WSR 20-21-082
PROPOSED RULES
OFFICE OF THE
INSURANCE COMMISSIONER
[Insurance Commissioner Matter R 2020-09—Filed October 19, 2020, 2:52 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 20-12-087.
Title of Rule and Other Identifying Information: Life insurance - behavioral change incentives (SHB 6052).
Hearing Location(s): On December 2, 2020, at 10:00 a.m. Via Zoom. Detailed information for attending the Zoom meeting posted on the office of the insurance commissioner (OIC) website here: https://www.insurance.wa.gov/life-insurance-behavioral-change-incentives-r-2020-09. Due to the COVID-19 public health emergency, this hearing will be held via Zoom.
Date of Intended Adoption: December 1, 2020.
Submit Written Comments to: Scott Bird, P.O. Box 40260, Olympia, WA 98504-0260, email rulescoordinator@oic.wa.gov, fax 360-586-3109, by December 1, 2020.
Assistance for Persons with Disabilities: Contact Melanie Watness, phone 360-725-701 [7013], fax 360-586-2023, TTY 360-586-0241, email MelanieW@oic.wa.gov, by December 1, 2020.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The commissioner proposes creating new regulations to provide guidance and establish standards to ensure incentives intended to influence consumer behavior are directed toward protecting policyholders' privacy rights and protecting consumers in the administration of life insurance products. The anticipated effect of the proposed rules is to provide guidance to insurers and implement the legislative amendments made to RCW
48.30.140,
48.30.150,
48.30.155, and
48.23.525 by passage of SSB 6052.
Reasons Supporting Proposal: The legislature passed SSB 6052 during the 2020 legislative session. The bill exempts life insurers offering products or services that are intended to incentivize behavioral changes from other insurance rebating and inducement statutes in Title
48 RCW. Based on the legislation, OIC needs to develop rules to establish standards for ensuring that incentives are directed to sharing the benefit of improving risk experience, minimum product or service standards to protect policyholder privacy rights and safeguard consumer protection in the administration of these products and services.
Statute Being Implemented: SSB 6052 (chapter 197, Laws of 2020, effective date July 1, 2020).
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: Scott Bird, P.O. Box 40260, Olympia, WA 98504-0260, 360-725-7036; Implementation: Melanie Anderson, P.O. Box 40260, Olympia, WA 98504-0260, 360-725-7000; and Enforcement: Toni Hood, P.O. Box 40260, Olympia, WA 98504-0260, 360-725-7000.
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 Bode Makinde, P.O. Box 40260, Olympia, WA 98504-0260, phone 360-725-7170, fax 360-586-3109, TTY 360-586-0241, email
bodem@oic.wa.gov.
This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:
Is exempt under RCW
19.85.025(3) as the rule content is explicitly and specifically dictated by statute.
Explanation of exemptions: The domestic insurers that are affected by this rule are large, interstate insurers and are not small businesses as defined in RCW
19.85.020(3).
The proposed rule does not impose more-than-minor costs on businesses. Following is a summary of the agency's analysis showing how costs were calculated.
Section 1 - Rule groups and their status relative to RFA analysis.
Rule Group | WAC | Exemption Category |
The purpose of these rules is to set standards for regulating non-insurance benefits permitted under RCW 48.23.525 (1)(d) related to any policy of individual life insurance that are intended to incent behavioral changes that improve the health and reduce the risk of death of the insured and establish the minimum practices required in the administration of such non-insurance benefits. These rules apply to the products or services permitted under RCW 48.23.525 (1)(d) related to individual life insurance policies governed by chapter 48.23 RCW. All other requirements applicable to life insurers pursuant to chapter 48.23 RCW and 284-23 WAC apply to life insurers providing such products or services, unless specifically stated otherwise in statute or rule. | 284-23-850 | |
Any advertisement for an individual life insurance policy that provides non-insurance benefits permitted under RCW 48.23.525 (1)(d) that incent healthy behavioral changes that improve the health and reduce the risk of death of the insureds, must clearly identify and explain the type of products or services offered, provide a description of the requirements for an insured to receive those products or services, and the cost associated with participation in using such products and services and the penalties , if any, for the insured who does not enroll or terminates participation in using such products and services. | 284-23-860 | |
No insurer offering non-insurance benefits permitted under RCW 48.23.525 (1)(d) that incent healthy behavioral changes that improve the health and reduce the risk of death of the insureds in an individual life insurance policy shall make, issue or circulate, or cause to be made, issued or circulated any misrepresentation of the terms of any such product or service or the benefits or advantages promised, or use any name or title of any policy or class of policies misrepresenting the nature thereof. | 284-23-870 | |
Any insurer including their appointed producer, contractor, managing general agent, or third party administrator who offers or administers non-insurance benefits permitted under RCW 48.23.525 (1)(d) that incent healthy behavioral changes that improve the health and reduce the risk of death of the insureds is subject to the privacy requirements of chapter 284-04 WAC. | 284-23-880 | |
Section 2 – Cost of compliance/minor cost threshold.
