WSR 18-21-104
PROPOSED RULES
OFFICE OF THE
INSURANCE COMMISSIONER
[Insurance Commissioner Matter No. R 2018-11—Filed October 16, 2018, 1:17 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 18-17-143.
Title of Rule and Other Identifying Information: Risk mitigation.
Hearing Location(s): On November 27, 2018, at 12:00 p.m., at the Office of the Insurance Commissioner, 5000 Capitol Boulevard S.E., Tumwater, WA 98501.
Date of Intended Adoption: November 28, 2018.
Submit Written Comments to: David Forte, P.O. Box 40260, Olympia, WA 98504-0260, email rulescoordinator@oic.wa.gov, fax 360-586-3109, by November 26, 2018.
Assistance for Persons with Disabilities: Contact Lorie Villaflores, phone 360-725-7087, TTY 360-586-0241, email LorieV@oic.wa.gov, by November 26, 2018.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The commissioner will consider adopting rules for property insurers, except commercial, to provide goods and/or services to their insureds in order to mitigate or prevent losses.
Reasons Supporting Proposal: During the 2018 legislative session, the legislature enacted chapter 239, Laws of 2018 (SHB 2322) which has been codified in RCW
48.18.558,
48.18.559, and
48.19.530. This law allows property insurers, except commercial, to provide certain goods and/or services to its insured and not be in violation of inducement laws. RCW
48.18.559 allows the commissioner to consider adopting rules to address the notice to insureds about their ability to opt out of risk reduction programs, to increase the value of goods and/or services allowed, establishment of pilot programs by property insurers, and to identify what emergency response activities by property insurers are exempt from RCW
48.18.558,
48.19.530,
48.30.140, and
48.30.150.
Statutory Authority for Adoption: RCW 48.02.60 [48.02.060] and
48.18.559.
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: David Forte, P.O. Box 40260, Olympia, WA 98504-0260, 360-725-7042; Implementation and Enforcement: Molly Nollette, P.O. Box 40255, Olympia, WA 98504-0255, 360-725-7100.
A school district fiscal impact statement is not required under RCW
28A.305.135.
A cost-benefit analysis is required under RCW
34.05.328. A preliminary cost-benefit analysis may be obtained by contacting David Forte, P.O. Box 40260, Olympia, WA 98504-0260, phone 360-725-7042, email
davidf@oic.wa.gov.
This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:
Explanation of exemptions: The businesses that must comply with the proposed rule are not small businesses, under chapter
19.85 RCW. The office of the insurance commissioner has found that none of the existing insurance issuers impacted by the proposed rule may be considered small businesses under RCW
19.85.020(2).
October 16, 2018
Mike Kreidler
Insurance Commissioner
Chapter 284-33 WAC
RISK REDUCTION FOR PROPERTY INSURANCE
NEW SECTION
WAC 284-33-005Definitions.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise:
(1) A "risk reduction program" means a program by a property insurance company to reduce either the probability of loss or extent of loss, or both, from a covered event as described in RCW
48.18.558(1) by supplying its named insured with either goods or services, or both, as described in WAC 284-33-030(1).
(2) "Commercial property insurance" means insurance pertaining to a business, profession, occupation, nonprofit organization, or public entity for the line of property insurance as defined in RCW
48.11.040.
NEW SECTION
WAC 284-33-010Purpose and scope.
(1) For property insurers' risk reduction programs for covered events, except commercial property insurance;
(2) For property insurers' pilot risk reduction programs for covered events, except commercial property insurance; and
NEW SECTION
WAC 284-33-015Conditions of the risk reduction program, pilot risk reduction program, and disaster or emergency response activity.
(1) Each insurer conducting any risk reduction program, pilot risk reduction program, or disaster or emergency response activity must maintain records regarding the insured's involvement with the risk reduction program, pilot risk reduction program, or disaster or emergency response activity for three years after its conclusion, and the record must be made available to the commissioner upon request.
(2) If the commissioner finds that a risk reduction program, pilot risk reduction program, or disaster or emergency response activity is in violation of any provision of either Title
48 RCW or 284 WAC, or both, the commissioner may order the insurer to end the risk reduction program, pilot risk reduction program, or disaster or emergency response activity.
NEW SECTION
WAC 284-33-020Notice to insureds participating in risk reduction program.
(1) The insurer must provide a clear and conspicuous notice to the named insured participating in either a risk reduction program, pilot risk reduction program, or both, that accurately describes the right to opt out. The notice must:
(a) Identify and describe all risk reduction programs being offered to the insured;
(b) State the goods provided in a program are owned by the named insured, even if the insurance is subsequently canceled or nonrenewed;
(c) Inform the named insured they may opt out of a program at any time;
(d) State that if an insured opts out of a program the premium cost of the policy may change; and
(e) Include a reply form that contains the opt out notice information.
(2) If an insurer communicates with the insured electronically, the insurer may deliver the reply form and opt out notice information electronically, as an electronic form, and the insured may reply to the opt out option via electronic signatures and electronic attestation, in accordance with 15 U.S.C. Sec. 7001 and chapter
48.185 RCW. Electronic communication shall have the same force and effect as paper communications.
(3) The notice to opt out must be included at policy inception or, if the policy is already in effect, at the beginning of a risk reduction program or pilot risk reduction program.
(4) If a named insured elects to opt out of a risk reduction program and later requests to rejoin, an insurer must allow the named insured to rejoin at the earliest reasonable time available in the program.
(5) If a named insured elects to opt out of a pilot risk reduction program, an insurer may allow the insured to rejoin if the opportunity is available.
NEW SECTION
WAC 284-33-030Goods and services.
(1) All goods or services, or both, that are approved by the commissioner to be included within a property insurer's risk reduction program must be implemented by the insurer to reduce either the probability of damage or extent of damage, or both, by a peril covered under the property policy, and may include:
(a) Smoke alarms;
(b) Fire extinguishers;
(c) Natural gas detectors;
(d) Brush and other wildfire fuel source removal services;
(e) Water monitors;
(f) Water shut off systems;
(g) Earthquake strapping;
(h) Locking mechanisms to secure property;
(i) Lightning protection devices;
(j) Security lighting;
(k) Security camera systems;
(l) Home safety monitoring systems;
(m) Educational material on home safety; and
(n) Other goods or services, or both, the commissioner may approve through a form filing.
(2) A voucher provided from the insurer to the insured for either goods or services, or both, is only permissible for those items as described in subsection (1) of this section and must fully redeem either the goods or services, or both, being used in the risk reduction program.
NEW SECTION
WAC 284-33-040Pilot program filing.
(1) To qualify as a pilot program as described in RCW
48.18.558(6), a form for the pilot risk reduction program must be filed with and approved by the commissioner prior to offer to insured.
(2) Within the submitted form of the pilot risk reduction program, the insurer must provide the same information it offers its participants of the pilot risk reduction program, including:
(a) The intent of the pilot risk reduction program;
(b) A description of either the goods or services, or both, offered in the pilot risk reduction program; and
(c) The intended start date of the pilot risk reduction program.
NEW SECTION
WAC 284-33-050Identifying disaster or emergency response activity.
To be exempt from RCW
48.18.558,
48.19.530,
48.30.140, and
48.30.150, all disaster or emergency response activity by property insurers must be as a result of imminent threat of damage to an insured's covered property and must be undertaken to either prevent or mitigate, or both, damage from a covered event to the insured's property and may include:
(1) Wildfire suppression and defense measures; and
(2) Floodwater diversion and sandbagging.