BILL REQ. #:  S-4312.1 

READ FIRST TIME 01/28/10.   

     AN ACT Relating to surplus line coverage; and amending RCW 48.15.040 and 48.19.410.

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

Sec. 1   RCW 48.15.040 and 1983 1st ex.s. c 32 s 4 are each amended to read as follows:
     If certain insurance coverages cannot be procured from authorized insurers, such coverages, hereinafter designated as "surplus lines," may be procured from unauthorized insurers subject to the following conditions:
     (1) The insurance must be procured through a licensed surplus line broker.
     (2) The insurance must not be procurable, after diligent effort has been made to do so from among a majority of the insurers authorized to transact that kind of insurance in this state.
     (3) Coverage ((shall)) must not be procured from an unauthorized insurer for the purpose of securing a lower premium rate than would be accepted by any authorized insurer nor to secure any other competitive advantage.
     (4) The commissioner may by ((regulation)) rule establish the degree of effort required to comply with subsections (2) and (3) of this section.
     (5) At the time of the procuring of any such insurance ((an affidavit)) a declaration setting forth the facts referred to in subsections (2) and (3) of this section must be executed by the surplus line broker. Such ((affidavit)) declaration ((shall)) must be ((filed with)) submitted to the commissioner within thirty days after the insurance is procured. The declaration may be in electronic, digital, or other format or form as designated by the commissioner. The declaration must include the following certification:

"I certify (or declare) under penalty of perjury that the foregoing is true and correct."

Sec. 2   RCW 48.19.410 and 2009 c 549 s 7095 are each amended to read as follows:
     (1) The commissioner may permit the organization and operation of examining bureaus for the examination of policies, daily reports, binders, renewal certificates, endorsements, and other evidences of insurance or of the cancellation thereof, for the purpose of ascertaining that lawful rates are being charged.
     (2) A bureau shall examine documents with regard to such kinds of insurance as the commissioner may, after hearing, reasonably require to be submitted for examination. A bureau may examine documents as to such other kinds of insurance as the issuing insurers may voluntarily submit for examination. Upon request of the commissioner, a bureau shall also examine ((affidavits)) declarations filed pursuant to RCW 48.15.040, surplus lines contracts and related documents, and shall make recommendations to the commissioner to assist the commissioner in determining whether surplus lines have been procured in accordance with chapter 48.15 RCW and rules issued thereunder.
     (3) No bureau shall operate unless licensed by the commissioner as to the kinds of insurance as to which it is permitted so to examine. To qualify for a license a bureau shall:
     (a) Be owned in trust for the benefit of all the insurers regularly using its services, under a trust agreement approved by the commissioner.
     (b) Make its services available without discrimination to all authorized insurers applying therefor, subject to such reasonable rules and regulations as to the obligations of insurers using its services, as to the conduct of its affairs, and as to the correction of errors and omissions in documents examined by it as are approved by the commissioner.
     (c) Have no manager or other employee who is an employee of an insurer other than to the extent that he or she is an employee of the bureau owned by insurers through such trust agreement.
     (d) Pay to the commissioner a fee of ten dollars for issuance of its license.
     (4) Such license shall be of indefinite duration and shall remain in force until revoked by the commissioner or terminated at the request of the bureau. The commissioner may revoke the license, after hearing,
     (a) if the bureau is no longer qualified therefor;
     (b) if the bureau fails to comply with a proper order of the commissioner;
     (c) if the bureau violates or knowingly participates in the violation of any provision of this code.
     (5) Any person aggrieved by any rule, regulation, act or omission of a bureau may appeal to the commissioner therefrom. The commissioner shall hold a hearing upon such appeal, and shall make such order upon the hearing as he or she deems to be proper.
     (6) Every such bureau operating in this state shall be subject to the supervision of the commissioner, and the commissioner shall examine it as provided in chapter 48.03 RCW of this code.
     (7) Every examining bureau shall keep adequate records of the outstanding errors and omissions found in coverages examined by it and of its receipts and disbursements, and shall hold as confidential all information contained in documents submitted to it for examination.
     (8) The commissioner shall not license an additional bureau for the examination of documents relative to a kind of insurance if such documents are being examined by a then existing licensed bureau. Any examining bureau operating in this state immediately prior to the effective date of this code under any law of this state repealed as of such date, shall have prior right to apply for and secure a license under this section.