BILL REQ. #:  S-3703.1 

Read first time 01/16/12.   Referred to Committee on Financial Institutions, Housing & Insurance.

     AN ACT Relating to specialty producer licenses; amending RCW 48.120.005, 48.120.010, 48.120.015, and 48.120.020; and adding a new section to chapter 48.120 RCW.

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

Sec. 1   RCW 48.120.005 and 2008 c 217 s 94 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) (("Communications equipment" means handsets, pagers, personal digital assistants, portable computers, automatic answering devices, batteries, and their accessories or other devices used to originate or receive communications signals or service approved for coverage by rule of the commissioner, and also includes services related to the use of the devices.)) "Portable electronics" means personal, self-contained, easily carried by an individual, battery-operated electronic communication, viewing, listening, recording, gaming, computing or global positioning devices, including cell or satellite phones, pagers, personal global positioning satellite units, portable computers, portable audio listening, video viewing or recording devices, digital cameras, video camcorders, portable gaming systems, docking stations, automatic answering devices, and other similar devices and their accessories, and service related to the use of such devices.
     (2) "((Communications equipment)) Portable electronics insurance program" means an insurance program as described in RCW 48.120.015.
     (3) (("Communications service" means the service necessary to send, receive, or originate communications signals)) "Portable electronics transaction" means the sale or lease of portable electronics or the sale of a service related to the use of portable electronics by a vendor to a customer.
     (4) "Customer" means a person or entity ((purchasing or leasing communications equipment or communications services from)) that enters into a portable electronics transaction with a vendor.
     (5) "Specialty producer license" means a license issued under RCW 48.120.010 that authorizes a vendor to offer or sell insurance as provided in RCW 48.120.015.
     (6) "Supervising ((agent)) entity" means a licensed insurer or an appointed insurance producer licensed under RCW 48.17.090 who provides training as described in RCW 48.120.020 and is ((affiliated to a licensed vendor)) appointed by an insurer to supervise the administration of a portable electronics insurance program.
     (7) "Vendor" means a person or entity resident or with offices in this state in the business of ((leasing, selling, or providing communications equipment or communications service to customers)), directly or indirectly, engaging in portable electronics transactions.
     (8) "Appointing insurer" means the insurer appointing the vendor as its agent under a specialty producer license.
     (9) "Federal securities law" means the securities act of 1933, the securities exchange act of 1934, and the investment company act of 1940.
     (10) "Location" means any physical locale in this state and any web site, call center site, or similar site directed to residents of this state.

Sec. 2   RCW 48.120.010 and 2008 c 217 s 95 are each amended to read as follows:
     (1) A vendor that intends to offer insurance under RCW 48.120.015 must file a specialty producer license application with the commissioner. Before the commissioner issues such a license, the vendor must be appointed as the insurance producer of one or more authorized appointing insurers under a vendor's specialty producer license.
     (2) Upon receipt of an application, if the commissioner is satisfied that the application is complete, the commissioner may issue a specialty producer license to the vendor.
     (3) An application submitted under this section must include:
     (a)(i) The name, residence address, and other information required by the commissioner for an employee or officer of the vendor that is designated by the applicant as the person responsible for the vendor's compliance with the requirements of this chapter.
     (ii) The information required in (a)(i) of this subsection for all of the vendor's officers, directors, and shareholders of record having beneficial ownership of ten percent or more of any class of securities registered under federal securities law if the vendor derives more than fifty percent of its revenue from the sale of portable electronics insurance;
     (b) The location of the applicant's home office; and
     (c) The written materials in RCW 48.120.020(1)(a).
     (4) The written materials in RCW 48.120.020(1)(a) must also be provided each time that a vendor seeks to renew their license.

Sec. 3   RCW 48.120.015 and 2002 c 357 s 3 are each amended to read as follows:
     (1) A specialty producer license authorizes a vendor and its employees and authorized representatives to offer and sell to, enroll in, and bill and collect premiums from customers for insurance covering ((communications equipment)) portable electronics on a master, corporate, or group commercial inland marine policy, or on an individual policy basis at each location at which the vendor engages in portable electronics transactions. However:
     (a) The supervising entity must maintain a registry of a vendor's locations in this state that are authorized to sell or solicit portable electronics insurance coverage; and
     (b) The registry under (a) of this subsection must be provided to the commissioner within ten days of a request by the commissioner.
     (2) An employee or authorized representative of a vendor may sell or offer portable electronics insurance to the vendor's customers without being individually licensed as an insurance producer if the vendor is licensed under this chapter and is acting in compliance with this chapter and any rules adopted by the commissioner.
     (3) A vendor billing and collecting premiums from customers for portable electronics insurance coverage is not required to maintain these funds in a segregated account if the vendor:
     (a) Is authorized by the insurer to hold the funds in an alternative manner; and
     (b) Remits the funds to the supervising entity within sixty days of receipt.
     (4) All funds received by a vendor from an enrolled customer for the sale of portable electronics insurance are considered funds held in trust by the vendor in a fiduciary capacity for the benefit of the insurer.
     (5) Any charge to the enrolled customer for coverage that is not included in the cost associated with the purchase or lease of portable electronics or related services must be separately itemized on the enrolled customer's bill.
     (6) If portable electronics insurance coverage is included with the purchase or lease of portable electronics or related services, the vendor must clearly and conspicuously disclose to the enrolled customer that the portable electronics insurance coverage is included with the portable electronics or related services.
     (7) Vendors may receive compensation for billing and collection services.

