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if the insurance company ignores that section, there are no teeth to penalize them, and they profit from it. If they can profit from violating a law, and get away with it, they will.
You will be able to wag your finger at them and tell them they violated the new law, but you can't stop them. All you will be empowered to do is complain to the new insurance oversight agency that is being created.
That agency, if they CHOOSE, could investigate. If they choose to investigate and find that anything was done wrong they can ADVISE the state agency to investigate too and issue penalties.
If the state agency then CHOOSES to follow suit and CHOOSES to issue penalties, they can issue a fine. They might also order the Insurance company to reverse their decision.
However, after all the time it would have taken to reach that point through the various bureaucracies, reinstating your insurance will be either too late (for a service that was needed immediately) or irrelevant (if you needed insurance so urgently that you were forced to get a new policy in the meantime). Reinstating your insurance is only meaningful if you weren't really using it yet.
If the insurance company is issued a fine for canceling your policy, they'll be able to afford to eat that fine. The savings from canceling your insurance is higher than the mandated fines that are ever likely to be approved by a state agency.
Most likely the department that canceled your insurance won't even be aware that there was a dispute and that it resulted in a fine. Another department would fight disputes and take the fines. Insulating the acting department from the punishing feedback is a common corporate way of ensuring that abusive behavior continues. They never get the feedback to stop. They don't know about the fine. They are under instructions to keep doing business as usual.
That's how.
The short answer for all of this is that there are always two sides to every story, the official answer and the truth. The official answer is that canceling policies is prohibited. The truth is that canceling policies will still be profitable, there will be no reason for them not to, and no significant penalty if they do.
They will break that clause with impunity, because the enforcement has been compromised precisely so that they can break it with impunity.
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