Z-0855

AN ACT Relating to the licensure of insurance companies; amending RCW 48.05.340 and 48.15.090; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 48.05.340 and 1982 c 181 s 3 are each amended to read as follows:

(1) Subject to RCW 48.05.350 and 48.05.360 to qualify for authority to transact any one kind of insurance as defined in chapter 48.11 RCW or combination of kinds of insurance as shown below, a foreign or alien insurer, whether stock or mutual, or a domestic insurer hereafter formed shall possess and thereafter maintain unimpaired paid-in capital stock, if a stock insurer, or unimpaired surplus if a mutual insurer, and shall possess when first so authorized additional funds in surplus as follows:

Paid-in capital

Kind or kinds stock or Additional

of insurance basic surplus surplus

Life ................................$((~~1,000,000~~)) $((~~1,000,000~~))

2,000,000 2,000,000

Disability .......................... ((~~1,000,000~~)) ((~~1,000,000~~))

2,000,000 2,000,000

Life and disability ................. ((~~1,200,000~~)) ((~~1,200,000~~))

2,400,000 2,400,000

Property ............................ ((~~1,000,000~~)) ((~~1,000,000~~))

2,000,000 2,000,000

Marine & transportation ............. ((~~1,000,000~~)) ((~~1,000,000~~))

2,000,000 2,000,000

General casualty .................... ((~~1,200,000~~)) ((~~1,200,000~~))

2,400,000 2,400,000

Vehicle ............................. ((~~1,000,000~~)) ((~~1,000,000~~))

2,000,000 2,000,000

Surety .............................. ((~~1,000,000~~)) ((~~1,000,000~~))

2,000,000 2,000,000

Any two of the following kinds of

insurance: Property, marine &

transportation, general

casualty, vehicle, surety,

disability ...................... ((~~1,500,000~~)) ((~~1,500,000~~))

3,000,000 3,000,000

Multiple lines (all insurances

except life and title

insurance) ...................... ((~~1,500,000~~)) ((~~1,500,000~~))

3,000,000 3,000,000

Title (in accordance with the

provisions of chapter 48.29

RCW)

(2) Capital and surplus requirements are based upon all the kinds of insurance transacted by the insurer wherever it may operate or propose to operate, whether or not only a portion of such kinds are to be transacted in this state.

(3) An insurer holding a certificate of authority to transact insurance in this state immediately prior to July 1, ((~~1980~~)) 1991, may continue to be authorized to transact the same kinds of insurance as long as it is otherwise qualified for such authority and thereafter maintains unimpaired the amount of paid-in capital stock, if a stock insurer, or basic surplus, if a mutual or reciprocal insurer, and special surplus as required of it under laws in force immediately prior to such effective date; and any proposed domestic insurer which is in process of formation or financing under a solicitation permit which is outstanding immediately prior to July 1, ((~~1980~~)) 1991, shall, if otherwise qualified therefor, be authorized to transact any kind or kinds of insurance upon the basis of the capital and surplus requirements of such an insurer under the laws in force immediately prior to such effective date((~~: PROVIDED, That any applicable action pending from the period between June 8, 1967, and July 1, 1980, shall be governed by this section as then in effect~~)). The requirements for paid-in capital stock, basic surplus, and special surplus that were in effect immediately before the effective date of this section, apply to any completed application for a certificate of authority from a foreign or alien insurer that is on file with the commissioner on the effective date of this section.

Sec. 2. RCW 48.15.090 and 1980 c 102 s 4 are each amended to read as follows:

(1) A surplus line broker shall not knowingly place surplus line insurance with insurers unsound financially. The broker shall ascertain the financial condition of the unauthorized insurer, and maintain written evidence thereof, before placing insurance therewith. The broker shall not so insure with:

(a) Any foreign insurer having less than six million dollars of capital and surplus or ((combined capital funds than the minimum amounts required for an admitted multiple line insurer in accordance with RCW 48.05.340 as now or hereafter amended, and in the case of an alien insurer, there must be on file with the commissioner a copy of a trust agreement, certified by the trustee, evidencing a subsisting trust deposit of not less than one-half of a like amount by such insurer with a bank or trust company in the United States, and which deposit is held for the protection of United States policyholders. Such trust account shall consist of cash or other assets acceptable to the commissioner and shall have an expiration date which at no time shall be less than five years hence)) substantially equivalent capital funds, of which not less than one million five hundred thousand dollars is capital; or

(b) Any alien insurer, having capital and surplus or substantially equivalent capital funds of six million dollars and of less than twelve million five hundred thousand dollars beginning January 1, 1992, and fifteen million dollars beginning January 1, 1993. Such alien insurers must have in force in the United States an irrevocable trust account, in a qualified United States financial institution, on behalf of United States policyholders of not less than two million five hundred thousand dollars and consisting of cash, securities, letters of credit, or of investments of substantially the same character and quality as those which are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state. There must be on file with the commissioner a copy of the trust, certified by the trustee, evidencing a subsisting trust deposit having an expiration date which at no time shall be less than five years. Such trust fund shall be included in the calculation of the insurer's capital and surplus or its equivalents; or

(c) Any unincorporated group of individual insurers maintaining a trust fund of less than fifty million dollars as security to the full amount thereof for all policyholders in the United States of each member of the group, and such trust shall likewise comply with the terms and conditions established in (b) of this subsection for an alien insurer; or

(d) Any insurance exchange created by the laws of an individual state, maintaining capital and surplus, or substantially equivalent capital funds of less than fifty million dollars in the aggregate. For insurance exchanges which maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall maintain minimum capital and surplus, or the substantial equivalent thereof, of not less than six million dollars. In the event the insurance exchange does not maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall meet the minimum capital and surplus requirements of (a) of this subsection.

(2) The commissioner may, by rule ((~~and regulation,~~)):

(a) Increase the financial requirements under subsection (1) of this section by not more than one million dollars in any twelve-month period, but in no case may the requirements exceed fifteen million dollars; or

(b) Prescribe the terms under which the foregoing financial requirements may be waived in circumstances where insurance cannot be otherwise procured on risks located in this state.

((~~(2)~~)) (3) For any violation of this section the broker may be fined not less than one hundred dollars or more than five thousand dollars, ((~~his~~)) and in addition to or in lieu thereof the surplus line broker's license may be revoked, suspended, or nonrenewed.

NEW SECTION. Sec. 3. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1991.