HOUSE BILL REPORT
HB 2594
This analysis was prepared by non-partisan legislative staff for the use of legislative members in
their deliberations. This analysis is not a part of the legislation nor does it constitute a
statement of legislative intent.
As Reported by House Committee On:
Insurance, Financial Services & Consumer Protection
Title: An act relating to distributing the insurance commissioner's examination reports.
Brief Description: Distributing the insurance commissioner's examination reports.
Sponsors: Representatives Kirby, Ormsby, Kenney and Upthegrove; by request of Insurance Commissioner.
Brief History:
Insurance, Financial Services & Consumer Protection: 1/15/08 [DP].
Brief Summary of Bill |
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HOUSE COMMITTEE ON INSURANCE, FINANCIAL SERVICES & CONSUMER PROTECTION
Majority Report: Do pass. Signed by 8 members: Representatives Kirby, Chair; Kelley, Vice Chair; Roach, Ranking Minority Member; Hurst, Loomis, Santos, Simpson and Smith.
Staff: Jon Hedegard (786-7127).
Background:
Examinations by the Insurance Commissioner
Under the Insurance Code, the Insurance Commissioner is authorized to examine the
financial affairs, transactions, accounts, records, documents, assets, and business practices of
regulated entities (these entities include insurers, health care service contractors, health
maintenance organizations, and other persons or corporations involved in the business of
insurance).
Financial examinations - The Insurance Commissioner is authorized to examine the financial
affairs, transactions, accounts, records, documents, and assets of regulated entities (these
entities include insurers, health care service contractors, health maintenance organizations,
and other persons or corporations involved in the business of insurance) at least every five
years. In conducting an examination, the Insurance Commissioner must be given access to
accounts, records, documents, and files relating to the subject of the examination.
Market analyses and market conduct examinations - The Insurance Commissioner may also
undertake a market analyses or a market conduct examinations. In 2007, the Legislature
passed ESSB 5717 which established a new statutory framework for market analyses and
market conduct examinations. In a market analysis, staff for the Office of the Insurance
Commissioner (OIC) collect and use information to develop a baseline understanding of the
market and determine if a regulated entity is deviating from the norm or engaging in a
practice that may be detrimental to consumers. A market analysis may lead to some sort of
action to remedy a practice of a regulated entity. It may also lead to a more thorough market
conduct review of a regulated entity. Market conduct actions must focus on general business
practices and compliance activities instead of infrequent or unintentional random errors. The
Insurance Commissioner may determine that the market conduct action has not sufficiently
addressed the business practices of a regulated entity and decide to have a market conduct
examination. In conducting a market conduct examination, the Insurance Commissioner
must be given access to accounts, records, documents, and files relating to the subject of the
examination.
Examination Reports
Within 60 days after completing an examination, the Insurance Commissioner must make a
full certified written report containing facts, conclusions, and recommendations. A copy of
the report is provided to the examined entity not less than 10 days and not more than 30 days
prior to the filing of the report for public inspection. If the examined entity requests in
writing within this time period, the Insurance Commissioner must hold a hearing to consider
objections to the report as proposed, and must not file the report until after the hearing and
after any necessary modifications in the report have been made. Within 30 days of this time
period, the Insurance Commissioner must consider the report, together with any written
submissions or rebuttals and any relevant portions of the examiner's workpapers and enter an
order that may be appealed. The order may:
Examination Report Confidentiality
After adopting an examination report, the Insurance Commissioner must continue to hold the
content of the examination report as private and confidential information for a period of five
days except that the order may be disclosed to the examined entity. After that time, the
Insurance Commissioner may open the report for public inspection so long as no court of
competent jurisdiction has stayed its publication. The Insurance Commissioner may
withhold from public inspection any examination or investigation report for so long as he or
she deems it advisable.
Summary of Bill:
The Insurance Commissioner may provide copies of financial examination reports to an
examined entity by certifiable electronic means instead of sending the report by certified mail
to the entity.
Appropriation: None.
Fiscal Note: Not requested.
Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony:
(In support) There is a need to deliver examination information to entities and their directors.
The law requires certified hard copies delivered to the entity and to the residence of the
director. The bill allows the Insurance Commissioner the option of using modern technology.
Information sent electronically to a director must be sent to the personal e-mail of a director.
The information can be delivered more quickly. Additionally, there may be some
cost-savings. There must be a record of the delivery, whether by mail or electronically.
While there is a reason to send the information to a director personally, not all directors want
to receive these at home. The bill still requires a director to receive the information
personally but they now can get it electronically.
Persons Testifying: Mary Clogston, Office of the Insurance Commissioner; and Mike Kapphahn, Farmers Insurance Group.