HOUSE BILL REPORT

SSB 6381

BYSenate Committee on Financial Institutions & Insurance (originally sponsored by Senators von Reichbauer, Moore, Johnson and Rasmussen; by request of Insurance Commissioner)

Changing multiple insurance statutes.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (11)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Chandler, Ranking Republican Member; Anderson, Beck, Crane, Day, Dorn, Inslee, Schmidt and Winsley.

House Staff:John Conniff (786-7119)

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE

FEBRUARY 23, 1990

BACKGROUND:

The Administrative Procedures Act supersedes the Insurance Code's provisions requiring hearings within 30 days of a demand for a hearing.  The Administrative Procedures Act requires a hearing within 90 days of a demand for a hearing.

A nonresident applicant for an agent's license need not pass an exam to obtain the license if the applicant held an agent's license for the two year period immediately preceding the date of application.

The Insurance Code permits the Insurance Commissioner to adopt regulations establishing alternative procedures for insurance company appointment of agents within licensed firms or corporations.  Similar authority is not permitted for appointment of agents within a sole proprietorship.

The Insurance Code makes no provision for nonresident agent offices within the state of Washington.

The Insurance Code procedures for service of process are inconsistent with the recently enacted Administrative Procedures Act.

Last year the Legislature passed two separate measures amending the same section of code governing treatment of alcoholism and drug addiction thereby creating confusion in the Insurance Code which references the statute that was amended twice.

Insurance companies, agents and brokers may not give to insureds or prospective insureds any goods, prizes, or merchandise exceeding $5 in value.

The Insurance Commissioner is required to revoke the license of any insurance agent or broker found guilty of the misdemeanor offense of making a false or fraudulent statement in an application for insurance.

The Insurance Code classifies the submission of false claims to an insurance company as a gross misdemeanor offense.

Insurance adjustors who investigate fire losses are required to report any facts supporting a claim of fraud to the Insurance Commissioner.

SUMMARY:

The Insurance Code provisions governing administrative hearings is amended to permit a hearing concerning temporary license suspension within 30 days rather than 90 days under the Administrative Procedures Act.

Only residents who held an agent's license during the two years preceding application for a license may avoid the agent's license exam.

The commissioner is authorized to adopt procedures governing the appointment of agents within a sole proprietorship.

Nonresident agents may have offices within Washington.

Insurance Code provisions governing service of process are amended to conform to the Administrative Procedures Act.

Insurance Code provisions referencing statutes governing alcoholism and drug treatment are amended to conform to the changes made in these statutes.

The amount that insurers, agents, and brokers may expend on insureds or prospective insureds is increased from $5 to $25.

A binder evidencing application for insurance may be used as proof of insurance in credit transactions.

The Insurance Commissioner is no longer required to revoke the license of an agent or broker found guilty of a misdemeanor charge of making a fraudulent statement in an application of insurance.  The commissioner may revoke the agent's or broker's license for making a false or fraudulent statement in an application for insurance whether or not the agent or broker is subsequently convicted of a misdemeanor.

The submission of a false claim to an insurance company is punishable as a class C felony if the value of the claim exceeds $1,500.

The Insurance Code provisions requiring adjustors to report facts supporting a fraudulent fire loss to the Insurance Commissioner is repealed. The Insurance Commissioner is no longer the State Fire Marshal.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    No one.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    None.

House Committee - Testimony Against:      None.