission.

- Be certain that an individual knew the answer to a health history question and failed to provide the requested information before considering rescinding that individual’s coverage.

- Verify at the time of coverage purchase that applications are accurate and complete.

- Ask clear and unambiguous health history questions.

- Require agents who assist applicants with their questions to attest to the insurer regarding their assistance, at every stage of the application process.

The proposed regulations also would encourage insurers to use personal health records to underwrite applicants.

A copy of the proposed regulation is available here.