SENATE BILL REPORT

SB 6381

BYSenators von Reichbauer, Moore, Johnson and Rasmussen; by request of Insurance Commissioner

Changing multiple insurance statutes.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):January 23, 1990; January 30, 1990

Majority Report:  That Substitute Senate Bill No. 6381 be substituted therefor, and the substitute bill do pass.

      Signed by Senators von Reichbauer, Chairman; Johnson, Vice Chairman; McCaslin, McMullen, Moore, Rasmussen, Smitherman.

Senate Staff:Walt Corneille (786-7416)

                  February 2, 1990

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, JANUARY 30, 1990

BACKGROUND:

The many sections of the insurance code regulate the sale and marketing of insurance in the state of Washington.  From time to time, the code needs to be reviewed for any necessary updates or changes.  The Insurance Commissioner's office often undertakes this task and brings to the attention of the Legislature necessary changes in the insurance code that need to be made for purposes of updating the code, to improve clarity and to respond to changes in the everyday practice of marketing insurance.

SUMMARY:

Under current law, an agent applying for a license, who has held a license within the last two years, is not required to take the exam to obtain a license.  This exemption to the testing requirement is extended only to agents that were licensed as residents during the immediate past two years.  This exemption does not apply to nonresident licensees wishing to become licensed again.

If an agent's license has been temporarily suspended, that agent must be provided a hearing within 30 days of the temporary suspension if the hearing is demanded.  Current law only requires a hearing within 30 days of the demand.

Current law requires the commissioner to adopt regulations establishing alternative agent appointment procedures for agents licensed with a firm or corporation.  This alternative procedure is extended to appointment procedures for individuals that are licensees that are empowered to exercise authority conferred by a sole proprietorship. 

A sole proprietorship may be licensed the same as a firm or corporation.  Currently a firm or corporation may obtain its own license but there is no provision for a sole proprietorship with associated licensees to obtain a license.

A nonresident licensee may maintain an office in this state as the required location of the business.  Communications or orders from the Insurance Commissioner may be sent to the person's last residential address, or if it's a corporation or firm to the last known business address.  An order of the Insurance Commissioner may be served by mail or personal service.  The method of mail service is defined. 

Coverage for alcohol or drug treatment is required if the treatment is provided through an approved facility or program.  Current language in the code only provides for treatment from an approved facility.

The limitation on the amount that can be expended for advertising or promotional purposes is changed from $5 to $25 in a 12-month period.  This applies to both cash and noncash expenditures made for promotional or advertising purposes.

The license of any person making a false statement in an application for insurance may be revoked.  Existing law requires a person to be found guilty of a misdemeanor before the revocation may be effective.

Any person making a false or fraudulent claim in an amount greater than $1,500 is guilty of a class C felony.  Existing law makes no provision for the amount of the claim and provides only for a gross misdemeanor.

Sections of the Insurance Code that require an adjuster to report to the Insurance Commissioner a fraudulent claim regarding a fire loss are repealed.  Existing law requires that any arson fraud be reported to the state Fire Marshal.

EFFECT OF PROPOSED SUBSTITUTE:

Property insurance that is required by a lender or other creditor on secured properties may be provided by a binder as well as a policy.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Scott Jarvis, Insurance Department (pro); Clark Sitzes, IIAW (pro)