H-1006              _______________________________________________

                                                    HOUSE BILL NO. 797

                        _______________________________________________

State of Washington                              50th Legislature                              1987 Regular Session

By Representatives Meyers and Lux

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

AN ACT Relating to insurance rate filing; and amending RCW 48.19.030.

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

        Sec. 1.  Section .19.03, chapter 79, Laws of 1947 and RCW 48.19.030 are each amended to read as follows:

          Rates shall be used, subject to the other provisions of this chapter, only if made in accordance with the following provisions:

          (1) In the case of insurances under standard fire policies and that part of marine and transportation insurances not exempted under RCW 48.19.010, manual, minimum, class or classification rates, rating schedules or rating plans, shall be made and adopted; except as to specific rates on inland marine risks individually rated, which risks are not reasonably susceptible to manual or schedule rating, and which risks by general custom of the business are not written according to manual rates or rating plans.

          (2) In the case of casualty and surety insurances:

          (a) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.

          (b) Risks may be grouped by classifications for the establishment of rates and minimum premiums.  Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both.  Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.

          (3) Due consideration in making rates for all insurances shall be given to:

          (a) Past and prospective loss experience within and outside this state((; and)):  PROVIDED, That in the case of rates for fire insurance, due consideration shall be given to the loss experience of insurers as to insurance against fire during a period of not less than the most recent five-year period for which such experience is available  AND PROVIDED FURTHER, That casualty rates and rating schedules shall be supported, whenever possible, by loss experience for this state.  If such information is not available or is not statistically credible, an insurer may use loss experience from the state of Idaho, Montana, and Oregon in support of a rate filing or rating schedule.  Loss experience from states other than Washington, Idaho, Montana, and Oregon may be used in support of a rate filing or rating schedule only after it has been demonstrated to the satisfaction of the commissioner that the loss experience from those states is either not available or is not statistically credible.

          (b) Conflagration and catastrophe hazards, where present.

          (c) A reasonable margin for underwriting profit and contingencies.

          (d) Dividends, savings and unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers.

          (e) All other relevant factors within and outside this state.

          (4) In addition to other factors required by this section, rates filed by an insurer on its own behalf may also be related to the insurer's plan of operation and plan of risk classification.

          (5) Except to the extent necessary to comply with RCW 48.19.020 uniformity among insurers in any matter within the scope of this section is neither required nor prohibited.

(6) A schedule rating plan shall provide for no more than a twenty-five percent increase or decrease of a rate inclusive of any expense adjustment.

(7) An insurer, having made its rates for commercial insurance in full compliance with this chapter, may use its rates immediately upon filing with the commissioner, provided the change in rates as the result of the filing neither exceeds ten percent for any single policy nor results in a change exceeding ten percent when all filings applying to any single policy are combined for the preceding twelve months.