H-150                _______________________________________________

                                                    HOUSE BILL NO. 281

                        _______________________________________________

State of Washington                              50th Legislature                              1987 Regular Session

By Representatives Ballard, Lux and Miller

Read first time 1/23/87 and referred to Committee on Financial Institutions & Insurance.

AN ACT Relating to cancellation of insurance policies; amending RCW 48.30.320; adding a new section to chapter 48.18 RCW; creating a new section; and declaring an emergency.

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

NEW SECTION. Sec. 1.  A new section is added to chapter 48.18 RCW to read as follows:

          (1) Notwithstanding the provisions of RCW 48.18.290 through 48.18.292:

          (a) No insurer may cancel or refuse to renew the liability coverage nor increase the rate for the liability coverage of any insurance policy based upon the loss history of the insured unless the loss history reveals a provable, material increase in risk to the insurer.  In determining whether there exists a material increase of risk, the insurer may not consider losses that were not substantially caused by the insured or by a person or entity for whom the insured would be liable.

          (b) No insurer may cancel or refuse to renew any insurance policy based upon a decision by the insurer to reduce its insurance business unless the requirements of RCW 48.18.295 (1) or (2) are met.

          (c) No insurer may refuse to issue or renew a private passenger automobile insurance policy based upon the applicant's accident history unless the accident(s) was substantially caused by the insured or by a person or entity for whom the insured would be liable.

          (d) No insurer may refuse to issue an insurance policy based upon another insurer's  prior cancellation or nonrenewal of a policy insuring the applicant unless the insurer ascertains the actual reason for such cancellation or nonrenewal and the reason reveals that the applicant fails to meet the underwriting criteria of the insurer to which application is made.  No insurer may refuse to issue an insurance policy based upon the mere fact of such prior cancellation or nonrenewal.

          (2) The provisions of this section do not apply to life insurance, disability insurance, title insurance, or reinsurance.

          (3) The commissioner may grant insurers exceptions from these provisions as are necessary for the protection of the public interest.

        Sec. 2.  Section 1, chapter 133, Laws of 1979 and RCW 48.30.320 are each amended to read as follows:

          Every authorized insurer, upon canceling, denying, or refusing to renew any individual life, individual disability, homeowner, dwelling fire, ((or)) private passenger automobile, or other casualty insurance policy, shall, upon written request, directly notify in writing the applicant or insured, as the case may be, of the reasons for the action by the insurer.  Any benefits, terms, rates, or conditions of such an insurance contract which are restricted, excluded, modified, increased, or reduced because of the presence of a sensory, mental, or physical handicap shall, upon written request, be set forth in writing and supplied to the insured.  The written communications required by this section shall be phrased in simple language which is readily understandable to a person of average intelligence, education, and reading ability.

NEW SECTION. Sec. 3.     The provisions of this act shall apply to all policies issued or renewed, or applications for insurance made, on or after August 1, 1987, and shall apply to all notices of cancellation and nonrenewal given after August 1, 1987.  No cancellation or nonrenewal of a policy governed by this act is effective if the purpose of the cancellation or nonrenewal is to evade the provisions of this act before August 1, 1987, and after the effective date of this section.

NEW SECTION. Sec. 4.     This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.