SENATE BILL REPORT

SB 5704

BYSenators Metcalf and Talmadge

Requiring information to be filed with insurance rates.

Senate Committee on Financial Institutions

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

Majority Report:  That Substitute Senate Bill No. 5704 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Moore, Chairman; Bender, Vice Chairman; Bottiger, Fleming, McDermott, Metcalf, Pullen, von Reichbauer.

Senate Staff:Phil Sorensen (786-7470)

                  March 3, 1987

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS, MARCH 3, 1987

BACKGROUND:

In 1986 the Legislature directed the Insurance Commissioner to study the cyclical nature of the industry.  The study determined that while cycles tend to create alternate times of prosperity and crisis, the cycles themselves are not undesirable.  However, the study found that moderating vast swings in the cycle was an appropriate goal.

Cycles tend to run in six year periods.  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 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, then 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 then require that adequate information be furnished.

EFFECT OF PROPOSED SUBSTITUTE: 

The Commissioner has the undisputed right to demand and receive supporting information deemed necessary to permit a proper review of a filing.

Fiscal Note:      none requested

Senate Committee - Testified: Mildred V. Elliott, Hall-Conway-Jackson, Inc.; Basil Badley, AIA; Fos Cronyn; Scott Jarvis, Insurance Department; Dan Wolfe, SAFECO; Dennis Martin, WSTLA; Harold Fosso