WSR 00-19-048

PERMANENT RULES

OFFICE OF THE

INSURANCE COMMISSIONER

[ Insurance Commissioner Matter R 98-18 -- Filed September 14, 2000, 2:40 p.m. ]

Date of Adoption: September 14, 2000.

Purpose: Some aspects of the previous rules have been confusing to some parties. The adopted changes clarify the scope and language of the existing regulation and eliminate possible areas of ambiguity that may exist. Exemptions are eliminated. Certain documents must be filed prior to use. The amendments should aid in clarifying the scope of the rules, be easier to implement and administer, and further protect the consumers of the state of Washington.

Citation of Existing Rules Affected by this Order: Amending WAC 284-30-600 and 284-30-610.

Statutory Authority for Adoption: RCW 48.02.060, 48.30.010.

Other Authority: RCW 48.01.020, 48.01.060.

Adopted under notice filed as WSR 00-13-113 on June 21, 2000.

Changes Other than Editing from Proposed to Adopted Version: WAC 284-43-600 (1)(a) includes a clarification. The proposed final sentence ended with contract" - it now ends "policy or certificate." This retains consistent language through the regulation.

New WAC 284-30-600(4) clarifies that the section does not apply to certain self-funded plans or insurers acting as administrators of those plans.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 2, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 2, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 2, Repealed 0. Effective Date of Rule: Thirty-one days after filing.

September 14, 2000

D. J. Patin

Acting Chief Deputy Commissioner

OTS-2452.3


AMENDATORY SECTION(Amending Order 90-14, filed 1/16/91, effective 4/1/91)

WAC 284-30-600
Unfair practices with respect to out-of-state group life and disability insurance.

(1) ((Pursuant to)) under RCW 48.30.010, ((except as provided in subsection (2) of this section)) it is an unfair method of competition and an unfair practice for any insurer to ((effect life)) engage in any insurance transaction, as defined in RCW 48.01.060, regarding life insurance, annuities, or disability insurance coverage on individuals in this state under a group policy ((which is)) delivered to a policyholder outside this state when:

(a) ((Such)) The policy or ((any)) certificate ((used therewith)) providing coverage in the state of Washington, including, but not limited to, applications, riders, or endorsements, contains any inconsistent, ambiguous or misleading clauses, or exceptions and conditions which unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the policy or certificate.

(b) ((Such)) The policy or ((any certificate used therewith)) certificate providing coverage in the state of Washington, including, but not limited to, applications, riders, or endorsements, has any title, heading, or other indication of its provisions which is misleading.

(c) ((Such)) The policy or certificate delivered to residents of the state of Washington does not include all terms and conditions of the coverage.

(d) The type of group being covered under the contract providing coverage in the state of Washington does not qualify for group life insurance or group disability insurance under the provisions of Title 48 RCW.

(e) The coverage is being solicited by deceptive advertising.

(((d))) (f) With respect to disability insurance, the ((out-of-state group)) policy or certificate providing coverage in the state of Washington does not:

(i) Provide that claims will be processed in compliance with RCW 48.21.130 through ((48.21.146)) 48.21.148;

(ii) Meet the requirements as to benefits and coverage mandated by chapter 48.21 RCW and rules effectuating that chapter, specifically including those set forth in chapter 284-51 WAC, and WAC 284-30-610 ((and)), 284-30-620 and 284-30-630;

(iii) With respect to long-term care insurance, also meet the requirements of chapter 48.84 RCW and chapter 284-54 WAC;

(iv) With respect to Medicare supplemental insurance, also meet the requirements of chapter 48.66 RCW and chapter 284-66 WAC; and

(v) Meet the loss ratio standards applicable to group insurance ((pursuant to)) under RCW 48.66.100 and 48.70.030 and chapter 284-60 WAC ((284-60-060)).

(((e))) (g) With respect to life insurance, the out-of-state group policy or certificate providing coverage in the state of Washington fails to comply with the provisions of ((RCW 48.24.100 through 48.24.260, WAC 284-23-550, 284-30-620, and)):

(i) Chapter 48.24 RCW;

(ii) WAC 284-23-550 and 284-23-600 through 284-23-730;

(iii) WAC 284-30-620; and

(iv) WAC 284-30-630.

(2)(((a) Unless the individual insured pays all or substantially all of the cost of his or her coverage, subsection (1) of this section is not applicable to life or disability insurance coverage provided by any group policy issued for a group which would be qualified for group life insurance if the master policy were delivered to a policyholder in this state pursuant to RCW 48.24.035, 48.24.040, 48.24.050, or 48.24.095.

(b) Subsection (1) of this section is not applicable with respect to coverage under a master policy issued for an association group which would be qualified for group insurance under such policy if it were delivered to the policyholder in this state pursuant to the requirements of RCW 48.24.045:

(i) If such association clearly has a genuine purpose and existence of significant value to its members independent of its status as the group policyholder and independent of its involvement in insurance on behalf of its members, and if, further, there is a realistic and demonstrable basis related to the situs of the association or the residencies of a substantial portion of its members justifying the issuance of the group policy in the other state; or

(ii) If such association provides such coverage to each of its members, except those who may not qualify by reason of age, at no charge to them other than the standard membership dues or costs paid by each member.

(c) Subsection (1) of this section is not applicable with respect to a group policy issued for a group which qualifies for group insurance pursuant to RCW 48.24.060, 48.24.080, and 48.24.090.

