An insurer that takes an action that adversely affects a subject of abuse on the basis of a medical condition or on the basis of claims history or other underwriting information that the insurer knows or has reason to know is abuse-related shall explain the reason for its action to the applicant or insured in writing and shall be able to demonstrate that its action, and any applicable policy provision:

(1) Does not treat abuse status as a medical condition or underwriting criterion;

(2) Is otherwise permissible by law and applies in the same manner and to the same extent to all applicants and insureds with a similar medical condition or a similar claim or claims history without regard to whether the condition is or the claims are abuse-related; and

(3) Except for claims actions, is based on a determination, made in conformance with sound actuarial principles or otherwise supported by actual or reasonably anticipated experience, that there is a correlation between the medical condition and a material increase in insurance risk.