(6) "Premiums written" means gross direct premiums (excluding that portion of premiums on risks ceded to the joint reinsurance association) charged during the second preceding calendar year with respect to property in this state on all policies of property insurance and property insurance components of all multiperil policies, as defined and computed by the facility, less return premiums, dividends paid or credited to policyholders, or the unused or unabsorbed portions of premium deposits.

(7) A "service insurer" ((shall be)) means any company designated by the facility and approved by the commissioner to issue policies under this program.

(8) "Commissioner" means the commissioner of insurance of the state of Washington.

(((9) "Secretary" means the Secretary, U.S. Department of Housing and Urban Development.

(10) "The act" means the Urban Property Protection and Reinsurance Act of 1968, 82 Stat. 555, Public Law 90-448, as amended.))

[Order R-73-2, § 284-19-050, filed 3/30/73; Order R-70-1, § 284-19-050, filed 7/31/70; Order R-69-1, § 284-19-050, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-060  FAIR plan--Inspections and reports. (1) Any person having an insurable interest in real or tangible personal property at a fixed location in an urban area ((shall be)) is entitled((, upon application therefor to the facility,)) to an inspection of the property by the inspection bureau at no cost ((to the applicant)), upon application to the facility. The inspection may be requested by the property owner ((or his representative)), a representative of the property owner, the insurer, or the insurance producer and need not be in writing. Requests for inspections shall be transcribed on a form approved by the facility. A deposit premium ((shall)) is not ((be)) required as a precondition to inspection.

(2) The owner of the building need not be present for a tenant to obtain an inspection, but the inspection bureau must be provided full access to the property for which insurance is sought.

(3) An inspection report shall be made for each property inspected. The report shall cover pertinent structural and occupancy features as well as the general condition of the building and surrounding structures. A representative photograph of the property may be taken during the inspection.

(4) During the inspection, the inspector shall point out features of structure and occupancy to the applicant or ((his)) a representative of the applicant, if present, and shall indicate those features which may result in condition charges if the risk is accepted. The inspector ((shall have)) has no authority to advise whether ((any insurer)) the facility will provide the coverage.

(5) ((After the inspection a copy of the completed inspection report, and any photograph, indicating the pertinent features of building, construction, maintenance, occupancy and surrounding property shall be sent within five business days to the facility for distribution to a service insurer. The person requesting the inspection report may designate the service insurer to which the inspection report is to be referred.

(6) Included with)) The report shall ((be)) include a rate make-up statement, including any condition charges or surcharges imposed by inspection or under the program, or under any substandard rating plan approved by the commissioner. A copy of the inspection report shall be made available to the applicant or ((his)) the applicant's agent upon request.

[Order R-69-1, § 284-19-060, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R 79-3, filed 7/11/79)

WAC 284-19-070  FAIR plan business--Distribution and placement. (1) The facility ((may)) shall not require((, as a precondition to the placement of business under the FAIR plan,)) that the applicant ((make a showing)) demonstrates that he or she is unable to obtain insurance in the normal market, ((but)) as a precondition to the placement of business under the FAIR plan. The facility, however, may require an agent or broker to furnish ((the facility with)) copies of documents or information showing what effort was made by ((such)) the agent or broker to obtain insurance in the normal market((, and)). The facility shall forward to the commissioner the names of ((such)) agents or brokers who fail to cooperate or who appear to fail to make reasonable efforts on behalf of applicants for insurance to obtain insurance in the normal market.

(2) ((Thereafter, the facility, upon receipt of an application for coverage and the corresponding inspection report from the inspection bureau, shall assign such application to the service insurer designated by the applicant or by his agent; or if no service insurer is so designated, it shall assign the application to a service insurer, keeping the assignments evenly distributed, based on the volume of property insurance writings in this state of the various service insurers.

(3))) Assessments upon each insurer participating in this program shall be levied by the facility on the same percentage allocation basis as ((such)) the insurer's premiums written bears to the total of all premiums written by all insurers participating in the program.

(a) The maximum limit of liability ((which)) that may be placed through this program on any one property at one location is $1,500,000. The facility ((shall)) undertakes the responsibility of seeking to place that portion of a risk ((which)) that exceeds $1,500,000.

(b) The term "at one location" as used ((herein)) in this chapter refers to real and personal property consisting of and contained in a single building, or consisting of and contained in contiguous buildings under one ownership.

[Statutory Authority: RCW 48.01.030, 48.02.060, 48.18.480, and 48.30.020. 79-08-019 (Order R 79-3), § 284-19-070, filed 7/11/79; Order R-69-1, § 284-19-070, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-080  Procedure after inspection and submission. (1) ((Any service insurer to which a risk is referred by the facility shall,)) Within three business days after receipt of the inspection report ((and application, complete an action report and return the same to)), the facility ((advising that)) shall notify the insured and the agent that:

(a) The risk is acceptable; or

(b) The risk will be acceptable if the improvements noted in the action report are made by the applicant and confirmed by reinspection; or

(c) The risk is not acceptable for the reasons stated in the action report.