Sec. 4   RCW 48.120.020 and 2002 c 357 s 4 are each amended to read as follows:
     (1) A vendor issued a specialty producer license may not issue insurance under RCW 48.120.015 unless:
     (a) At every location where customers are enrolled in ((communications equipment)) portable electronics insurance programs, written material regarding the program is made available to prospective customers; and
     (b) The ((communications equipment)) portable electronics insurance program is operated with the participation of a supervising ((agent)) entity who, with authorization and approval from the appointing insurer, supervises a training program for employees of the licensed vendor.
     (2) Employees and authorized representatives of a vendor issued a specialty producer license may only act on behalf of the vendor in the offer, sale, solicitation, or enrollment of customers in a ((communications equipment)) portable electronics insurance program. The conduct of these employees and authorized representatives within the scope of their employment or agency is the same as conduct of the vendor for purposes of this title.

NEW SECTION.  Sec. 5   A new section is added to chapter 48.120 RCW to read as follows:
     (1) The cancellation provisions in RCW 48.18.290 and the nonrenewal provisions in RCW 48.18.2901 do not apply to portable electronics insurance policies issued under this chapter.
     (2) An insurer may terminate or otherwise change the terms and conditions of a policy of portable electronics insurance only:
     (a) Upon providing the policyholder and enrolled customers with at least thirty days' notice; or
     (b) As provided in subsections (4) and (5) of this section.
     (3) If an insurer changes the terms and conditions, then the insurer must provide:
     (a) The vendor policyholder with a revised policy or endorsement; and
     (b) Each enrolled customer with:
     (i) A revised certificate, endorsement, updated brochure, or other evidence indicating a change in the terms and conditions has occurred; and
     (ii) A summary of material changes.
     (4) An insurer may terminate an enrolled customer's enrollment under a portable electronics insurance policy upon fifteen days' notice for discovery of fraud or material misrepresentation in obtaining coverage or in the presentation of a claim.
     (5) An insurer may immediately terminate an enrolled customer's enrollment under a portable electronics insurance policy:
     (a) For nonpayment of premium;
     (b) If the enrolled customer ceases to have an active service with the vendor of portable electronics; or
     (c) If an enrolled customer exhausts the aggregate limit of liability, if any, under the terms of the portable electronics insurance policy and the insurer sends notice of termination to the enrolled customer within thirty calendar days after exhaustion of the limit. However, if notice is not timely sent, enrollment continues notwithstanding the aggregate limit of liability until the insurer sends notice of termination to the enrolled customer.
     (6) When a portable electronics insurance policy is terminated by a policyholder, the policyholder must mail or deliver written notice to each enrolled customer advising the enrolled customer of the termination of the policy and the effective date of termination. The written notice must be mailed or delivered to the enrolled customer at least thirty days prior to the termination.
     (7) Any notice or correspondence with respect to a policy of portable electronics insurance required under this section or otherwise required by law must be in writing. A notice and correspondence may be sent either by mail or by electronic means. If the notice or correspondence is mailed, it must be sent to the vendor of portable electronics at the vendor's mailing address specified for that purpose and to its affected enrolled customers' last known mailing addresses on file with the insurer.
     The insurer or vendor of portable electronics, as the case may be, must maintain proof of mailing in a form authorized or accepted by the United States postal service or other commercial mail delivery service. If a notice or correspondence is sent by electronic means, it must be sent to the vendor of portable electronics at the vendor's electronic mail address specified for that purpose and to its affected enrolled customers' last known electronic mail address as provided by each enrolled customer to the insurer or vendor of portable electronics, as the case may be.
     For purposes of this subsection, an enrolled customer's provision of an electronic mail address to the insurer, supervising entity, or vendor of portable electronics means that the enrolled customer consents to receive notices and correspondence by electronic mail. The insurer or vendor of portable electronics, as the case may be, must maintain proof that the notice or correspondence was sent.
     (8) Notice or correspondence required by this section or otherwise required by law may be sent by the supervising entity appointed by the insurer on behalf of an insurer or a vendor.