FINAL BILL REPORT

SHB 1202

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.

Background:

The Insurance Commissioner (Commissioner) oversees individual and group life insurance contracts that are issued or delivered in this state.

Under the insurance code, the state is a member of the Interstate Insurance Product Regulation Compact (Compact). The Compact became operational in May of 2006. The Compact is the legal arrangement. It creates an Interstate Insurance Product Regulation Commission (Commission). The Commission will develop product standards and receive, review, and approve products. A standard must be approved by two-thirds of the members of the Commission before it can be adopted. Each compacting state has one representative on the Commission. The Commissioner is the representative from the state. The state may opt-out of a product standard in either of two ways. First, legislation may be enacted to opt out of any product standard at any time for any reason. Second, the state may also opt-out by rule-making of the Office of the Insurance Commissioner (OIC). To opt-out by rule, the OIC must make specific findings of fact and conclusions of law in determining that the standard does not provide reasonable protections to the citizens of the state.

An insurer may file products for approval with the OIC for use in this state. Instead of, or in addition to, filing a product with the OIC, an insurer may file a product for approval with the Commission prior to use by the insurer. A product approved by the Commission may be used in any compacting state, including this state.

The practice of law is overseen by the Washington Supreme Court (Supreme Court). A person who provides legal services, who is not a licensed lawyer or otherwise authorized by law to provide legal services, may be engaging in the unauthorized practice of law. The unauthorized practice of law is a crime in this state.

Summary:

A life insurer may include specific noninsurance benefits as part of a policy of individual or group life insurance, with the prior approval of the Commissioner, such as:

will preparation services;
financial planning and estate planning services;
probate and estate settlement services; and
other services adopted by rule of the Commissioner.

The Commissioner is not required to approve any particular proposed noninsurance benefit. Any proposed noninsurance benefit that the Commissioner determines may tend to promote or facilitate a violation of the insurance code may be disapproved by the Commissioner.

The Commissioner may adopt rules to ensure disclosure of the noninsurance benefits.

Persons or businesses providing the noninsurance services must be appropriately licensed. The authority and ethical obligations of those who are authorized by the Supreme Court to practice law in this state is not affected. The prohibition against the unauthorized practice of law is not affected. The application of the state securities laws is not affected.

Votes on Final Passage:

House	97	0
Senate	44	0