BILL REQ. #:  Z-1045.2 

Read first time 01/20/2004.   Referred to Committee on Financial Institutions & Insurance.

     AN ACT Relating to a joint underwriting association for persons and entities that provide services to children and vulnerable adults; amending RCW 48.88.010, 48.88.020, 48.88.030, 48.88.040, 48.88.050, and 48.88.070; and adding new sections to chapter 48.88 RCW.

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

Sec. 1   RCW 48.88.010 and 1986 c 141 s 1 are each amended to read as follows:
     ((Day care service providers)) Persons and entities that provide services to children and vulnerable adults have experienced major problems in both the availability and affordability of liability insurance. Premiums for such insurance policies have recently grown ((as much as five hundred percent)) and the availability of such insurance in Washington markets has greatly diminished.
     The availability of quality ((day care)) services for children and vulnerable adults is essential to achieving such goals as increased work force productivity, family self-sufficiency, and protection for adults and children at risk ((due to poverty and abuse)). The unavailability of adequate liability insurance threatens to decrease the availability of ((day care)) essential services for children and vulnerable adults.
     This chapter is intended to remedy the problem of unavailable liability insurance ((for day care services)) by requiring all insurers authorized to write ((commercial or professional liability)) general casualty insurance to be members of a joint underwriting association created to provide liability insurance for ((day care services)) persons and entities who provide services to children and vulnerable adults.

Sec. 2   RCW 48.88.020 and 1986 c 141 s 2 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Association" means the joint underwriting association established ((pursuant to the provisions of)) under this chapter.
     (2) (("Day care)) "Board" means the governing board of the association.
     (3) "Liability insurance" means insurance coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death or injury of any person as the result of negligence or malpractice in rendering professional service by any licensee.
     (((3))) (4) "Licensee" means any ((person)) nonprofit entity or facility ((licensed to provide day care)) providing services ((pursuant to chapter 74.15 RCW)) to children or vulnerable adults that:
     (a) Is licensed or regulated under Title 70 or 74 RCW; or
     (b) Contracts with the department of social and health services to provide the services.
     (5) "Vulnerable adult" has the same meaning as in RCW 74.34.020(13) and 74.34.021.

Sec. 3   RCW 48.88.030 and 1986 c 141 s 3 are each amended to read as follows:
     (1) The commissioner ((shall approve by July 1, 1986,)) must appoint a board by July 1, 2004. The governing board is subject to supervision by the commissioner. Members of the governing board may be reimbursed by the association for actual and necessary expenses incurred to attend meetings.
     (2) The board must develop a reasonable plan ((for the establishment of)) of operation to establish a nonprofit, joint underwriting association for ((day care)) liability insurance, subject to the conditions and limitations contained in this chapter.
     (3) The association must offer coverage by January 1, 2005.

Sec. 4   RCW 48.88.040 and 1986 c 141 s 4 are each amended to read as follows:
     The association shall be comprised of all insurers possessing a certificate of authority to write and engage in writing ((property and)) general casualty insurance within this state on a direct basis, including the liability portion of multiperil policies, but not of ocean marine insurance. Every such insurer shall be a member of the association and shall remain a member as a condition of its authority to continue to transact business in this state.

Sec. 5   RCW 48.88.050 and 1986 c 141 s 5 are each amended to read as follows:
     Any licensee may apply to the association to purchase ((day care)) liability insurance, and the association shall offer a policy with reasonable liability limits ((of at least one hundred thousand dollars per occurrence)) as determined by the commissioner based on standard insurance industry practices. The commissioner shall require the use of a rating plan for ((day care)) liability insurance that permits rates to be modified for individual licensees according to the type, size and past loss experience of the licensee including any other difference among licensees that can be demonstrated to have a probable effect upon losses.

NEW SECTION.  Sec. 6   A new section is added to chapter 48.88 RCW to read as follows:
     The commissioner may select one or more insurers to manage the operations of the association established under this chapter. Every managing insurer must be admitted to transact the business of insurance in the state of Washington.

Sec. 7   RCW 48.88.070 and 1986 c 141 s 7 are each amended to read as follows:
     The commissioner may adopt all rules necessary to ensure the efficient, equitable operation of the association, including but not limited to, rules requiring or limiting certain policy provisions or requiring development and implementation of risk management programs.

NEW SECTION.  Sec. 8   A new section is added to chapter 48.88 RCW to read as follows:
     The association is not a member of the guaranty fund created under chapter 48.32 RCW. The guaranty fund, this state, and any political subdivisions are not responsible for the losses sustained by the association.