(2) If the risk is accepted by the ((designated service insurer)) facility, and upon receipt of premium, the policy or binder shall be delivered within two business days. ((No producer shall have authority to bind the facility or any service insurer for any risk eligible for this program until acceptance of the risk and payment of premium.)) No coverage shall commence until the application is accepted and the premium paid to the facility.

(3) In the event a risk is declined because it fails to meet reasonable underwriting standards, the facility will so notify the applicant and the commissioner. Reasonable underwriting standards shall include((, but not be limited to,)) the following:

(a) Physical condition of the property, such as its construction, heating, wiring, evidence of previous fires or general deterioration;

(b) Its present use or housekeeping, such as vacancy, overcrowding, storage of rubbish or flammable materials;

(c) Other specific characteristics of ownership, condition, occupancy or maintenance which are violative of public policy and result in unreasonable exposures to loss. Neighborhood or area location or any environmental hazard beyond the control of the property owner ((shall not be deemed to be)) is not an acceptable criterion for declining a risk.

(4) ((In the event)) If the risk is conditionally declined because the property does not meet reasonable underwriting standards, but can be improved to meet such standards, the facility shall promptly advise the applicant and the commissioner what improvements noted in the action report should be made to the property. Upon completion of the improvements by the applicant or property owner, the facility((, when so notified,)) will have the property promptly reinspected ((and furnish the new inspection report to the previously designated service insurer)).

(5) If the inspection of the property reveals that there are one or more substandard conditions, surcharges ((may)) shall be imposed in conformity with the substandard rating plan approved by the commissioner. In this event, the facility shall advise the applicant of what improvements, if any, ((he)) the applicant may make to bring ((his)) the property to insurable condition at unsurcharged rates.

(((6) Any insurer, which is a member of a group of insurers under the same management or ownership, to which a referral is made under the program, may apply in behalf of the group for a combined distribution and placement quota under the program. Such group shall have the option of designating the insurer within the group to which the risk shall be referred.))

[Order R-69-1, § 284-19-080, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-090  Joint reinsurance association. (1) A joint reinsurance association (((hereinafter)) referred to as the association((: Is hereby)) is created consisting of all insurers.

(2) The association ((shall be)) is authorized to assume and cede reinsurance on behalf of insurers ((and cede reinsurance on behalf of insurers on)) for eligible risks written by insurers through the FAIR plan. The reinsurance assumed by the association ((shall be for)) is 100% of each risk written under this program under $1,500,000.

(3) Each insurer ((shall)) participates in the total writings, expenses, profits and losses of the association in proportion to its premiums written.

(4) ((In the event)) If any reinsuring member fails, by reason of insolvency, to pay its proportion of any expense or of any loss as an assuming reinsurer incurred by the facility under the program, ((such)) the unpaid loss or expense shall be paid by the remaining members((,)). Each ((contributing)) remaining member contributes in the manner provided for in the distribution of expenses and losses under the program, deleting ((therefrom)) the proportion of the defaulting member. The facility ((shall be)) is subrogated to the rights of the remaining members in any liquidation proceeding and ((shall have)) has full authority on their behalf to exercise such rights in any action or proceeding.

[Order R-69-1, § 284-19-090, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-100  Standard policy coverage--Coding. All policies issued shall be for essential property insurance on standard policy forms((,)). The policies shall be separately coded((,)) and ((shall be)) issued for a term of one year, at rates ((promulgated)) set by the inspection bureau under filings approved by the commissioner. Individual company deviation filings shall not apply to risks written under this program.

[Order R-69-1, § 284-19-100, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-110  Cancellation and nonrenewal under this program. (1) ((No insurer shall)) The facility shall not cancel or nonrenew a policy ((or binder)) issued under this program except ((for)):

(a) For cause which would have been grounds for nonacceptance of the risk under the program had ((such)) the cause been known to the insurer at the time of acceptance; or

(b) For nonpayment of premium; or

(c) With the approval of the governing committee.

(2) Notice of cancellation or nonrenewal, together with a statement of the reason ((therefor)), shall be sent to the insured ((with a copy sent to the facility)).

(3) Any cancellation or nonrenewal notice to the insured shall be accompanied by a statement that the insured has a right of appeal as ((hereinafter)) provided in WAC 284-19-120.

[Order R-69-1, § 284-19-110, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-120  Right of appeal. (1) Any applicant or insurer ((shall have)) has a right of appeal to the committee, including the right to appear in person before the committee, if requested by the party seeking appeal.

