SENATE BILL REPORT
SHB 2322
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. |
As Reported by Senate Committee On:
Financial Institutions & Insurance, February 15, 2018
Title: An act relating to risk mitigation in property insurance.
Brief Description: Allowing property insurers to assist their insureds with risk mitigation goods or services.
Sponsors: House Committee on Business & Financial Services (originally sponsored by Representatives Stanford, Kirby, Vick, Barkis, McDonald and Ryu; by request of Insurance Commissioner).
Brief History: Passed House: 1/22/18, 95-0.
Committee Activity: Financial Institutions & Insurance: 2/01/18, 2/15/18 [DPA].
Brief Summary of Amended Bill |
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SENATE COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE |
Majority Report: Do pass as amended.
Signed by Senators Mullet, Chair; Hasegawa, Vice Chair; Angel, Ranking Member; Fortunato, Hobbs and Kuderer.
Staff: Jeff Olsen (786-7428)
Background: An insurer, insurance producer, or title insurance agent may not offer or pay to the insured any rebate, reduction of premium, commission, shares of stock, or any other valuable consideration not expressly provided for in the policy as an inducement to signing up for insurance. There are certain exceptions to the restriction, including authorizing limited advertising or promotional activities. For example, insurers and insurance producers may offer advertising or promotional programs including prizes, goods, wares, or merchandise, not exceeding $100 in value per person in any 12-month period. The promotional programs must be offered to all insureds or prospective insureds under similar qualifying circumstances.
Summary of Amended Bill: A property insurer may include up to $1,500 in value over a 12-month period for goods and services intended to reduce losses from a covered event as part of a property insurance policy, excluding commercial property insurance. Examples of goods and services that may be offered include a water monitor, foundation strapping, home safety monitoring, brush clearing, or other goods and services approved by OIC. An insurer must receive prior approval from OIC before offering risk mitigation goods and services. To obtain approval from OIC, an insurer must include information in its rate filing including a description of the risk goods or services provided, the method for delivering those goods and services, and the selection criteria for an insured to receive those goods and services. A rate filing by a property insurer for a policy that includes risk mitigation goods and services must demonstrate that its rates account for the expected costs and the reduction in claims costs resulting from providing the goods and services. OIC may adopt rules as necessary to implement the bill.
An insurer may conduct a two year risk mitigation strategy pilot program by offering risk mitigation goods and services in accordance with rules adopted by OIC. Insurers in the pilot program are exempt from including information about the risk mitigation goods and services in their rate filings.
OIC may develop rules identifying which insurer disaster response activities are exempt from the new risk mitigation program and existing restrictions on inducements.
EFFECT OF FINANCIAL INSTITUTIONS & INSURANCE COMMITTEE AMENDMENT(S):
Specifies that property insurers, excluding commercial property insurance, may provide risk mitigation goods and services with prior approval of OIC.
Increases the value of goods and services that may be provided from $1,000 to $1,500 in any 12-month period.
Adds that a pilot program for risk mitigation may include a prevention strategy and excludes commercial property insurance.
Clarifies insurer disaster response activities are exempt from the new risk mitigation program and existing restrictions on inducements.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony on Substitute House Bill: The committee recommended a different version of the bill than what was heard. PRO: This bill lines up with Senate bill 6035 and is well supported, however, there are a few technical changes that need to be made. Insurers support the bill but are also requesting further changes to incorporate into the bill and expect to have agreed upon amendments.
Persons Testifying: PRO: Lonnie Johns-Brown, Office of the Insurance Commissioner; Carrie Tellefson, USAA; Dan McGrady, PEMCO Insurance.
Persons Signed In To Testify But Not Testifying: No one.