Illinois insurance regulators say health and disability insurers in the state are continuing to use expired discretionary clauses.
Discretionary clauses are insurance policy provisions that give the insurer the discretion, or freedom, to interpret the rest of the policy provisions.
Critics say the provisions appear to give insurers the ability to interpret policies in absurd ways; insurers and others say insurance laws and regulations permit insurers to interpret policies only in a reasonable fashion, even when discretionary clauses are in place.
Illinois Insurance Director Michael McRaith writes in Company Bulletin 2010-05 that Illinois has banned use of discretionary clauses in the health and disability arrangements it regulates since July 1, 2005.
The Illinois Insurance Department has discovered that some insurers are continuing to enforce discretionary clauses included in health and disability policies issued before July 1, 2005, McRaith says.