SENATE BILL 5159
State of Washington 52nd Legislature 1992 Regular Session
By Senators Moore, Vognild, Rinehart, Wojahn, Rasmussen and Bauer
Read first time 01/22/91. Referred to Committee on Financial Institutions & Insurance.
AN ACT Relating to motor vehicle insurance; adding a new chapter to Title 46 RCW; and making an appropriation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1. INTENT. The legislature finds that greater cost savings can be realized by the automobile insurance purchasers of the state of Washington through the establishment of a universal auto insurance program. By creation of the Washington automobile insurance corporation the legislature intends that all registered vehicles not specifically exempted be required to carry automobile liability insurance provided through the Washington automobile insurance corporation. It is also the intent of the legislature that insurance issued by the corporation be provided without consideration of age, marital status, or sex, which have commonly been the basis for establishing rates for automobile insurance.
NEW SECTION. Sec. 2. DEFINITIONS. As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.
(1) "Adjuster" has the meaning given in RCW 48.17.050.
(2) "Additional premium" means an additional premium charged against an insured under section 21 of this act.
(3) "Agent" has the meaning given in RCW 48.17.010.
(4) "Applicant" means a person who applies for insurance.
(5) "Automobile" means a motor vehicle as defined in this chapter.
(6) "Automobile insurance" means any policy or contract providing protection against loss from the liability imposed by law arising out of the ownership, maintenance, or use of a motor vehicle or vehicles within the United States or Canada.
(7) "Basic premium" means that portion of the premium that is based on criteria or classifications established under the rules, but does not include an additional premium.
(8) "Benefits" means benefits prescribed in the rules.
(9) "Board" means the board of directors of the corporation.
(10) "Certificate" means a certificate of automobile insurance issued under this chapter.
(11) "Contract" means a contract of insurance and includes a policy, certificate, interim receipt, renewal receipt, or writing evidencing the contract, whether sealed or not, and also includes a binding oral agreement.
(12) "Contract of insurance" means insurance provided by the insurance corporation of Washington and evidenced by a certificate.
(13) "Commissioner" means the insurance commissioner.
(14) "Corporation" means the Washington automobile insurance corporation.
(15) "Coverage" means the right conferred on a person by this chapter or rules to be indemnified against liability for, or compensated for, death, injury, loss, or damages.
(16) "Director" means the director of licensing.
(17) "Driver's certificate" means a certificate issued under this chapter to a person who may obtain a driver's license under Title 46 RCW, and such certificate may be part of the driver's license or a separate document.
(18) "Extension insurance" means automobile insurance that may be made available by the corporation under the rules that is in excess of the limits, or reduces the deductible amount or otherwise supplements one or more of the coverages, in a universal compulsory automobile insurance plan prescribed by the rules.
(19) "Insured" means an insured as defined in the rules.
(20) "License," when referring to a driver or operator of a motor vehicle, means a license or permit issued under Title 46 RCW authorizing the holder of a license of a designated class to drive or operate a motor vehicle of the category designated for that class, and includes a learner's license; and, when referring to a motor vehicle or trailer, means a license or permit issued in respect to a motor vehicle or trailer under Title 46 RCW or a license or permit for a motor vehicle issued under any other law.
(21) "Motor vehicle" means every device capable of being moved upon a public highway and in, upon, or by which any person or property is or may be transported or drawn upon a public highway, except for devices moved by human or animal power or used exclusively upon stationary rails or tracks.
(22) "Motor vehicle liability policy" means a certificate issued under this chapter evidencing a contract of automobile insurance in the form, and providing insurance against perils and for amounts, that are prescribed.
(23) "Owner" means the person in whose name a motor vehicle or trailer is registered and licensed under Title 46 RCW.
(24) "Owner's certificate" means a certificate issued under this chapter to an owner.
(25) "Plan" means a plan of universal compulsory automobile insurance established by the corporation under this chapter, and includes extension insurance.
(26) "Point penalties" means point penalties that may be recorded against the driving record of a driver under either Title 46 RCW or this chapter.
(27) "Policy" means the document evidencing a contract and includes a certificate of membership relating in any way to insurance.
(28) "Premium" means money paid or to be paid by an insured or by an applicant for insurance to the corporation for the issue to him or her of a certificate of insurance under a plan or for extension insurance.
(29) "President" means the president of the corporation.
