BILL REQ. #:  H-0308.2 

Prefiled 01/04/13. Read first time 01/14/13.   Referred to Committee on Business & Financial Services.

     AN ACT Relating to portable electronics insurance; amending RCW 48.18.100, 48.19.030, and 48.120.015; and adding a new section to chapter 48.120 RCW.

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

Sec. 1   RCW 48.18.100 and 2008 c 217 s 12 are each amended to read as follows:
     (1) No insurance policy form or application form where written application is required and is to be attached to the policy, or printed life or disability rider or endorsement form may be issued, delivered, or used unless it has been filed with and approved by the commissioner. This section does not apply to:
     (a) Surety bond forms;
     (b) Forms filed under RCW 48.18.103;
     (c) Forms exempted from filing requirements by the commissioner under RCW 48.18.103;
     (d) Manuscript policies, riders, or endorsements of unique character designed for and used with relation to insurance upon a particular subject; or
     (e) Contracts of insurance procured under the provisions of chapter 48.15 RCW.
     (2) Every such filing containing a certification, in a form approved by the commissioner, by either the chief executive officer of the insurer or by an actuary who is a member of the American academy of actuaries, attesting that the filing complies with Title 48 RCW and Title 284 of the Washington Administrative Code, may be used by the insurer immediately after filing with the commissioner. The commissioner may order an insurer to cease using a certified form upon the grounds set forth in RCW 48.18.110. This subsection does not apply to certain types of policy forms designated by the commissioner by rule.
     (3) Except as provided in RCW 48.18.103, every filing that does not contain a certification pursuant to subsection (2) of this section must be made not less than thirty days in advance of issuance, delivery, or use. At the expiration of the thirty days, the filed form shall be deemed approved unless prior thereto it has been affirmatively approved or disapproved by order of the commissioner. The commissioner may extend by not more than an additional fifteen days the period within which he or she may affirmatively approve or disapprove any form, by giving notice of the extension before expiration of the initial thirty-day period. At the expiration of the period that has been extended, and in the absence of prior affirmative approval or disapproval, the form shall be deemed approved. The commissioner may withdraw any approval at any time for cause. By approval of any form for immediate use, the commissioner may waive any unexpired portion of the initial thirty-day waiting period.
     (4) The commissioner's order disapproving any form or withdrawing a previous approval must state the grounds for disapproval.
     (5) No form may knowingly be issued or delivered as to which the commissioner's approval does not then exist.
     (6) The commissioner may, by rule, exempt from the requirements of this section any class or type of insurance policy forms if filing and approval is not desirable or necessary for the protection of the public.
     (7) Every member or subscriber to a rating organization must adhere to the form filings made on its behalf by the organization. Deviations from the organization are permitted only when filed with the commissioner in accordance with this chapter.
     (8) Medical malpractice insurance form filings are subject to the provisions of this section.
     (9) Variable contract forms; disability insurance policy forms; individual life insurance policy forms; life insurance policy illustration forms; industrial life insurance contract, individual medicare supplement insurance policy, and long-term care insurance policy forms, which are amended solely to comply with the changes in nomenclature required by RCW 48.18A.035, 48.20.013, 48.20.042, 48.20.072, 48.23.380, 48.23A.040, 48.23A.070, 48.25.140, 48.66.120, and 48.76.090 are exempt from this section.
     (10) An insurance policy that provides portable electronics insurance coverage, defined in RCW 48.120.005, issued on a commercial inland marine policy must be filed in accordance with this chapter whether the coverage is offered on a group, master, or individual policy basis. The written materials in RCW 48.120.020(1)(a) are not required to be filed for the review or approval of the commissioner.

Sec. 2   RCW 48.19.030 and 1989 c 25 s 3 are each amended to read as follows:
     Rates shall be used, subject to the other provisions of this chapter, only if made in accordance with the following provisions:
     (1) In the case of insurances under standard fire policies and that part of marine and transportation insurances not exempted under RCW 48.19.010, manual, minimum, class or classification rates, rating schedules or rating plans, shall be made and adopted; except as to specific rates on inland marine risks individually rated, which risks are not reasonably susceptible to manual or schedule rating, and which risks by general custom of the business are not written according to manual rates or rating plans.
     (2) In the case of casualty and surety insurances:
     (a) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.
     (b) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.
     (3) In the case of a portable electronics insurance program, as defined in RCW 48.120.005, an insurer:
     (a) May use ranges of rating factors and may use actuarial judgment in the making of such rates; and
     (b) Must file rates for approval for portable electronics insurance offered on a group, master, or individual policy basis in accordance with the requirements of RCW 48.18.040; and
     (c) May not increase premiums or deductibles or otherwise restrict benefits more than once in any six-month period. An insurer must comply with the notice requirements in section 4 of this act if any such changes are made.
     (4) Due consideration in making rates for all insurances shall be given to:
     (a) Past and prospective loss experience within this state for experience periods acceptable to the commissioner. If the information is not available or is not statistically credible, an insurer may use loss experience in those states which are likely to produce loss experience similar to that in this state.
     (b) Conflagration and catastrophe hazards, where present.
     (c) A reasonable margin for underwriting profit and contingencies.
     (d) Dividends, savings and unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers.
     (e) Past and prospective operating expenses.
     (f) Past and prospective investment income.
     (g) All other relevant factors within and outside this state.
     (((4))) (5) In addition to other factors required by this section, rates filed by an insurer on its own behalf may also be related to the insurer's plan of operation and plan of risk classification.
     (((5))) (6) Except to the extent necessary to comply with RCW 48.19.020 uniformity among insurers in any matter within the scope of this section is neither required nor prohibited.

Sec. 3   RCW 48.120.015 and 2012 c 154 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 portable electronics on a master, corporate, group commercial inland marine policy, or on an individual policy basis on a month-to-month or other periodic basis at each location at which the vendor engages in portable electronics transactions. However:
     (a) The supervising person must maintain a list of a vendor's locations that are authorized to sell or solicit portable electronics insurance coverage; and
     (b) The list 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 person 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.

NEW SECTION.  Sec. 4   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. Any notice required to be provided to a person insured under a portable electronics insurance policy in the event of cancellation, modification, or nonrenewal of such policy is governed exclusively by this section.
     (2) An insurer may cancel, modify, 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 without prior notice:
     (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, coverage 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. Notice or 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 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 person, or vendor of portable electronics means that the enrolled customer consents to receive notices and correspondence by electronic mail as long as a disclosure to that effect is provided to the consumer at the time the consumer provides an electronic mail address. 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 person appointed by the insurer on behalf of an insurer or a vendor.