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Bill

Bill

HB 1069

Life and Health Insurance Policies and Annuity and Health Maintenance Organization Contracts - Discretionary Clauses - Prohibition

2025 Regular Session Introduced by Tiffany Alston and 23 co-sponsors

Maryland prohibits insurers from using discretionary clauses in policies, requiring coverage decisions based on explicit terms rather than subjective interpretation.

Approved by the Governor - Chapter 396
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Bill Summary · HB 1069

Legislative bill overview

HB 1069 prohibits insurance companies and health maintenance organizations from including discretionary clauses in life, health insurance policies, annuity contracts, and HMO contracts. Discretionary clauses typically give insurers broad authority to interpret policy terms and make coverage decisions without specific criteria, potentially allowing them to deny claims based on subjective judgment rather than explicit policy language.

Why is this important

This law directly affects consumers' ability to challenge insurance claim denials and receive promised benefits. By eliminating discretionary language, insurers must base coverage decisions on clear, objective policy provisions rather than internal interpretations, reducing disputes and potentially increasing claim approval rates for policyholders.

Potential points of contention

  • Insurance industry concerns: Insurers argue discretionary clauses provide necessary flexibility to address complex medical situations and unforeseen circumstances; removing them could increase claims costs and potentially raise premiums
  • Definition clarity: The bill's effectiveness depends on how "discretionary clauses" are defined and enforced—ambiguous language in regulations could create loopholes or unintended consequences
  • Implementation burden: Insurance companies must review and revise thousands of existing policies and contracts, creating administrative costs that may be passed to consumers

Compiled from official sources — confirm details with the bill’s official record.

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