(30) "Registration and license" means a registration, license, or permit issued under Title 46 RCW in respect to a motor vehicle or trailer registered and licensed under and in accordance with this chapter.
(31) "Trailer" means a trailer as defined in RCW 46.04.620.
(32) "Universal compulsory automobile insurance" means universal compulsory automobile insurance as defined by the rules.
The director may by rule include any kind or class of vehicle, as defined in Title 46 RCW, within the definition of motor vehicle, and thereby subject it to this chapter.
NEW SECTION. Sec. 3. CORPORATION CREATED. A public nonprofit corporation to be known as the Washington automobile insurance corporation is created. The public corporation is an instrumentality of the state and has all the powers and is subject to the same restrictions that are permitted or ascribed to private nonprofit corporations but shall exercise those powers only for carrying out the purpose of this chapter and those purposes necessarily implied from this chapter.
NEW SECTION. Sec. 4. BOARD OF DIRECTORS. The governor shall appoint a board of eight directors for the corporation who shall serve terms of six years, except that two of the original directors shall serve for two years, and two of the original directors shall serve for four years. Additional members of the board of directors shall include the chairman of the state investment board as well as two nonvoting members to include the insurance commissioner and the president of the Washington automobile insurance corporation. The members of the board of directors appointed by the governor shall be individuals that possess adequate knowledge of business so as to make them appropriate board members as for any insurance corporation and must be so possessed of such knowledge, experience, and integrity to insure the respect of the people and the business and financial community of the state of Washington. The board shall designate one director as chairman. Board members, other than the president, may be paid and accept as remuneration for the directors' services, the daily or periodic amounts fixed by the board's bylaws and shall be reimbursed for travel expenses as provided in RCW 43.03.050 and 43.03.060. A majority of the voting members constitutes a quorum of the board of directors.
NEW SECTION. Sec. 5. PRESIDENT AND STAFF. (1) The board shall appoint a president to hold office at its pleasure and shall fix the salary of the president.
(2) The board shall define the duties of the president.
(3) The board or, if authorized by the board, the president, may appoint such officers and employees as are necessary to carry on the corporation's business and determine their duties and remuneration and may provide a system of organization to fix responsibility and promote efficiency.
(4) Chapter 41.06 RCW does not apply to the officers and employees of the corporation. The governor may, by order, direct that the public employees retirement system applies to the officers and employees.
(5) The corporation may, alone or in cooperation with other corporations, commissions, or other agents of the state, establish, support, or participate in one or more pension or group insurance plans for the benefit of its officers and employees and their dependents. The establishment or support of, or participation in, a pension plan under this subsection shall not be the subject of a collective bargaining agreement between the corporation and its employees.
(6) The corporation may require a bond from the officers and employees it may designate.
NEW SECTION. Sec. 6. HEAD OFFICE. The corporation's head office shall be in Olympia, Washington. The corporation may establish branch offices at places designated by the board.
NEW SECTION. Sec. 7. CORPORATION TO ENGAGE IN AUTOMOBILE INSURANCE. The corporation shall engage in automobile insurance in all its classes and operate a plan of universal compulsory automobile insurance set out in this chapter and, in addition, shall provide any plan of extension insurance prescribed by rule.
NEW SECTION. Sec. 8. POWERS AND DUTIES. The corporation has the following powers and duties:
(1) Engage in and carry on, inside and outside the state, the business of automobile insurance and reinsurance in all its classes;
(2) Operate and administer plans of automobile insurance authorized under any other law;
(3) Engage in and carry on the business of repairing insured property and of salvaging and disposing by public or private sale property insured and acquired under a contract by which the corporation may be liable as an insurer, or make agreements with other persons for those purposes;
(4) For its own use and benefit, acquire or expropriate, and hold or take options on land required for its business, conveyed, mortgaged, or hypothecated to it by way of security, acquired as an investment, or conveyed to it in satisfaction in whole or in part for debts and judgments, and may dispose of the whole or part of the land; and
(5) Acquire some or all of the shares or business and property of an automobile insurer, agent, adjuster, or motor vehicle repairperson, or make an agreement to carry on jointly a class of automobile insurance with another insurer, within or without the state, and Title 48 RCW does not apply to the agreement.
