AN ACT Relating to
member insurers and the persons to whom coverage is available under the
Washington life and disability insurance guaranty association; and amending RCW
48.32A.020, 48.32A.030, and 48.32A.040.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
Sec. 1. RCW 48.32A.020 and 1994
c 149 s 2 are each amended to read as follows:
This chapter shall
apply as follows to life insurance policies, disability insurance policies, and
annuity contracts of impaired or insolvent insurers, other than separate
account variable policies and contracts authorized by chapter 48.18A RCW:
(1) ((To all such
policies and contracts of a domestic, foreign, or alien insurer authorized to
transact such insurance or annuity business in this state at the time such
policies or contracts were issued or at the time the insurer becomes an
impaired or insolvent insurer, and of which the policy or contract owner,
insured, annuitant, beneficiary, or payee is a resident.
(2))) To persons, regardless of where they
reside, except for nonresident certificate holders under group policies or
contracts, who are the beneficiaries, assignees, or payees of the persons
covered under subsection (2) of this section.
(2) To persons who
are owners of or certificate holders under such policies or contracts; or, in
the case of unallocated annuity contracts, to the persons who are the contract
holders, and who:
(a) Are residents;
or
(b) Are not
residents, but only under all of the following conditions:
(i) The insurers
that issued the policies or contracts are domiciled in this state;
(ii) The insurers
never held a certificate of authority in the states in which the persons
reside;
(iii) The states
have associations similar to the association created by this chapter; and
(iv) These persons
are not eligible for coverage by these associations. To policies and
contracts only of impaired or insolvent insurers.
(((3))) (4)
The obligations of the association created under this chapter shall apply only
as to contractual obligations of the insurer under insurance policies and
annuity contracts, and shall be no greater than such obligations of the
impaired or insolvent insurer. However, the liability of the association shall
in no event exceed:
(a) With respect to any
one life, regardless of the number of policies or contracts:
(i) Five hundred
thousand dollars in life insurance death benefits, including any net cash
surrender and net cash withdrawal values for life insurance;
(ii) Five hundred
thousand dollars in disability insurance benefits, including any net cash
surrender and net cash withdrawal values; or
(iii) Five hundred
thousand dollars in the present value of allocated annuity benefits and
annuities established under section 403(b) of the United States internal
revenue code.
The association shall
not be liable to expend more than five hundred thousand dollars in the
aggregate with respect to any one individual under this subsection; or
(b) With respect to any
one contract owner covered by any unallocated annuity contract, including
governmental retirement plans established under section 401 or 457 of the
United States internal revenue code, five million dollars in benefits,
irrespective of the number of such contracts held by that contract owner.
(((4))) (5)
This chapter shall not apply to:
(a) Fraternal benefit
societies;
(b) Health care service
contractors;
(c) Insurance or
liability assumed by the impaired or insolvent insurer under a contract of
reinsurance other than bulk reinsurance;
(d) Any unallocated
annuity contract issued to an employee benefit plan protected under the federal
pension benefit guaranty corporation; or
(e) Any portion of any
unallocated annuity contract which is not issued to or in connection with a
specific employee, union, association of natural persons benefit plan, or a
government lottery.
Sec. 2. RCW 48.32A.030 and 1994
c 149 s 3 are each amended to read as follows:
Within the meaning of
this chapter:
(1) "Account"
means any one of the three guaranty fund accounts created under RCW
48.32A.080(1).
(2) "Assessment"
means a charge made upon an insurer by the board under this chapter for payment
into a guaranty fund. The charge constitutes a legal liability of the insurer
so assessed.
(3)
"Association" means "the Washington life and disability
insurance guaranty association."
(4) "Board"
means the board of directors of the Washington life and disability insurance
guaranty association.
(5)
"Certificate" means a certificate of contribution provided for in RCW
48.32A.090.
(6)
"Commissioner" means the insurance commissioner of this state.
(7)
"Contributor" means an insurer that has paid an assessment.
(8) "Fund"
means a guaranty fund provided for in RCW 48.32A.080.
(9) "Impaired
insurer" means an insurer that, after June 9, 1994, is not an insolvent
insurer, and is placed under an order of rehabilitation or conservation, or a
substantially similar order, by a court of competent jurisdiction.
(10) "Insolvent
insurer" means an insurer with respect to which an order of liquidation
has been entered by a court of competent jurisdiction.
(11) "Member
insurer" means any insurer that holds a certificate of authority to
transact life insurance, disability insurance, or annuity insurance business in
this state, and includes any insurer whose license or certificate of authority
in this state has been suspended, revoked, not renewed, or voluntarily
withdrawn.
(12)
"Policies" means life or disability insurance policies;
"contracts" means annuity contracts and contracts supplemental to
such insurance policies and annuity contracts.
(((12))) (13)
"Resident" means a person who resides and is domiciled in this state
at the time an insurer is determined to be an impaired or insolvent insurer and
to whom a contractual obligation is owed. A person may be resident of only one
state, which in the case of a person other than an individual is its principal
place of business.
(((13))) (14)
"Unallocated annuity contract" means any annuity contract or group
annuity certificate which is not issued to and owned by an individual, except
to the extent of any annuity benefits guaranteed to an individual by an insurer
under such contract or certificate.
Sec. 3. RCW 48.32A.040 and 1971
ex.s. c 259 s 4 are each amended to read as follows:
(1) There is hereby
created a nonprofit unincorporated legal entity to be known as the Washington
life and disability insurance guaranty association, which shall be composed of
the commissioner, ex officio, and of each member insurer authorized to
transact life insurance, or disability insurance, or annuity business in this
state. All such insurers shall be and remain members of the association during
the continuance of, and as a condition to, their authority to transact such
business in this state.
(2) The association
shall be managed by a board of directors composed of the commissioner, ex
officio, and of not less than five nor more than nine member insurers, each of
whom shall initially be appointed by the commissioner to serve for terms of
one, two, or three years. After the initial board is appointed, the board
shall provide in its bylaws for selection of board members by member insurers
subject to the commissioner's approval; members so selected shall serve for
three year terms, acceding to office upon expiration of the terms of the
respective initial board members; and board members shall thereafter serve for
three year terms and shall continue in office until their respective successors
be selected, approved, and have qualified. At least a majority of the members
of the board shall be domestic insurers. In case of a vacancy for any reason
on the initial board appointed, the commissioner shall appoint a member insurer
to fill the unexpired term; vacancies on the board thereafter shall be filled
in the same manner as in the original selection and approval. Board members
may be reimbursed for reasonable and necessary expenses incurred in connection
with the performance of their duties.
(3) A director,
officer, employee, agent or other representative of the association or of a
member insurer, or the commissioner or his representative shall in no event be
individually liable to any person, including the association, for any act or
omission to act, or for any liability incurred or assumed, on behalf of the
association or by virtue thereof, any such liability so incurred or assumed to
be collectible only out of a fund; nor shall any insurer member of the
association be subject to any liability except for assessment as in this
chapter provided.
(4) The association
shall be under the immediate supervision of the commissioner and shall be
subject to such provisions of the insurance code of the state of Washington as
may be applicable and not inconsistent with the provisions of this chapter.
(5) The board may, upon
majority vote, make recommendations to the commissioner for the detection and
prevention of insurer insolvencies.
