WSR 10-18-083

PROPOSED RULES

OFFICE OF

INSURANCE COMMISSIONER

[ Insurance Commissioner Matter No. R 2010-06 -- Filed August 31, 2010, 3:35 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 10-14-097.

Title of Rule and Other Identifying Information: Insurers use of legal name when transacting insurance.

Hearing Location(s): OIC Tumwater Office, Training Room 120, 5000 Capitol Boulevard, Tumwater, WA, http://www.insurance.wa.gov/about/directions.shtml, on October 5, 2010, at 9:00 a.m.

Date of Intended Adoption: October 6, 2010.

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 October 4, 2010.

Assistance for Persons with Disabilities: Contact Lorie Villaflores by October 4, 2010, TTY (360) 586-0241 or (360) 725-7087.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of this proposed rule is to modify a recently adopted rule to ensure that insurers and the entities they contract with use their "legal name" when conducting insurance so that consumers and the office [of] the insurance commissioner will be able to identify which insurer is involved in any insurance transaction while not creating an operational burden for insurers.

Reasons Supporting Proposal: A draft was sent to insurers with comments solicited to ensure that the amended rule provides necessary consumer protection, supports the commissioner's market conduct oversight, and minimizes the operation burden on insurers.

Statutory Authority for Adoption: RCW 48.02.060.

Statute Being Implemented: RCW 48.05.190.

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: Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, (360) 725-7041; Implementation and Enforcement: Carol Sureau, P.O. Box 40258, Olympia, WA 98504-0258, (360) 725-7050.

No small business economic impact statement has been prepared under chapter 19.85 RCW. This rule modifies a recently adopted rule on legal name to more tightly define the instances in which a legal name is required to be used by an insurer. The end result is a reduction of the regulatory burden on insurers and those they contract with as "contracted entities," which is projected to result in a reduction of associated costs. Because no additional restrictions or costs are imposed no small business economic impact statement is required.

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) 586-3109, e-mail kacys@oic.wa.gov.

August 31, 2010

Mike Kreidler

Insurance Commissioner

OTS-3425.4


AMENDATORY SECTION(Amending Matter No. R 2008-11, filed 6/2/10, effective 7/3/10)

WAC 284-30-670   Insurers must transact business in their legal name.   (1) The commissioner is adopting this regulation as an unfair practice for the following reasons:

(a) Many insurers fail or periodically fail to comply with the legal name requirement of RCW 48.05.190(1) when transacting insurance business.

(b) When a consumer seeks assistance from the commissioner, the legal name of the company must be determined. When the consumer is unable to provide the information, the commissioner's staff must research it, which unnecessarily wastes the commissioner's resources and delays the inquiry and resolution, posing a risk of harm to the consumer.

(c) ((Insurers will not accept a lawsuit from their insured)) If ((the)) lawsuit paperwork does not identify the insurer correctly the lawsuit may be dismissed.

(2) The following definition((s apply)) applies to this section:

(((a))) "Legal name" of the insurer means the name displayed on the Washington state certificate of authority issued by the commissioner.

(((b) "Contracted entity" means an entity with which an insurer contracts to transact any aspect of the business of insurance, such as adjudicating claims, determining eligibility, or underwriting or marketing products on behalf of an insurer, and includes such entities as insurance producers, claims administrators, and managing general agents as defined in RCW 48.98.005(3).

(c) "Transacting business" includes insurance transaction, as defined in RCW 48.01.060.

(3) An insurer must identify itself by its legal name when:

(a) Transacting business with a consumer, insured, potential insured or claimant as defined in WAC 284-30-320(2); and

(b) Communicating orally, electronically, or in writing with the commissioner regarding an investigation, inquiry, enforcement matter or examination.)) (3) Insurers must take steps reasonably calculated to ensure that consumers are aware of the legal name of the insurance company with which they hold a policy or contract or are doing business. While not every written document must include the legal name to satisfy this requirement, documents used to accomplish an insurance transaction must include the legal name of the insurer.

(a) When a policy or contract is issued and at renewal, insurers must provide the legal name of the insuring company to the insured on the declarations page or other required policy or contract summary.

(b) The insurer must provide its legal name in the course of an insurance transaction, specifically including:

(i) When an insurer communicates on behalf of the insured with persons other than the insured;

(ii) All written communications concerning matters such as claims, underwriting, marketing or policyholder services.

(c) At some point before the policy or contract is issued, the insurer or their producer must inform the consumer of the legal name of the company that will issue the policy or contract.

(d) If the commissioner receives a complaint in whole or in part that involves an insurer not using its legal name when transacting insurance, the insurer must demonstrate to the commissioner's satisfaction that reasonable efforts were made to inform the complainant of its legal name.

(4) To assist the commissioner in identifying the legal name of the insurer, insurers' written communications ((with)) to the commissioner in response to any investigation, inquiry, enforcement matter or examination must ((also)) include the insurer's NAIC code.

(((4) Advertisements directed to insureds or potential insureds must clearly display the insurer's legal name and the location of its home office or principal office, as required by RCW 48.30.050.

(a) An advertisement by an insurance producer, licensee, or other marketing entity advertising an insurance product common to multiple insurers does not need to include the legal name of the insurer. The advertisement must include the insurance producer, licensee, or other marketing entity's name and address.

(b) Advertisements directed solely to insurance producers, providers, or other marketing entities, but not directed to insureds or potential insureds, are exempt from this subsection.))

(5) ((Each single)) Violation of this section by an insurer or its contracted entity may subject the insurer to all applicable provisions of Title 48 RCW((, including, but not limited to, RCW 48.05.140 and 48.05.185)).

(6) This regulation does not bar the use of trade names, group names, logos or trademarks. ((To be in compliance with RCW 48.05.190(1), when an insurer uses a trade name, group name, logo or trademark when conducting its business, the insurer must also identify itself by its legal name as required by this section.))

[Statutory Authority: RCW 48.02.060. 10-12-100 (Matter No. R 2008-11), 284-30-670, filed 6/2/10, effective 7/3/10.]

Washington State Code Reviser's Office