(2) A decision of the committee may be appealed to the commissioner.

(3) Each denial of insurance under this program shall be accompanied by a statement setting forth the provisions of this section (((WAC 284-19-120))).

(4) Notification of appeal may be made to the committee through the manager of the facility or any member of the committee.

(5) All appeals to the committee or to the commissioner shall be in writing and must indicate in what respect the applicant feels aggrieved.

(6) ((Decisions of)) The committee shall make decisions in writing on appeals ((to it shall be reduced to writing and shall be rendered)) within ((at least)) 15 business days after notification of appeal is received, unless delayed by mutual consent. The majority of committee members (((3))) must concur in all decisions adverse to the party seeking appeal.

(7) Appeals to the commissioner under this program ((shall)), in all other respects not set forth ((herein)) in this chapter, shall be handled in accordance with chapters 48.04 and 34.04 RCW (Administrative Procedure Act).

[Order R-69-1, § 284-19-120, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-130  Commission. Commission under this program shall be 10 percent on the policy premium and ((shall be)) paid to the licensed producer designated by the applicant.

[Order R-69-1, § 284-19-130, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R 79-3, filed 7/11/79)

WAC 284-19-140  Administration. (1) This program shall be administered by a governing committee (((hereinafter)) referred to as the committee) of the facility, subject to the supervision of the commissioner, and operated by a manager appointed by the committee.

(2) ((On and after September 1, 1979,)) The committee ((shall)) consists of nine members, including five insurers, one of which ((shall be)) is elected from each of the following:

((American Insurance Association, Alliance of American Insurers, National Association of Independent Insurers, all other stock insurers, and all other nonstock insurers.)) (a) American Insurance Association;

(b) Alliance of American Insurers;

(c) National Association of Independent Insurers;

(d) All other stock insurers; and

(e) All other nonstock insurers.

A sixth member shall be ((the)) an insurer designated as the service insurer under the program (((or, if there be more than one service insurer, the sixth member shall be such service insurer as the commissioner designates as the member))). The commissioner shall designate a sixth member if there is more than one service insurer. The other three members ((shall be)) are individuals who are appointed by the commissioner to ((so)) serve, none of whom ((shall be interested, directly or indirectly)) have a direct or indirect interest in any insurer except as a policyholder. The individual members ((shall)) serve for a period of one year or until their successors are appointed. Not more than one insurer in a group under the same management or ownership shall serve on the committee at the same time. One of the six insurers on the governing committee shall be a domestic insurer.

(([(3) The governing committee is hereby empowered to issue operating procedures and other directives to carry out the purposes of this plan, the act, and directives of the secretary and the commissioner pursuant thereto.]

[(4) Each person serving on the committee or any subcommittee thereof, each member of the facility, and each officer and employee of the facility shall be indemnified by the facility against all costs and expenses actually and necessarily incurred by him or it in connection with the defense of any action, suit, or proceeding in which he or it is made a party by reason of his or its being or having been a member of the committee, or a member or officer or employee of the facility except in relation to matters as to which he or it has been judged in such action, suit, or proceeding to be liable by reason of willful misconduct in the performance of his or its duties as a member of such committee, or a member or officer or employee of the facility. This indemnification shall not apply to any loss, cost, or expense on insurance policy claims under the program. Indemnification hereunder shall not be exclusive of other rights to which such member or officer may be entitled as a matter of law.]))

(3) The governing committee may issue operating procedures and other directives to carry out the purposes of this plan and directives of the commissioner.

(4) Each person serving on the committee or any subcommittee, each member of the facility, and each officer and employee of the facility shall be indemnified by the facility against all costs and expenses actually and necessarily incurred in connection with the defense of any action, suit, or proceeding in which he or she is made a party by reason of being or having been a member of the committee, or a member or officer or employee of the facility except in relation to matters as to which he or she has been judged in such action, suit, or proceeding to be liable by reason of willful misconduct in the performance of duties as a member of the committee, or a member or officer or employee of the facility. This indemnification does not apply to any loss, cost, or expense on insurance policy claims under the program. Indemnification is not exclusive of other rights to which such member or officer may be entitled as a matter of law.

[Statutory Authority: RCW 48.01.030, 48.02.060, 48.18.480, and 48.30.020. 79-08-019 (Order R 79-3), § 284-19-140, filed 7/11/79; Order R-69-1, § 284-19-140, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-150  Annual and special meetings. (1) There shall be an annual meeting of the insurers on a date fixed by the committee. The three ((aforementioned)) associations (WAC 284-19-140(2)) shall designate or elect their representatives to the committee. The two nonassociation groups of companies shall elect their respective representatives by a majority vote counted on a weighted basis in accordance with each insurer's premiums written and the aggregate premiums written for all insurers in the respective groups of companies. Representatives on the committee shall serve for a period of one year or until successors are elected or designated.

