HOUSE BILL REPORT

ESB 6320

BYSenators von Reichbauer, Moore and Rasmussen; by request of Insurance Commissioner

Revising insurance form and rate filing requirements.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (10)

      Signed by Representatives Lux, Chair; Zellinsky, Vice Chair; Anderson, Chandler, Crane, Day, P. King, Nutley, Silver and Winsley.

House Staff:John Conniff (786-7119)

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE

FEBRUARY 25, 1988

BACKGROUND:

Almost all insurance policy forms and property/casualty rates must be filed with the Insurance Commissioner for review before the policy form or rates may be used by an insurance company.  The Commissioner has 15 days to review the policy forms and rates submitted.  If the Commissioner does not disapprove the form or property rate within 15 days, the form or rate is deemed approved by the Commissioner.  The Commissioner has 30 days to disapprove casualty insurance rates.

Although insurance companies are permitted to apply for deviations from property and casualty insurance rates filed with the Commissioner, insurers are not statutorily authorized to apply for deviations from forms filed with the Commissioner.  Nevertheless, the Commissioner permits insurers to apply for deviations from forms filed with the Commissioner.

If the premium for an insurance policy can only be determined when the policy is terminated, the insurer must submit a statement of the basis and rates upon which the final premium will be determined to an examining bureau and to the insured upon request.

Casualty rates tend to be fixed using loss experience for the prior three years.  Loss experience is derived from not only Washington experience but also from any other jurisdiction the insurer deems necessary to produce accurate loss experience information.

SUMMARY:

Provisions governing insurance rate and form filings are amended to permit the Insurance Commissioner 30 days to review all rate and form filings, to authorize deviations from forms filed with the Commissioner, to require certain policies to contain a statement of the basis and rate upon which a final premium will be calculated, and to provide uniformity in rate and form filing deviation procedures.

A filing by an insurer for rate approval must be accompanied by information upon which the filing is based.  When setting rates insurers must consider past and prospective loss experience within this state for at least a five year period, except private passenger auto insurance which may be evaluated over a period of not less than three years.  If Washington loss experience is unusable, loss experience from similarly situated states may be employed.

If a filing is not properly supported and the Commissioner cannot independently determine the appropriateness of the filing, the Commissioner may require that adequate information be furnished.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Dave Rodgers, Insurance Commissioner's Office.

House Committee - Testified Against:      Foster Cronyn, Washington Insurers and NAII; and Basil Badley, American Insurance Association.

House Committee - Testimony For:    These changes are necessary to improve rate and form filing review by the Commissioner.  These changes are also necessary to ensure fairness to the insurance consumer.

House Committee - Testimony Against:      The provisions that require insurers to consider Washington loss experience before considering other state experience will hurt insurance companies who do a minor part of their business in Washington and will cost some insurance companies money by requiring a re-evaluation of insurance rates.