H-3957 _______________________________________________

HOUSE BILL NO. 1832

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State of Washington 49th Legislature 1986 Regular Session

By Representatives Lux, Locke and Wang

Read first time 1/23/86 and referred to Committee on Financial Institutions & Insurance.

AN ACT Relating to property and casualty insurance rates; amending RCW 48.19.030; and adding a new section to chapter 48.19 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section .19.03, chapter 79, Laws of 1947 and RCW 48.19.030 are each amended to read as follows:

Rates shall be used, subject to the other provisions of this chapter, only if made in accordance with the following provisions:

(1) In the case of insurances under standard fire policies and that part of marine and transportation insurances not exempted under RCW 48.19.010, manual, minimum, class or classification rates, rating schedules or rating plans, shall be made and adopted; except as to specific rates on inland marine risks individually rated, which risks are not reasonably susceptible to manual or schedule rating, and which risks by general custom of the business are not written according to manual rates or rating plans.

(2) In the case of casualty and surety insurances:

(a) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.

(b) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.

(3) Due consideration in making rates for all insurances shall be given to:

(a) Past and prospective loss experience within and outside this state; and in the case of rates for fire insurance, to the loss experience of insurers as to insurance against fire during a period of not less than the most recent five-year period for which such experience is available.

(b) Conflagration and catastrophe hazards, where present.

(d) Dividends, savings and unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers.

(e) All other relevant factors within and outside this state.

(4) In addition to other factors required by this section, rates filed by an insurer on its own behalf may also be related to the insurer's plan of operation and plan of risk classification.

(5) Except to the extent necessary to comply with RCW 48.19.020 uniformity among insurers in any matter within the scope of this section is neither required nor prohibited.

(6) The commissioner shall require, to the greatest extent possible without jeopardizing an insurer's financial condition, that rates be based upon loss experience within the state and that rates for individual or group insureds be based upon the individual's or group's past loss experience.

NEW SECTION. Sec. 2. A new section is added to chapter 48.19 RCW to read as follows:

In exercising discretionary authority granted by this chapter, the commissioner shall not grant a broad exemption to insurers or types of insurance from the standards and filing requirements for rates governed by this chapter without a specific finding that such exemption is necessary for the preservation of an insurance market or insurance company.