BILL REQ. #:  H-0577.1 

Read first time 01/18/2005.   Referred to Committee on Financial Institutions & Insurance.

     AN ACT Relating to underwriting medical malpractice coverage; adding a new section to chapter 48.19 RCW; and adding a new section to chapter 48.18 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 48.19 RCW to read as follows:
     (1) For the purposes of this section, "underwrite" means the process of selecting, rejecting, or pricing a risk, and includes each of these processes:
     (a) Evaluation, selection, and classification of risk;
     (b) Application of rates, rating rules, and classification plans to risks that are accepted; and
     (c) Determining eligibility for:
     (i) Coverage provisions;
     (ii) Providing or limiting the amount of coverage or policy limits; or
     (iii) Premium payment plans.
     (2) Each medical malpractice insurer must file its underwriting rules, guidelines, criteria, standards, or other information the insurer uses to underwrite medical malpractice coverage. However, an insurer is excluded from this requirement if the insurer is ordered into rehabilitation under chapter 48.31 or 48.99 RCW.
     (a) Every filing of underwriting information must identify and explain:
     (i) The class, type, and extent of coverage provided by the insurer;
     (ii) Any changes that have occurred to the underwriting standards; and
     (iii) How underwriting changes are expected to affect future losses.
     (b) The information under (a) of this subsection must be filed with the commissioner at least thirty days before it becomes effective and is subject to public disclosure upon receipt by the commissioner.

NEW SECTION.  Sec. 2   A new section is added to chapter 48.18 RCW to read as follows:
     (1) For the purposes of this section:
     (a) "Adverse action" includes, but is not limited to, the following:
     (i) Cancellation, denial, or nonrenewal of medical malpractice insurance coverage;
     (ii) Charging a higher insurance premium for medical malpractice insurance than would have been charged, whether the charge is by any of the following:
     (A) Application of a rating rule;
     (B) Assignment to a rating tier that does not have the lowest available rates; or
     (C) Placement with an affiliate company that does not offer the lowest rates available to the insured within the affiliate group of insurance companies; or
     (iii) Any reduction or adverse or unfavorable change in the terms of coverage or amount of any medical malpractice insurance, including, but not limited to, the following: Coverage provided to the insured physician is not as broad in scope as coverage requested by the insured physician but is available to other insured physicians of the insurer or any affiliate.
     (b) "Affiliate" has the same meaning as in RCW 48.31B.005(1).
     (c) "Claim" means a demand for payment by an allegedly injured third party under the terms and conditions of an insurance contract.
     (d) "Tier" has the same meaning as in RCW 48.18.545(1)(h).
     (2) When an insurer takes adverse action against an insured, the insurer may consider the following factors only in combination with other substantive underwriting factors:
     (a) An insured has inquired about the nature or scope of coverage under a medical malpractice insurance policy;
     (b) An insured has notified the insurer, pursuant to the provisions of the insurance contract, about a potential claim, which did not ultimately result in the filing of a claim; or
     (c) A claim was closed without payment.