Effective Date of Rule: Thirty-one days after filing.

     Purpose: These new rules clarify the standards for detecting and preventing the purchase of juvenile life insurance for speculative or fraudulent purposes.

     Citation of Existing Rules Affected by this Order: Amending WAC 284-23-800, 284-23-803, and 284-23-806.

     Statutory Authority for Adoption: RCW 48.02.060 (3)(a).

      Adopted under notice filed as WSR 10-01-130 on December 21, 2009.

     Changes Other than Editing from Proposed to Adopted Version:

•	WAC 284-23-806(4) was rewritten for clarification: An insurer must have underwriting standards and procedures justifying the issuance of.
•	WAC 284-23-806(4), deleted language from original rule added back in: "The insurer must provide the insurance commissioner with documentation from its records and files to support ((the)) its underwriting justification upon request.
•	WAC 284-23-806 (4)(d), language added: "The commissioner must be able to determine that"...
•	WAC 284-23-806 (5)(a), (b), (c), new language regarding policies of fifty thousand dollars or less issued without underwriting added in response to comments.

     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     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 3, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 3, Repealed 0.

     Date Adopted: June 2, 2010.

Mike Kreidler

Insurance Commissioner

OTS-2875.5

JUVENILE LIFE INSURANCE
AMENDATORY SECTION(Amending Matter No. R 2007-09, filed 1/21/09, effective 2/21/09)

WAC 284-23-800   Purpose and scope.   The purpose of these rules is to ((prevent)) set standards for detecting and preventing 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)) life insurance ((issued in Washington state on)) policies governed by chapter 48.23 RCW that insure the life of a juvenile.

[Statutory Authority: RCW 48.02.060 and 48.23.345. 09-03-104 (Matter No. R 2007-09), § 284-23-800, filed 1/21/09, effective 2/21/09.]

     (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 policy or 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.

[Statutory Authority: RCW 48.02.060 and 48.23.345. 09-03-104 (Matter No. R 2007-09), § 284-23-803, filed 1/21/09, effective 2/21/09.]

     (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)) must 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 juvenile. The insurer must obtain and keep documentation sufficient to demonstrate that the ((person applying)) applicant for the policy has an insurable interest in the life of the ((insured)) juvenile.

     (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))) consent of the parent or legal guardian with whom the juvenile resides, as evidenced by signature, must be obtained before submitting the application for underwriting. 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)) underwriting standards and procedures justifying the issuance of 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)) its underwriting justification upon request. The justification must ((contain)) address the following elements:

     (a) The ((justification)) issued policy must conform to the insurer's established standards and practices for underwriting juvenile life insurance or explain any variance.

     (b) As part of its underwriting practice, the insurer must identify the amount, if any, of other life insurance contracts on the life of the juvenile which are in force or applied for 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.)) The insurer must confirm that the policy death benefit is grossly proportional to the value of life insurance or accidental death benefits issued for other siblings or immediate family members, and if not, justify why proportionality or equivalency was not required.

     (d) The commissioner must be able to determine that the insurer had good cause to underwrite when the overall amount of insurance on the juvenile exceeds the annual household income, and if it does so, justify why such an amount was approved. The extent to which the beneficiary or applicant is dependent on the juvenile for income or other support is an example of such a justification.

     (5) If an application on the life of a juvenile is fifty thousand dollars or less and issued without underwriting, the insurer must meet the following additional requirements:

     (a) In addition to asking the applicant, take reasonable steps to determine the total amount of insurance in-force on the life of the juvenile at the date of application including, but not limited to, checking any national data base for in-force insurance information;

     (b) Document the steps taken to determine the total amount of insurance in-force on a particular application and make the documentation available to the insurance commissioner upon request; and

     (c) File an amended application or endorsement for use in Washington including the following statement: "This policy may be void or reduced when a claim is submitted if the total amount of life insurance in-force from all sources exceeds the underwriting limits established for issuance of this policy on the life of a juvenile." This statement must be printed in bold face type of at least twelve-point font.

     (6) 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.

[Statutory Authority: RCW 48.02.060 and 48.23.345. 09-03-104 (Matter No. R 2007-09), § 284-23-806, filed 1/21/09, effective 2/21/09.]

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