NEW SECTION. Sec. 9. ADDITIONAL POWERS. The corporation may do all acts and things necessary for the purpose of carrying out its powers and duties, including but not limited to:
(1) Conducting surveys and research programs and obtaining statistics for its purposes and to establish and administer any automobile insurance plan;
(2) Entering into an agreement with or retaining agents or adjusters to solicit and receive applications for automobile insurance, to collect premiums, adjust claims, and do other things on its behalf it considers necessary;
(3) Prescribing forms for application, contracts, policies, and other matters it considers necessary;
(4) Evaluating damages and losses and paying claims under a contract by which the corporation may be liable as an insurer;
(5) Reinsuring the whole or part of a contract of another automobile insurer, and reinsuring its risks under the whole or part of a contract with another insurer, whether or not the other insurer is in or out of the state, or is licensed under Title 48 RCW;
(6) Doing anything necessary to settle, adjust, investigate, defend, and otherwise deal with claims made on contracts by which the corporation may be liable as insurer or on a plan established under section 8 of this act.
NEW SECTION. Sec. 10. CORPORATION TO MAINTAIN ACCOUNTS. The corporation shall keep and maintain separate and distinct accounts in which it shall record:
(1) All money paid to the corporation for premiums and all other money, including investment income, paid to the corporation for the purposes of this chapter; and
(2) All payments by the corporation of benefits, insurance money, damages, compensation, costs, capital expenditures, and operating expenses for the purposes of this chapter.
The accounts of the corporation are not subject to chapter 48.88 RCW. No appropriation is required for expenditures from the accounts of the corporation. The earnings on any surplus balances in the accounts of the corporation shall be credited to the corporation's accounts notwithstanding RCW 43.84.090.
NEW SECTION. Sec. 11. MONEY IN SAFE KEEPING. The corporation's uninvested money and securities held by it shall be kept for safe keeping in financial institutions determined by the board.
NEW SECTION. Sec. 12. BORROWING POWER. (1) Subject to subsection (2) of this section, the corporation, as agent of the state, may, for its purposes, raise money by way of loan on the credit of the corporation.
(2) Through the state treasurer as its agent for the purpose of this section the corporation may:
(a) Issue notes, bonds, debentures or other securities of the corporation;
(b) Dispose of the securities so issued at the prices considered advisable;
(c) Mortgage or pledge its property; and
(d) Raise money by way of loan on the securities.
NEW SECTION. Sec. 13. DIRECTORS TO ACCOUNT FOR INCOME AND EXPENDITURES. Where income, including investment income, is received by the corporation or an expenditure is made by the corporation partly for the purpose of this chapter and partly for another business or purpose of the corporation, the directors shall apportion and account for that income and expenditure accordingly.
NEW SECTION. Sec. 14. SURPLUS. Any surplus generated by the operation of the corporation shall be applied so as to limit fluctuations in automobile insurance premiums charged by the corporation with the primary goal of keeping the cost of the insurance products provided by the corporation as low as is fiscally advisable.
NEW SECTION. Sec. 15. PLAN. (1) Pursuant to section 7 of this act and compliance with this chapter, the corporation shall administer a plan of universal compulsory automobile insurance providing coverage under a motor vehicle liability policy of at least the amount prescribed by the rules under this chapter, to all persons:
(a) Whether named in a certificate or not, to whom, or in respect of whom, or to whose dependents, benefits are payable if bodily injury is sustained or death results;
(b) Whether named in a certificate or not, to whom or on whose behalf insurance money is payable, if bodily injury to, or death of another or others, or damage to property, for which he or she is legally liable, results; or
(c) To whom insurance money is payable, if loss or damage to a motor vehicle results;
from one of the perils mentioned in the rules caused by a motor vehicle or trailer or their use or operation, or any other risk arising out of their use or operation.
(2) The corporation shall not make a contract for extension insurance unless the insured:
(a) Is, or is entitled to be, insured under a certificate of universal compulsory automobile insurance;
(b) Is a resident of the state, or, if a corporation, is incorporated or registered to do business in this state; and
(c) Pays the prescribed premium.
(3) A contract providing for extension insurance shall provide insurance in excess of the limits of a plan of universal compulsory automobile insurance, or otherwise supplement the coverage in the plan, and the provisions of this chapter respecting universal compulsory automobile insurance apply to extension insurance.
(4) A plan issued under this chapter shall not be canceled before the anniversary date of the policy other than for nonpayment of premium. Nothing in this section prohibits the corporation from receiving an additional premium as provided by the rules adopted under this chapter.
