6525.E AMH FII H4628.3

6525.E AMH FII H4628.3

ESB 6525 - H COMM AMD

By Committee on Financial Institutions & Insurance

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. The legislature finds that single premium credit insurance, when added to a loan balance and financed, reduces equity in real property and may cost purchasers of credit insurance thousands of dollars in interest payments. This insurance may also be sold using deceptive marketing practices.

NEW SECTION. Sec. 2. A new section is added to chapter 48.30 RCW to read as follows:

(1) For the purpose of this section:

(a) "Single premium credit insurance" means any credit insurance where the full premium is charged to the consumer as a whole sum at or near the inception of coverage whether that charge is made by the creditor or by the insurer.

(b) "Residential mortgage loan" means any loan primarily for personal, family, or household use secured by a mortgage or deed of trust on residential real estate upon which is constructed or intended to be constructed a single-family dwelling or multiple-family dwelling of four or less units.

(2) Single premium credit insurance products shall not be sold in connection with a residential mortgage loan unless:

(a) The borrower is given the option to buy monthly credit insurance products where the insurance premiums are not financed;

(b) The term of the single premium credit insurance coverage is not longer than the term of the loan agreement or the premiums are financed for a period not to exceed the term of the single premium credit insurance coverage;

(c) The borrower is provided a full refund of premiums if the insurance is canceled within sixty days of the date of the loan; and

(d) The borrower is provided with written notification that the purchase of the single premium credit insurance is optional and that the receipt of the loan is not contingent on the purchase of the insurance. Failure to provide this notification shall constitute an unfair or deceptive practice under RCW 19.146.0201 and 31.04.027.

(3) An insurer must comply with the terms of this section:

(a) The earlier of sixty days after the commissioner approves an insurer's credit insurance monthly product or one year after the effective date of this section, unless the insurer and the commissioner are actively engaged in making a good faith effort towards approval of the credit insurance monthly product; or

(b) One year after the effective date of this section if the insurer has not filed a credit insurance monthly product for approval.

(4) The commissioner may adopt rules establishing disclosure standards for the sale of single premium credit insurance. All disclosures to the borrower must be in writing. The disclosure statement must be signed by the borrower and the borrower must receive a copy of the signed document no later than the time of closing. Required disclosures include, but are not limited to:

(a) The cost of single premium credit insurance and related financing charges;

(b) A comparison of the cost of single premium credit insurance to comparable credit insurance described in subsection (2)(a) of this section;

(d) Notification to the borrower that the purchase of the single premium credit insurance is optional and that the receipt of the loan is not contingent on the purchase of the insurance.

NEW SECTION. Sec. 3. A new section is added to chapter 48.30 RCW to read as follows:

The prohibition under section 2 of this act does not apply to residential mortgage loans if:

(1) The loan amount does not exceed ten thousand dollars, exclusive of fees; and

(2) The repayment term of the loan does not exceed five years; and

(3) The term of the credit insurance does not exceed the repayment term of the loan.

NEW SECTION. Sec. 4. This act takes effect July 1, 2002."

ESB 6525 - H COMM AMD

By Committee on Financial Institutions & Insurance

On page 1, line 1 of the title, after "insurance;" strike the remainder of the title and insert "adding new sections to chapter 48.30 RCW; creating a new section; and providing an effective date."