SENATE BILL REPORT

SB 5875

BYSenator Peterson

Creating insurance consumer board.

Senate Committee on Financial Institutions

Senate Hearing Date(s):March 4, 1987

Senate Staff:Stephanie Yates (786-7416)

AS OF MARCH 4, 1987

BACKGROUND:

The Insurance Commissioner is required by law to enforce the provisions of the insurance code.  Among these provisions are insurance rate review and approval and enforcement of the unfair practices chapter of the insurance code.

As a method of enforcement, the Commissioner operates a consumer protection division within the Office of the Commissioner.  In addition, the Commissioner periodically publishes consumer information pamphlets to better inform the public of their insurance rights and to provide information regarding insurance products.

SUMMARY:

An insurance consumers board is crated to promote the interests of insurance consumers and to disseminate information to consumers.  The board will consist of seven members:  the Commissioner, one member appointed by the Commissioner, one member appointed by the Governor, and four members appointed by the Legislature.  No member may be affiliated in any way with the insurance industry.  In addition, no member may accept compensation or any gratuity from the insurance industry while on the board or for a period of two years after serving on the board.

Generally, members of the board will be appointed for a term of two years except initial members who will be appointed for a three year term.  No appointed member may serve more than two terms.  Members who are not currently compensated by public moneys may receive a per diem allowance and travel expenses.

Among the functions of the board are collecting and analyzing consumer-related insurance information; advocating and promoting individual and collective interests of consumers before legislative, administrative and other groups; recommending changes in state laws and rules; preparing annual reports to the legislative, executive, and judicial branches of government; preparing public information brochures; and preparing and publicizing lists of sources of indemnification.

The board may collect all information necessary to fulfill its functions and may issue subpoenas to obtain specific information.  The board may retain staff to carry out its goals.

At the request of the board, insurers must send an enclosure to policyholders with premium statements.  The enclosures are to be prepared by the board and may not exceed four enclosures annually.

Every insurer shall assess, collect, and remit to the Commissioner a surcharge of 50 cents on every policy with an annual premium in excess of $200 unless the policyholder rejects the charge by making a notation on the billing statement.  These funds will be used to support the board and the board must draft a statement to the policyholder regarding the collection and use of such funds.

Fiscal Note:      none requested