FINAL BILL REPORT
2SHB 318
C 248 L 88
BYHouse Committee on Financial Institutions & Insurance (originally sponsored by Representatives Lux, P. King, Nutley, Prince and Chandler; by request of Insurance Commissioner)
Revising provisions on insurance.
House Committe on Financial Institutions & Insurance
Senate Committee on Financial Institutions & Insurance
SYNOPSIS AS ENACTED
BACKGROUND:
The Insurance Commissioner has established and operated a consumer complaint section within the commissioner's office for many years. This function of the commissioner's office is not specifically required by statute.
A person who is the subject of an order issued by the commissioner is permitted to request a hearing on the order within 90 days of receiving notice of the order. The notice provisions of the statute do not address notice, which is sent by mail.
When the Insurance Commissioner has issued an order suspending, revoking or refusing to renew an agent's, broker's, solicitor's or adjuster's license, the person denied the license may appeal the order and if the person posts a bond in the amount of $500, the order may be suspended pending the outcome of the appeal.
If an insurer loses its authority to do business in Washington, the insurer may no longer issue or renew policies in this state.
Insurers are required to report loss and expense experience for certain property and casualty insurance lines by the first day of March of each year.
Fees for taking an exam to obtain a license as an agent, broker, solicitor or adjuster are $5 for processing the first examination for a license, $50 for a broker's license, and $10 for all other examinations except those conducted by an independent testing service whose fees are approved by the commissioner.
If another state establishes a fine or penalty of a certain amount that may be imposed upon Washington insurers for violations of that state's laws, then Washington may impose a fine or penalty of a similar amount, for similar violations of Washington laws, upon insurers of the other state. This statute is commonly referred to as a "retaliatory" provision and is designed to ensure equal treatment of insurers headquartered in Washington when they do business in other states.
A person may not obtain an agent or broker license if the person intends to use the license primarily to obtain insurance on his or her own "risks." The statutory definition of risk was repealed in 1985.
If an application for insurance has been rejected by the life or disability insurer of the agent submitting the application, the agent may submit the application with another insurer even if the agent is not an agent of the other insurer.
Persons who receive premiums or return premiums on behalf of an insurance company or insured are subject to criminal penalties for misappropriation of the premiums.
No agent or broker may compensate an unlicensed person to solicit or assist in the procurement of business unless the compensation is in the form of a salary paid irrespective of whether a policy is actually issued.
If the commissioner finds that the public safety is in jeopardy, the commissioner may temporarily suspend an agent's license. However, the suspension is effective only until revocation proceedings are concluded. Notice of the temporary suspension must be given at least three days prior to the effective date of the suspension and must include a notice of revocation.
Agents and brokers are permitted to charge a fee for services provided beyond those customarily provided during an insurance sale.
Insurance agents are required to maintain a separate account for insurance premiums.
Automobile insurance companies must offer collision and comprehensive coverage in an amount necessary to cover the total loan liability of the insured on a motor vehicle even if the coverage exceeds the actual value of the vehicle.
No lender may sell insurance for the protection of real property until the lender has made a commitment to lend money.
Health care service contractors are entitled to an automatic hearing on any order or other regulatory action taken by the commissioner against the contractor.
SUMMARY:
The Insurance Commissioner is required to provide assistance to consumers in resolving complaints and in providing information that involves insurers and other licensees.
The commissioner may send notice of an order to the affected person by mail at the person's most recent address shown in the commissioner's records. All persons licensed under the insurance code must notify the commissioner of any change of address. Notice sent to the most recent address is deemed to be notice to the person.
The provision of the insurance code that permits a stay of suspension, revocation or refusal to issue an agent's license upon the posting of a $500 bond is repealed.
A policy that has been issued by an insurer who loses its authority to do business after issuing the policy may be renewed and continued in force despite the loss of authorization.
Procedures are adopted for the transfer of an insurance company's place of business to or from the state of Washington.
The deadline for filing loss and expense experience for certain property and casualty insurance lines is extended to the first day of May of each year.
The specific application fees charged for processing an initial examination to obtain an agent's license and for a broker's examination are deleted. A $10 fee will be assessed for all agent and broker exams administered by the commissioner. In addition, a technical amendment is made to the section authorizing independent testing services to collect a fee for administering exams. Independent testing services may now also keep the fee for their services.
The "retaliatory" tax provision of the insurance code is amended to delete the reference to "fines and penalties." The result of this change is to permit Washington to impose a more equitable and rational retaliatory fine or penalty for delinquent taxes.
The provision prohibiting agents from obtaining a license if the principal purpose of the license is to place coverage for the agent's own risks is deleted.
An agent who places insurance with another company after the agent's own company rejects an insurance application is deemed to be the agent of the other company as to the policy issued.
Persons who receive any funds on behalf of an insurer or insured is deemed to act in a fiduciary capacity and is subject to criminal penalties for misappropriation of funds.
Payment by an agent or broker is permitted for services furnished by an unlicensed person who does not participate in the insurance transaction and whose compensation is not contingent upon an insurance sale.
The commissioner may temporarily suspend an agent's license after notice of revocation if the public safety or welfare is threatened.
Agents and brokers who provide services beyond those customarily provided in conjunction with an insurance sale may reduce the fee charged for these additional services to the extent a full fee would result in the client's double payment for the same services.
Title insurers and agents and brokers whose average daily balance of provisions exceed $1 million dollars, are exempted from statutory provisions requiring a separate account for insurance premiums.
Automobile insurers may limit collision and comprehensive coverage for the insured's loan liability on private passenger automobiles and motor homes to accidents that totally destroy the covered vehicle.
Lenders are prohibited from selling insurance to a borrower prior to making a commitment to lend money for personal property as well as real property.
Health care service contractors are not entitled to an automatic hearing but must request a hearing on any order or other regulatory action taken by the commissioner against a contractor.
The Insurance Commissioner is directed to create a committee to review health care coverage for a condition known as temporomandibular joint disorder.
VOTES ON FINAL PASSAGE:
House 88 0
Senate 44 0(Senate amended)
House 97 0(House concurred)
EFFECTIVE:June 9, 1988
March 24, 1988 (Section 5)