WSR 06-01-099




[ Insurance Commissioner Matter No. R 2005-03 -- Filed December 21, 2005, 9:10 a.m. ]

     Original Notice.

     Preproposal statement of inquiry was filed as WSR 05-22-112.

     Title of Rule and Other Identifying Information: Exemption from form filing requirements - large commercial accounts.

     Hearing Location(s): Insurance Commissioner's Office, Room TR 120, 5000 Capitol Boulevard, Tumwater, WA 98501, on March 1, 2006, at 10:00 a.m.

     Date of Intended Adoption: March 8, 2006.

     Submit Written Comments to: Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, e-mail, fax (360) 725-7041 by February 15, 2006.

     Assistance for Persons with Disabilities: Contact Lorie Villaflores by February 24, 2006, TTY (360) 586-0241 or (360) 725-7087.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: WAC 284-24-120 currently suspends the rate filing requirements under chapter 48.19 RCW for a "large commercial property casualty account" based on objective criteria defined in the rule. This proposal exempts large commercial accounts from filing forms under chapter 48.18 RCW based on the same objective criteria.

     Reasons Supporting Proposal: Large commercial accounts negotiate rates and contract provisions concurrently. The types of products large risks would buy include property insurance programs to cover multiple locations and excess insurance for self-funded liability insurance programs. Large risks often employ risk management staff to administer these programs, and they are capable of negotiating price and coverage terms with insurance producers and insurers.

     Statutory Authority for Adoption: RCW 48.02.060, 48.18.100(6), and 48.18.103 (3)(a).

     Statute Being Implemented: RCW 48.18.100(6) and 48.18.103 (3)(a).

     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: Lisa Smego, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7134; 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 is no impact on small business as defined under RCW 19.85.020(1).

     A cost-benefit analysis is not required under RCW 34.05.328. No costs are anticipated due to implementation of this rule. Insurers will save money by forgoing the form filing requirements for large commercial accounts, and these savings should offset any minor expenses of record retention.

Mike Kreidler

Insurance Commissioner


WAC 284-20-150   Rules that exempt certain commercial property casualty forms from filing requirements.   (1) For purposes of this rule, "large commercial property casualty account" means insurance coverage that:

     (a) Involves the lines of property and casualty insurance defined in RCW 48.11.040, 48.11.050, 48.11.060, 48.11.070, and/or 48.11.080; and

     (b) Is purchased by a business, not-for-profit organization, or public entity with enough insurance buying experience to negotiate with insurers in a largely unregulated environment and that meets any two of the following criteria:

     (i) Annual premiums of one hundred thousand dollars or more, excluding workers compensation insurance issued by the department of labor and industries and types of insurance listed in subsection (7) of this section;

     (ii) Net revenues or sales in excess of one hundred million dollars;

     (iii) More than two hundred employees;

     (iv) Net worth over fifty million dollars;

     (v) Is a not-for-profit organization or public entity with an annual budget or assets of at least forty-five million dollars;

     (vi) Is a municipality with a population over fifty thousand.

     (2) This rule exempts forms issued to insure a large commercial property casualty account from the filing requirement of chapter 48.18 RCW, as permitted under RCW 48.18.103(3).

     (3) Each insurer or its agent must notify the insured in writing that the policy forms are not filed with or approved by the commissioner before the insurer issues an insurance policy under this rule.

     (4) The Washington Insurance Examining Bureau will not audit property forms used to insure large commercial property casualty accounts under WAC 284-20-006.

     (5) If grounds exist under RCW 48.18.110(1), the commissioner may subsequently disapprove any form used to insure a large commercial property casualty account. If the form is disapproved under RCW 48.18.110(1), the insurer must construe the form as if it fully complied with the requirements of RCW 48.18.510.

     (6) Each insurer must keep copies of policy forms used to insure large commercial property casualty accounts for at least six years from the date each policy is issued under this section. These records must be made available to the commissioner upon request.

     (7) Subsection (2) of this section does not apply to:

     (a) Professional liability insurance, including medical malpractice insurance;

     (b) Directors' and officers' liability insurance purchased by individuals;

     (c) Motor vehicle service contract reimbursement insurance, as defined in RCW 48.96.010(4);

     (d) Reimbursement insurance policies, as defined in RCW 48.110.020(8); and

     (e) Master policies under which certificates of coverage are issued to individual consumers, households, businesses, or other organizations.