BILL REQ. #:  S-1798.3 

READ FIRST TIME 02/25/09.   

     AN ACT Relating to authorizing usage-based rating factors for motor vehicle insurance; adding a new section to chapter 48.19 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that:
     (1) Recent increases in gasoline prices have inflated the costs of transportation, requiring Washington families to spend more of their income on transportation and further stretching families' limited budgets;
     (2) Consistent with chapter 348, Laws of 2007, climate change, due in part to vehicles emitting greenhouse gases, is expected to have significant impacts in the Pacific Northwest region in the near and long-term future, including: Increased temperatures; declining snowpack; more frequent heavy rainfall and flooding; receding glaciers; rising sea levels; increased risks to public health due to insect and rodent-borne diseases; declining salmon populations; and increased drought and risk of forest fires;
     (3) Consistent with chapter 14, Laws of 2008, the state intends to take steps to limit and reduce emissions of greenhouse gas and reduce emissions at the lowest cost to Washington's economy;
     (4) A reduction in the average vehicle miles traveled per Washington motorist may lead to a substantive reduction in greenhouse gas emissions;
     (5) Providing insurance-based incentives to motorists to drive less may reduce overall vehicle miles traveled;
     (6) Current state automotive insurance rates do not necessarily reflect the actual miles that motorists drive;
     (7) According to the United States environmental protection agency, once an individual purchases a car, roughly eighty-eight percent of his or her transportation costs remain much the same on a monthly basis regardless of how much or how little he or she drives;
     (8) The increase in traffic density from a typical additional driver increases total statewide insurance costs of other drivers;
     (9) Implementing new programs that offer insurance on a usage basis may effectively reduce vehicle miles traveled and help the state achieve its goals to reduce gas emissions;
     (10) Verifying miles driven ensures insurance rates that more accurately reflect vehicle miles traveled and provides incentives for Washington drivers to reduce driving and emissions; and
     (11) Verifying miles driven will better enable insurance companies to charge accurate rates based on actual miles driven.

NEW SECTION.  Sec. 2   A new section is added to chapter 48.19 RCW to read as follows:
     (1) This section applies to private passenger automobile insurance and commercial automobile insurance.
     (2) As used in this section:
     (a) "Recording device" means an electronic system, and the physical device or mechanism containing the electronic system, that primarily or incidental to its primary function, preserves or records, in electronic form, data collected by sensors or provided by other systems within a motor vehicle. "Recording device" includes event data recorders, sensing and diagnostic modules, electronic control modules, automatic crash notification systems, geographic information systems, and any other device that records and preserves data that can be accessed related to the usage of that motor vehicle.
     (b) "Usage-based algorithm" means any algorithm or formula that is used in the calculation of insurance rates and is based on data that is collected from a recording device that is continuously or temporarily installed in the insured vehicle and is not available from any other source. A usage-based algorithm may also include adjustments acceptable to the commissioner that are designed to prevent the insurer's use of the algorithm from causing rates to be unfairly discriminatory.
     (c) "Usage-based insurance" means automobile insurance in which the premium is based in part on a usage-based algorithm or other information reflecting how the vehicle was operated in the reported period including, but not necessarily limited to, information reported by an insured.
     (3) Before selling usage-based insurance, an insurer must file the usage-based insurance with the commissioner and obtain the commissioner's approval. For usage-based insurance incorporating a usage-based algorithm:
     (a) The insurer may include the usage-based algorithm in its rate filing. In this case, the entire rate filing, including the usage-based algorithm, is open to public inspection after the filing becomes effective as provided under RCW 48.19.040(5).
     (b) Alternatively, the insurer may keep the usage-based algorithm confidential by filing it separately from its rates and rules. In this case, RCW 48.19.040(5) does not apply, and the usage-based algorithm is withheld from public inspection and is considered a trade secret under RCW 48.02.120(3).
     (4) The commissioner may adopt rules to implement this section.