Preproposal statement of inquiry was filed as WSR 07-17-163.
Title of Rule and Other Identifying Information: The sale of juvenile life insurance policies.
Hearing Location(s): Insurance Commissioner's Office, Room TR 120, 5000 Capitol Boulevard, Tumwater, WA 98504-0255, on January 6, 2009, at 10:00 a.m.
Date of Intended Adoption: January 13, 2009.
Submit Written Comments to: Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, e-mail KacyS@oic.wa.gov, fax (360) 586-3109, by January 5, 2009.
Assistance for Persons with Disabilities: Contact Lorie Villaflores by January 5, 2009, TTY (360) 586-0241 or (360) 725-7087.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed rules provide detail on acceptable written standards and procedures for the sale of juvenile life insurance, designed to ensure that policies are not sold for fraudulent or speculative purposes.
Reasons Supporting Proposal: The commissioner surveyed life insurers, asking for their written policies and procedures pursuant to RCW 48.23.345. Some insurers writing juvenile policies in Washington do not have written policies and procedures. Other standards, policies and procedures do not go far enough to protect juveniles from fraudulent or speculative policy purchases. The rules interpret the statute for insurers.
Statutory Authority for Adoption: RCW 48.02.060 and 48.23.345.
Statute Being Implemented: RCW 48.34.345.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Mike Kreidler, insurance commissioner, governmental.
Name of Agency Personnel Responsible for Drafting: Meg Jones, P.O. Box 40258, Olympia, WA 98504-0258, (360) 725-7197; Implementation: Beth Berendt, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7117; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.
No small business economic impact statement has been prepared under chapter 19.85 RCW. There are no domestic insurance companies offering juvenile life insurance that meet the law's definition of "small."
A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, phone (360) 725-7041, fax (360) 586-3535, e-mail Kacys@oic.wa.gov.
December 3, 2008
WAC 284-23-800 Purpose and scope. The purpose of these rules is to prevent the purchase of juvenile life insurance for speculative or fraudulent reasons, by ensuring that insurance underwriting practices consider such risk, and by setting forth the minimum practices required to insure the life of a juvenile. These rules apply to any insurance issued in Washington state on the life of a juvenile.
(1) "Insurable interest" means a relationship to the insured at the time of application congruent with the continuance of the life of the insured, and as further defined in RCW 48.18.030 and 48.18.060(2).
(2) "Juvenile" means a person younger than eighteen years of age.
(3) "Juvenile Life Insurance Contract" means a life insurance contract issued on the life of a juvenile.
(4) "Parent or legal guardian" means a natural parent, an adoptive parent whose status is documented in a final court order of adoption or a court appointed legal guardian for the juvenile. Step-parents who have not legally adopted the juvenile, foster parents, noncustodial parents or relatives acting in loco parentis are not considered parents or legal guardians of the juvenile for purposes of this rule.
(1) An insurer may require applicants to cancel other life insurance-in-force before issuing its policy when the total coverage from all combined life insurance exceeds the issuing insurer's maximum for juveniles.
(2) Life insurance upon a juvenile may not be made or take effect unless at the time the contract is made, the applicant is a person having an insurable interest in the life of a minor or is a person upon whom the minor is dependent for support and maintenance. The insurer must obtain and keep documentation sufficient to demonstrate that the person applying for the policy has an insurable interest in the life of the insured.
(3) In addition to the signature of the applicant, the following consent as evidenced by signature must be obtained before submitting the application for underwriting:
(a) The parent or legal guardian with whom the juvenile resides must sign the application if the applicant is not a parent or legal guardian.
(b) Any juvenile age fifteen or older must sign the initial application for insurance on the juvenile's life.
(4) An insurer must have justification for selling a life insurance policy on the life of a juvenile in excess of reasonably anticipated costs associated with the juvenile's funeral, other death expenses or costs of mental health treatment for family members or loss of income to the family. The insurer must provide the insurance commissioner with documentation from its records and files to support the justification upon request. The justification must contain the following elements:
(a) The justification must conform to the insurer's established standards and practices for juvenile life insurance or explain any variance.
(b) Identify the amount, if any, of other life insurance contracts on the life of the juvenile which are in force at the time of application.
(c) Whether and to what extent the beneficiary or applicant is dependent on the juvenile for income or other support.
(d) The value of life insurance or accidental death benefits issued for other siblings or immediate family members, and if not grossly proportional to the underwritten policy benefit or individually equivalent to coverage on other family members, why proportionality or equivalency was not required.
(e) Whether the overall amount of insurance on the juvenile exceeds the annual household income, and if so, why such an amount was approved.
(5) For each application for juvenile life insurance rejected by an insurer, each insurer must maintain at its home or principal office a complete file containing the original signed application, underwriting analysis, correspondence with the applicant and any other documents pertinent to the decision to reject the applicant as an insured, for a period of not less than ten years from the date the application was signed by the applicant. Such file shall be subject to inspection by the insurance commissioner.