(2) A special meeting may be called at ((such)) a time and place designated by the committee or upon the written request to the committee of any ten insurers, not more than one of which may be a group under the same management or ownership.

(3) Twenty days' notice of ((such)) the annual or special meeting shall be given in writing by the committee to the insurers. A majority of the insurers ((shall)) constitutes a quorum. Voting by proxy ((shall be)) is permitted. Notice of any meeting shall be accompanied by an agenda for ((such)) the meeting.

(4) Any matter, including amendment of this program, may be proposed and voted upon by mail, provided ((such)) the procedure is unanimously authorized by the members of the committee present and voting at any meeting of the committee. If ((so)) approved by the committee, notice of any proposal ((shall be)) is mailed to the insurers not less than twenty days prior to the final date fixed by the committee for voting ((thereon)).

(5) At any regular or special meeting at which the vote of the insurers is or may be required on any proposal, including amendment to this program, or any vote of the insurers which may be taken by mail on any proposal, such votes shall be cast and counted on a weighted basis in accordance with each insurer's premiums written. A proposal ((shall)) becomes effective when approved by at least two-thirds of the votes cast on ((such)) the weighted basis, except amendments to this program ((which)) that will require administrative action by the commissioner.

[Order R-69-1, § 284-19-150, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-160  Duties of the committee. (1) The committee shall meet as often as may be required to perform the general duties of the administration of the program or on the call of the commissioner. Three insurers of the committee shall constitute a quorum.

(2) The committee ((shall be empowered to)) may appoint a manager((, who shall serve at the pleasure of the committee,)) to budget expenses, levy assessments, disburse funds and perform all other duties provided ((herein)) in this chapter or necessary or incidental to the proper administration of the program. The manager serves at the pleasure of the committee. The adoption of or substantive changes in pension plans or employee benefit programs ((shall be)) is subject to approval of the insurers. Assessments upon each insurer shall be levied on the basis of its premiums written.

(3) Annually the manager ((shall)) prepares an operating budget ((which shall be)) that is subject to approval of the committee. ((Such)) The budget shall be furnished to the insurers after approval. Any contemplated expenditure in excess of or not included in the annual budget ((shall)) requires prior approval by the committee.

(4) The committee ((shall)) furnishes to all insurers and to the commissioner a written report of operations annually in ((such)) a form and detail as the committee may determine.

[Order R-69-1, § 284-19-160, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R 77-1, filed 3/24/77)

WAC 284-19-170  Public education and notices required. (1) All insurers shall undertake a continuing public education program in cooperation with producers and others, to assure that the ((essential property insurance inspection and placement)) program receives adequate public attention.

(2) All insurers terminating a property insurance policy shall give any policyholder eligible for coverage under this program ((30 days')) notice of cancellation or refusal to renew (((except in the case of nonpayment of premium or evidence of incendiarism), and)) as required under chapters 48.18 and 48.53 RCW. The insurers shall explain the procedure for making application under this program in or accompanying ((such)) the notice.

[Order R 77-1, § 284-19-170, filed 3/24/77; Order R-69-1, § 284-19-170, filed 1/28/69.]

AMENDATORY SECTION (Amending Order R-69-1, filed 1/28/69)

WAC 284-19-180  Statistics, records and reports. (1) Statistics. The facility shall maintain separate statistics on business written in accordance with this plan((, and)). The facility shall make ((the following quarterly report to the commissioner and to the secretary, and such additional reports as may be required by the commissioner.)):

(a) A quarterly report to the commissioner including:

(i) Number of requests for inspections,

(((b))) (ii) Number of risks inspected,

(((c))) (iii) The number of risks accepted, total and average premiums charged, high and low premiums,

(((d))) (iv) The number of risks declined, and

(((e))) (v) The number of reinspections made on conditionally declined risks.

(b) Additional reports as required by the commissioner.

(2) Records. ((In addition to statistics,)) The facility shall maintain complete and separate records of all business transactions, including copies of all policies and endorsements issued in accordance with this plan.

(3) Reports to members. Regular reports of the facility's operations shall be submitted to all members by the committee((, such)). The reports ((to)) shall include((, but not necessarily to be limited to, premiums written and earned, losses, including loss adjustment expense, paid and incurred, all other expenses incurred and)):

(a) Premiums written and earned;

(b) Losses, including loss adjustment expense, paid and incurred;

(c) All other expenses incurred; and

(d) Outstanding liabilities.

[Order R-69-1, § 284-19-180, filed 1/28/69.]

REPEALER

The following section of the Washington Administrative Code is repealed:

WAC 284-19-030 Effective date.

© Washington State Code Reviser's Office