NEW SECTION. Sec. 16. APPLICATION OF OTHER STATUTES. The activities and operation of the insurance corporation are exempt from the provisions and requirements of Title 48 RCW except for: (1) Chapter 48.03 RCW pertaining to examinations; (2) RCW 48.05.250 pertaining to annual reports; and (3) chapter 48.13 RCW pertaining to investments.
NEW SECTION. Sec. 17. COMBINED FORMS AND INFORMATION. (1) The corporation may require an applicant for insurance or an insured person to furnish prescribed information, statements, and reports relating to, or affecting, the operation of a plan.
(2) The corporation may require an insured to furnish prescribed notices, proofs of claim, proofs of loss, reports, and statements and to comply with any other prescribed methods of making and proving claims.
NEW SECTION. Sec. 18. APPOINTMENT OF AGENTS. (1) The corporation may in writing appoint agents it considers necessary.
(2) The corporation shall not appoint an agent unless he or she holds or has applied for a license under Title 48 RCW as an insurance agent for the place specified in the appointment.
(3) No agent's appointment may be terminated without just cause.
(4) The corporation, after consultation with an agent, may fix annually the commission and other remuneration to be paid to the agent.
(5) For the purpose of licensing agents appointed under this section, the corporation is deemed to be licensed as an insurer under Title 48 RCW.
NEW SECTION. Sec. 19. APPLICATION FOR INSURANCE. (1) At the time of or prior to applying for any class or kind of license or permit for a motor vehicle or trailer or their use or operation under Title 46 RCW or transfer of ownership under chapter 46.12 RCW, the applicant shall apply for the corresponding owner's certificate or driver's certificate, and, at the same time, shall pay to the person receiving the application the basic premium for that class of certificate and any additional premium that, having been assessed against the applicant, is due and owing.
(2) The application for a certificate under subsection (1) of this section may be made:
(a) To a person appointed as agent of the corporation under this chapter; or
(b) At the head office or a branch office of the corporation.
NEW SECTION. Sec. 20. CLASSIFICATION OF MOTOR VEHICLES AND BASIC PREMIUM. (1) The corporation shall, by rule, establish classes and subclasses of motor vehicles, trailers, and drivers of motor vehicles.
(2) The basic premium payable for an owner's certificate shall be that fixed for the class or subclass of motor vehicle or trailer to which that owner's certificate is appropriate.
(3) The basic premium payable for a driver's certificate shall be that fixed for the class or subclass of driver to which that driver's certificate is appropriate.
(4) Basic premiums for universal compulsory automobile insurance shall be fixed by rule of the corporation before the commencement of the period for which they are effective.
(5) The basic premium payable for universal compulsory automobile insurance shall not include any consideration of age, sex, or marital status.
(6) Basic premiums for extension insurance shall be fixed by the corporation before the commencement of the period for which they are effective, and for this purpose the corporation may establish classes and subclasses of motor vehicles, trailers, and drivers of motor vehicles.
NEW SECTION. Sec. 21. ADDITIONAL PREMIUMS. The corporation may adopt rules respecting additional premiums to be paid by owners or drivers based on any one or more of the following:
(1) The accident record of the owner or driver;
(2) The degree of fault of the owner or driver in respect to an accident;
(3) The type or class of vehicle to be operated, the use to which it will be put, or any other basis prescribed in the rules, but no additional premium may be based upon the age, marital status, or sex of the owner or driver.
NEW SECTION. Sec. 22. INSURANCE CONDITION PRECEDENT TO LICENSE. (1) Except for a motor vehicle or trailer exempted by the rules, no permit of any kind and no license, license plate, or decal for a motor vehicle or trailer or for their use or operation may be granted, issued, or renewed under Title 46 RCW, unless at or before the time of application the applicant has applied to the corporation or its agent for and is entitled to an owner's certificate under this chapter in respect to the motor vehicle or trailer for the term of the permit or license, or part of that term as may be prescribed, and the applicant has paid:
(a) The premium prescribed for that owner's certificate; and
(b) Any additional premium assessed by the corporation.
(2) No driver's license, permit, or other authority to drive or operate a motor vehicle may be issued or renewed under Title 46 RCW, unless:
(a) At or before the time of application the applicant has applied to the corporation or its agent for and is entitled to a driver's certificate under this chapter for the term of that license or permit or part of that term as may be prescribed; and
(b) The applicant has paid the premium prescribed for that driver's certificate and any additional premium assessed by the corporation.
