SENATE BILL REPORT

ESSB 5704

BYSenate Committee on Financial Institutions (originally sponsored by Senators Metcalf and Talmadge)

Requiring information to be filed with insurance rates.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 20, 1987; March 3, 1987; January 21, 1988

Majority Report:  Do pass.

      Signed by Senators von Reichbauer, Chairman; West, Vice Chairman; Johnson, Kreidler, McCaslin, Moore, Rasmussen, Smitherman.

Senate Staff:Walt Corneille (786-7416)

                  January 21, 1988

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, JANUARY 21, 1988

BACKGROUND:

In 1986 the Legislature directed the Insurance Commissioner to conduct a study of insurance cycles to determine what, if anything, could be done to prevent or modify peaks and valleys in insurance rates.  The study determined that while cycles can create problems caused by rapidly changing insurance premiums, cycles themselves are not undesirable.  The study did indicate that moderating vast swings in cycles is an appropriate goal.

Casualty rates tend to be fixed using loss experience for the prior three years.  Loss experience is derived from not only Washington experience, but also from any other jurisdiction the insurer deems necessary to produce accurate loss experience information.

SUMMARY:

A filing by an insurer for rate approval shall be accompanied by information upon which the filing is based.  When setting rates insurers must consider past and prospective loss experience, within this state, for at least a five year period.  If Washington loss experience is unusable, loss experience from similarly situated states may be employed.

If a filing is not properly supported and the Commissioner cannot independently determine the appropriateness of the filing, the Commissioner may require that adequate information be furnished.

Private passenger auto insurance may be evaluated over a period of not less than three years.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Basil Badley, AIA; Dennis Martin, WSTLA