PERMANENT RULES
INSURANCE COMMISSIONER
Effective Date of Rule: Thirty-one days after filing.
Purpose: These new rules establish requirements for underwriting standards that prevent fraudulent or speculative purchase of juvenile life insurance policies and contracts.
Statutory Authority for Adoption: RCW 48.02.060 and 48.23.345.
Adopted under notice filed as WSR 08-24-107 on December 3, 2008.
A final cost-benefit analysis is available by contacting Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, phone (360) 725-7041, fax (360) 586-3109, e-mail kacys@oic.wa.gov.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 3, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 3, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: January 21, 2009.
Mike Kreidler
Insurance Commissioner
OTS-2047.3
NEW SECTION
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.
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(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.
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(1) An insurer may refuse an applicant's request for life insurance when the combined life insurance-in-force 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.
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