PROPOSED RULES
INSURANCE COMMISSIONER
Original Notice.
Preproposal statement of inquiry was filed as WSR 10-08-052.
Title of Rule and Other Identifying Information: Excess flood or business interruption insurance market assistance plan.
Hearing Location(s): Insurance Commissioner's Office, TR 120, 5000 Capitol Boulevard, Tumwater, WA 98504-0255, on August 2, 2010, at 1:00 p.m.
Date of Intended Adoption: August 3, 2010.
Submit Written Comments to: Jim Tompkins, P.O. Box 40258, Olympia, WA 98504-0258, e-mail jimt@oic.wa.gov, fax (360) 586-3109, by July 30, 2010.
Assistance for Persons with Disabilities: Contact Lorrie [Lorie] Villaflores by July 30, 2010, TTY (360) 586-0241 or (360) 725-7087.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Chapter 230, Laws of 2010, provides that the commissioner must by rule establish a market assistance plan to assist persons located in the geographical area protected by any dam that are unable to purchase excess flood or business interruption insurance in an adequate amount from either the admitted or nonadmitted market. These proposed rules will allow the commissioner to establish this market assistance plan so that excess flood insurance and business interruption insurance is available for sale and issue.
Reasons Supporting Proposal: Chapter 230, Laws of 2010, provides that the commissioner must by rule establish a market assistance plan to assist persons located in the geographical area protected by any dam that are unable to purchase excess flood or business interruption insurance in an adequate amount from either the admitted or nonadmitted market. The commissioner is proposing these rules to establish this market assistance plan so that excess flood insurance and business interruption insurance is available for sale and issue.
Statutory Authority for Adoption: RCW 48.02.060 and sections 14 and 15, chapter 230, Laws of 2010.
Statute Being Implemented: Section 15, chapter 230, Laws of 2010.
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: Jim Tompkins, P.O. Box 40258, Olympia, WA 98504-0258, (360) 725-7036; Implementation and Enforcement: John Hamje, P.O. Box 40256, Olympia, WA 98504-0256, (360) 725-7262.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The enacting law limits the number of insurers who can be required by the commissioner to participate in the market assistance plan (MAP) to be just enough to ensure that there are twenty-five participants in the MAP. The law further requires the commissioner to make the designation based on the insurers' premium volume of property insurance in this state. These two provisions effectively guarantee that no domestic insurer defined as a small business in RCW 19.85.020 will be involuntarily designated; a check of the property and casualty insurance companies whose 2008 premium levels would place them in the top twenty-five verified this. As a result, this proposed rule does not require a small business economic impact statement.
A cost-benefit analysis is not required under RCW 34.05.328. ESHB 2560 clearly instructs the commissioner to "by rule require insurers ... to form a market assistance plan" (MAP) and further states that "the commissioner must make this requirement (requiring insurers to participate) to fulfill the quota of at least twenty-five insurers." This pair of instructions leaves no other options to the commissioner besides designating the 25+ insurers who are voluntarily active in issuing coverage ("willing to insure risks within the class designated") or requiring participation of insurers, in order of descending premium level, to fulfill the law's requirement of having at least twenty-five insurers participate in the MAP.
The proposed rule complies with the mandate in ESHB 2560 that the commissioner by rule require insurers to form a MAP. The proposed rule does not vary materially from the bill's clear instructions and intention for the composition of the MAP and therefore is not a significant legislative rule. Therefore, this proposed rule does not require a cost-benefit analysis under the provisions of RCW 34.05.328 (5)(b)(iii).
June 23, 2010
Mike Kreidler
Insurance Commissioner
OTS-3218.2
FLOOD INSURANCE
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(2) The number of companies required to participate in the MAP must be sufficient to fulfill the quota of twenty-five insurers participating in the MAP.
(3) If the commissioner determines that fewer than twenty-five insurers have volunteered to issue the coverage contemplated by chapter 230, Laws of 2010, the commissioner may require the insurers to participate in a MAP under section 15, chapter 230, Laws of 2010 and this section. The commissioner will identify and notify the additional companies that are required to complete and participate in the MAP and will list their names on the commissioner's web site, www.insurance.wa.gov.
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