CERTIFICATION OF ENROLLMENT

 

                        SENATE BILL 6292

 

 

                    Chapter 98, Laws of 1996

 

 

                        54th Legislature

                      1996 Regular Session

 

 

       LIFE AND DISABILITY INSURANCE GUARANTY ASSOCIATION

 

 

                    EFFECTIVE DATE:  6/6/96

Passed by the Senate February 10, 1996

  YEAS 46   NAYS 0

 

 

 

            JOEL PRITCHARD

President of the Senate

 

Passed by the House March 1, 1996

  YEAS 97   NAYS 0

             CERTIFICATE

 

I, Marty Brown, Secretary of the Senate of the State of Washington, do hereby certify that the attached is SENATE BILL 6292 as passed by the Senate and the House of Representatives on the dates hereon set forth.

 

 

 

             CLYDE BALLARD

Speaker of the

      House of Representatives

             MARTY BROWN

                            Secretary

 

 

Approved March 15, 1996 Place Style On Codes above, and Style Off Codes below.

                                FILED          

 

 

           March 15, 1996 - 3:29 p.m.

 

 

 

              MIKE LOWRY

Governor of the State of Washington

                   Secretary of State

                  State of Washington


          _______________________________________________

 

                         SENATE BILL 6292

          _______________________________________________

 

             Passed Legislature - 1996 Regular Session

 

State of Washington      54th Legislature     1996 Regular Session

 

By Senators Prentice, Sellar, Fraser and Quigley; by request of Insurance Commissioner

 

Read first time 01/10/96.  Referred to Committee on Financial Institutions & Housing.

 

Defining member insurers and who they cover.


    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.


    Passed the Senate February 10, 1996.

    Passed the House March 1, 1996.

Approved by the Governor March 15, 1996.

    Filed in Office of Secretary of State March 15, 1996.