(3) Where the director receives an application for transfer of ownership of a motor vehicle or trailer under chapter 46.12 RCW, the director shall refuse registration unless:
(a) The transferee has paid the corporation the premium or fee the rules prescribe for the transfer; and
(b) The transferee has paid the corporation all money due under this chapter for every motor vehicle and trailer owned by him or her and every owner's certificate issued to him or her under this chapter.
NEW SECTION. Sec. 23. NOTIFICATION. (1) The director shall notify the corporation of every violation report or conviction under any law regulating vehicular traffic, or in respect to the use or operation of a motor vehicle by a driver of a motor vehicle who is a resident of the state.
(2) The director shall notify the corporation of every suspension or cancellation of a license or permit for a motor vehicle or trailer, or of a license or permit to drive.
(3) The corporation may notify the director of the default of a person in paying a premium or an additional premium due to the corporation for a certificate of insurance, or of suspension or cancellation of a certificate.
NEW SECTION. Sec. 24. EXEMPTION OF GOVERNMENT MOTOR VEHICLES. (1) This chapter does not apply to motor vehicles owned or operated by the United States or the government of another state or territory, but applies to motor vehicles owned and operated by the government of Washington and their drivers.
(2) Notwithstanding subsection (1) of this section, the corporation may negotiate and conclude an agreement with a government excluded under that subsection to bring any or all motor vehicles belonging to or operated by that government in the state within the operation of this chapter.
NEW SECTION. Sec. 25. RULES. The corporation may adopt rules to carry out the purposes of this chapter.
NEW SECTION. Sec. 26. MONEY OF CORPORATION. Money required by law to be paid to the corporation, premiums and other consideration payable for insurance provided by the corporation, and any other money that may be due and payable to the corporation shall be paid to the corporation, and may be retained by it to be used and dealt with only to carry out the powers of the corporation.
NEW SECTION. Sec. 27. REPORTS. (1) The corporation shall provide to the legislature annually by March 1st for the preceding fiscal year:
(a) A report of the corporation on its operations; and
(b) A financial statement showing the corporation's operations, as well as its assets and liabilities at the end of the year, in the form that may be required by the state treasurer.
(2) The books and accounts of the corporation shall be audited at least once in every year by the state auditor, or by an auditor appointed by the governor, who shall report to the director on the annual financial statement.
(3) The financial statement referred to in subsection (1) of this section shall be prepared in accordance with generally accepted accounting principles.
NEW SECTION. Sec. 28. INSPECTION BY STATE AUDITOR. (1) The state auditor shall, as often as the auditor considers advisable, inspect the records of the corporation to satisfy himself or herself that revenues collected by the corporation on behalf of the state have been accurately recorded and remitted promptly to the state treasurer.
(2) The state treasurer may at any time direct the state auditor to examine and report to the office of the treasurer on the financial or accounting operations of the corporation.
NEW SECTION. Sec. 29. ADDITIONAL REPORTS. The governor or the legislature may, at any time, require additional reports from the corporation as the governor or the legislature may consider necessary.
NEW SECTION. Sec. 30. AGREEMENTS. The corporation may enter into agreements with the United States or another state on:
(1) Uniformity of contracts and statutory conditions;
(2) Deposit, security, and undertaking required to carry on business in other states; or
(3) Any other matter for carrying on business, or settlement of claims in other states.
NEW SECTION. Sec. 31. CORPORATION SELF-SUSTAINING. The corporation created by this chapter must pay all claims and any other debts, or obligations of any type out of the funds generated by the premiums or investment income earned by the corporation, and the general fund is not liable in any way for any of the debts or obligations or other responsibilities of the corporation.
NEW SECTION. Sec. 32. LEGISLATIVE POWER. The legislature reserves the right to amend or repeal all or any part of this chapter at any time, and there is no vested right of any kind against such amendment or repeal. All the rights, privileges, or immunities conferred by this chapter or any acts done under it exists subject to the power of the legislature to amend or repeal this chapter at any time.
NEW SECTION. Sec. 33. SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.
NEW SECTION. Sec. 34. CAPTIONS. As used in this chapter, captions constitute no part of the law.
NEW SECTION. Sec. 35. The sum of three hundred million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1992, from the general fund to the account of the Washington auto insurance corporation for the purposes of this act. Sums appropriated by this section shall be repaid by the corporation no later than June 1, 2000, including interest at the statutory rate.