The domestic insurers that are affected by this rule are large, interstate insurers and are not small businesses as defined in RCW
19.85.020(3). OIC applied a default cost of compliance (
$100) when analyzing whether the rules would have a disproportionate impact on small businesses as defined in RCW
19.85.020(3). Below are calculations for minor cost thresholds across all impacted industries based on the best analogous NAICS types. For these reasons, the proposed rules do not impose more-than-minor costs on businesses as defined by RCW
19.85.020(2).
2017 Industry NAICS Code | NAICS Code Title | Minor Cost Estimate | Average Annual Employment | 1% of Avg annual payroll | 0.3% of Avg Annual Gross Business Income |
524113 | Direct life insurance carriers | 25599.65 | 2,787 | $25,599.65 2018 Dataset pulled from USBLS | $3,520.62 2018 Dataset pulled from DOR |
524114 | Direct health and medical insurance carriers | 228929.41 | 6,777 | $88,030.57 2018 Dataset pulled from USBLS | $228,929.41 2018 Dataset pulled from DOR |
A copy of the detailed cost calculations may be obtained by contacting Bode Makinde, P.O. Box 40260, Olympia, WA 98504-0260, phone 360-725-7170, fax 360-586-3109, TTY 360-586-0241, email bodem@oic.wa.gov.
October 19, 2020
Mike Kreidler
Insurance Commissioner
INCENTIVIZED BENEFITS FOR INDIVIDUAL LIFE INSURANCE
NEW SECTION
WAC 284-23-850Purpose and scope.
The purpose of these rules is to set standards for regulating noninsurance benefits permitted under RCW
48.23.525 (1)(d) related to any policy of individual life insurance that are intended to incent behavioral changes that improve the health and reduce the risk of death of the insured and establish the minimum practices required in the administration of such noninsurance benefits. These rules apply to the products or services permitted under RCW
48.23.525 (1)(d) related to individual life insurance policies governed by chapter
48.23 RCW. All other requirements applicable to life insurers pursuant to chapters
48.23 RCW and 284-23 WAC apply to life insurers providing such products or services, unless specifically stated otherwise in statute or rule.
NEW SECTION
WAC 284-23-860Advertising requirements.
(1) Any advertisement for an individual life insurance policy that provides noninsurance benefits permitted under RCW
48.23.525 (1)(d) that incent healthy behavioral changes that improve the health and reduce the risk of death of the insureds, must contain the following disclaimer:
"Products or services offered under the (program/product name) program are not insurance and are subject to change. For more information, please contact the company at (website address) or via telephone at (number)."
(2) Any advertisement for an individual life insurance policy with noninsurance benefits that has additional costs or participation requirements for these products or services must also contain the following language in the disclaimer, as applicable:
(a) "There are additional costs associated with these products or services"; and/or
(b) "There are additional requirements associated with participation in the program."
(3) Any advertisement for an individual life insurance policy with noninsurance benefits that has penalties for terminating participation for these products or services must also contain the following language in the disclaimer, as applicable:
"There may be penalties for terminating participation in this program."
NEW SECTION
WAC 284-23-870Misleading offers to incentivize behavior.
No insurer offering noninsurance benefits permitted under RCW
48.23.525 (1)(d) that incent healthy behavioral changes that improve the health and reduce the risk of death of the insureds in an individual life insurance policy shall make, issue or circulate, or cause to be made, issued or circulated any misrepresentation of the terms of any such product or service or the benefits or advantages promised, or use any name or title of any policy or class of policies misrepresenting the nature thereof.
NEW SECTION
WAC 284-23-880Privacy.
Any insurer including their appointed producer, contractor, managing general agent, or third-party administrator who offers or administers noninsurance benefits permitted under RCW
48.23.525 (1)(d) that incent healthy behavioral changes that improve the health and reduce the risk of death of the insureds is subject to the privacy requirements of chapter 284-04 WAC.