Brief Description: Exempting certain insurance policy forms from filing requirements.

Sponsors: Representatives Simpson, D., Benson, Schual-Berke and Rockefeller; by request of Insurance Commissioner.

Hearing Date: 2/4/04

Staff: Carrie Tellefson (786-7127).

Background:

Insurance Commissioner Approval of Rates and Forms:

In general, insurers must file insurance rates and insurance forms (contracts) for review and approval by the Insurance Commissioner (Commissioner). Insurers may not use the rates and forms until they have been approved with certain exceptions. One exception is commercial property casualty forms, which may be issued prior to filing the rates or forms. These rates and forms must be filed with the Commissioner within 30 days after an insurer issues any policy using them.

Commercial insurance pertains to a business, profession, occupation, nonprofit organization, or public entity for certain lines of insurance, such as property insurance, marine and transportation insurance, and general casualty insurance (including liability insurance).

The Commissioner may suspend or modify the requirement of a form or rate filing if the Commissioner believes filing is not necessary for the protection of the public. The Commissioner has, by rule, suspended the rate filing requirement for certain large commercial accounts. Under the rule, large commercial property casualty accounts are those purchased by an entity with experience to negotiate with and meet any two of the following criteria: Annual premiums of $100,000 or more, excluding workers compensation and certain other types of coverage; net revenues or sales in excess of $100 million; more than 200 employees; net worth over $50 million; not-for-profit organization or public entity with an annual budget or assets of at least $45 million; or municipality with a population over 50,000. In addition, before an insurer can issue a policy under the exemption, the insurer must notify the prospective insured, in writing, that the rates will not be filed with the Commissioner.

While the Commissioner has, by rule, suspended the rate filing requirement for commercial property casualty rates, the Commissioner lacks the authority to suspend the form filing requirement with respect to commercial forms. The result is that the rates for commercial policies are exempt from the filing requirements, but the forms must be filed.

Rating organizations make filings on behalf of subscriber insurers. Rating organizations must apply for, qualify, and receive a license from the Commissioner prior to making filings on behalf of insurers.

Manuscript insurance policies are one-of-a-kind policies that pertain to unique needs.

Summary of Bill:

The Commissioner may, by rule, exempt commercial property casualty forms from the filing requirement.

Manuscript policies, riders, or endorsements are specifically exempt from the form filing requirements.

The general requirement that insurance forms must be filed and approved is amended to exempt from the application of this requirement: Surety bond forms, forms filed under the commercial forms statute, forms exempt from filing under the commercial forms statute, and manuscript policies.

Insurers that subscribe to rating organizations must use the forms filed by the rating organization. If a subscriber wants to use different forms, it must file that form separately with the Commissioner.

Appropriation: None.

Fiscal Note: Not requested.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.