H-549                _______________________________________________

                                                    HOUSE BILL NO. 777

                        _______________________________________________

State of Washington                              50th Legislature                              1987 Regular Session

By Representatives Lux, Zellinsky, Dellwo, Nutley, Day, Meyers, Chandler, Leonard, Locke, K. Wilson, Taylor, Lewis, Cole, Rasmussen, Sprenkle, Madsen, May, Rayburn and Jesernig

Read first time 2/9/87 and referred to Committee on Financial Institutions & Insurance.

AN ACT Relating to insurance; amending RCW 48.18.090, 48.84.040, and 48.84.060; and adding a new section to chapter 48.84 RCW.

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

        Sec. 1.  Section .18.09, chapter 79, Laws of 1947 and RCW 48.18.090 are each amended to read as follows:

          (1) Except as provided in subsection (2) of this section, no oral or written misrepresentation or warranty made in the negotiation of an insurance contract, by the insured or in his behalf, shall be deemed material or defeat or avoid the contract or prevent it attaching, unless the misrepresentation or warranty is made with the intent to deceive.

          (2) Except as provided in section 4 of this 1987 act, in any application for life or disability insurance made in writing by the insured, all statements therein made by the insured shall, in the absence of fraud, be deemed representations and not warranties.  The falsity of any such statement shall not bar the right to recovery under the contract unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.

        Sec. 2.  Section 4, chapter 170, Laws of 1986 and RCW 48.84.040 are each amended to read as follows:

          No long-term care insurance policy or benefit contract may:

          (1) Use riders, waivers, endorsements, or any similar method to limit or reduce coverage or benefits;

          (2) Indemnify against losses resulting from sickness on a different basis than losses resulting from accidents;

          (3) Be canceled, nonrenewed, or segregated at the time of rerating solely on the grounds of the age or the deterioration of the mental or physical health of the covered person;

          (4) Exclude or limit coverage for preexisting conditions for a period of more than one year prior to the effective date of the policy or contract or more than six months after the effective date of the policy or contract;

          (5) Differentiate benefit amounts on the basis of the type or level of nursing home care provided;

          (6) Contain a provision establishing any new waiting period in the event an existing policy or contract is converted to a new or other form within the same company;

(7) Contain a provision that conditions the availability or amount of policy or contract benefits upon the insured's or beneficiary's admission and stay in a hospital for a period of time greater than three days.  On and after January 1, 1989, no policy or contract may contain a provision that conditions the availability or amount of policy or contract benefits upon the insured's or beneficiary's admission and stay in a hospital unless the commissioner approves  of the use and  content of such a provision upon proof that such a provision is actuarially necessary and that alternative methods of controlling benefit utilization are unavailable, impractical, or would result in significant increase in cost to the insured or beneficiary.  In no case may the commissioner approve of a hospitalization requirement greater than three days.

        Sec. 3.  Section 6, chapter 170, Laws of 1986 and RCW 48.84.060 are each amended to read as follows:

          No agent, broker, or other representative of an insurer, contractor, or other organization selling or offering long-term care insurance policies or benefit contracts may:  (1) ((Complete the medical history portion of any form or application for the purchase of such policy or contract; (2))) Knowingly sell a long-term care policy or contract to any person who is receiving medicaid; or (((3))) (2) use or engage in any unfair or deceptive act or practice in the advertising, sale, or marketing of long-term care policies or contracts.

NEW SECTION. Sec. 4.  A new section is added to chapter 48.84 RCW to read as follows:

          Notwithstanding the provision of RCW 48.18.090(2), whenever the agent, broker, or other representative of an insurer, contractor, or other organization selling or offering a long-term care insurance policy or benefit contract completes the medical history portion of any form or application for the purchase of such a policy or contract, the falsity of any statement contained in the portion completed by the agent, broker or other representative shall not bar the right to recovery of benefits under the contract or policy unless such false statement resulted from the actual intent of the applicant to deceive.