(d) Except for coverages excluded by (a), (b), and (c) of this subsection, this section applies to all life and disability coverage on individuals in this state under group policies which are delivered to policyholders outside this state, specifically including those issued for trustee and other groups which are eligible for group insurance pursuant to RCW 48.21.010, 48.21.030, 48.24.020, 48.24.045, and 48.24.070.

(3))) Except as provided in subsection (((4))) (3)(c) of this section, for purposes of this section it is immaterial whether the ((insurance)) coverage is offered by means of a solicitation through: A sponsoring organization((, through the mail or other mass communication media, or through)); the mail broadcast or print media; electronic communication, including electronic mail and websites; licensed agents or brokers; or any other method of communication.

(((4))) (3) It is further defined to be an unfair practice for any insurer ((effecting)) marketing group insurance coverage in this state ((through policies delivered to an out-of-state master policyholder to fail)) to do the following with respect to ((such insurance)) the coverage:

(a) ((It must)) To fail to comply with the requirements of this state relating to advertising and claims settlement practices, and ((it must, upon request,)) to fail to furnish the commissioner, upon request, copies of all advertising materials intended for use in this state;

(b) ((It must make available copies of any policy forms, and certificate forms used therewith, upon request of the commissioner; and

(c) Where the sale of such coverage to individuals in this state will be through solicitation by agents, solicitors or brokers, so that WAC 284-30-610 will be applicable to such solicitations, the insurer shall file with the commissioner copies of the pertinent group policy and certificate forms, and shall include a copy of the disclosure statement required by WAC 284-30-610, appropriately completed, which will be)) To fail to file copies of all certificate forms and any other related forms providing coverage in Washington, including trust documents or articles of incorporation with the commissioner at least thirty days prior to use; and

(c) To fail to file with the commissioner a copy of the disclosure statement required by WAC 284-30-610, where the sale of coverage to individuals in this state will be through solicitation by agents, solicitors or brokers. The disclosure statement must be appropriately completed, as it appears when delivered to the Washington individuals who are solicited by the Washington licensees.

((Such material)) The disclosure form must also be filed at least ((twenty days before the)) thirty days prior to any solicitation of coverage ((commences)).

(4) This section does not apply to self-funded plans that are defined by and subject to the federal Employee Retirement Income Security Act of 1974 (ERISA) or to insurers when acting as third-party administrators for self-funded ERISA plans.

[Statutory Authority: RCW 48.02.060 (3)(a) and 48.30.010. 91-03-073 (Order 90-14), 284-30-600, filed 1/16/91, effective 4/1/91. Statutory Authority: RCW 48.02.060 (3)(a). 85-02-018 (Order R 84-7), 284-30-600, filed 12/27/84.]


AMENDATORY SECTION(Amending Order 90-14, filed 1/16/91, effective 4/1/91)

WAC 284-30-610
Unfair practices with respect to the solicitation of coverage under out-of-state group policies.

(1) It is an unfair method of competition and an unfair practice for:

An ((insurance company)) insurer to permit its appointed licensed agent((, and for));

An insurance agent((,));

Solicitor; or

A broker,

to solicit an individual in the state of Washington to buy or apply for life insurance, annuities, or disability insurance coverage when ((such)) the coverage is provided ((pursuant to)) under the terms of a group ((insurance)) policy delivered to an association or organization (or to a trustee designated by ((such)) the association or organization), as policyholder, outside this state, ((if obtaining such coverage or continuing it is dependent upon the covered individual being a member of or in some way affiliated with such association or organization (other than as an employee, or a dependent of an employee, thereof),)) unless the following steps are taken:

(a) An accurately completed disclosure statement, substantially in the form set forth in subsection (2) of this section, must be ((signed by the soliciting licensee, and delivered to and)) brought to the attention of the individual being solicited before the application for coverage is completed and signed. The disclosure form must be signed by both the soliciting licensee and the individual being solicited and it must be given to the individual.

(b) ((The signed original disclosure statement must be left with such individual.

(c))) A copy of the completed disclosure statement must be ((signed by such individual to acknowledge its receipt, and be)) submitted by the soliciting licensee, with the application for coverage, to the ((insurance company)) insurer providing the coverage.

(((d) The insurance company)) (c) The insurer must confirm the accuracy of the form's contents, and retain ((such)) the copy for not less than three years from the date the coverage commences or from the date received, whichever is later.

(2) Disclosure statement form: (Type size to be no less than ten-point)

(((Insurance Company's)) Insurer's name and address)
IMPORTANT INFORMATION ABOUT THE ((INSURANCE)) COVERAGE YOU ARE BEING OFFERED
Save this statement! It may be important to you in the future. The Washington State Insurance Commissioner requires that we give you the following information about the ((health insurance)) coverage offered to you under a group ((insurance)) policy issued by (((insurance company)) insurer) , (to/on behalf of) (association or organization) .


The policy is subject to and governed by the laws of the state of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


((The coverage (meets/does not meet) minimum insurance standards required of Washington state policies. You (will/will not) receive benefits required to be provided by Washington policies. The policy is designed to return benefits which are valued at a percentage (less than/equal to/greater than) the percentage of premiums that would be required under Washington state's rules or laws for group coverage.)) The certificate of coverage issued to you is governed by the state of Washington.


The Washington State Insurance Commissioner ((will have limited)) has authority to assist you concerning ((the)) your coverage.


To keep this ((insurance)) coverage, you (must/need not) continue membership in the group. If you are not now a member, the initial cost of membership is $. . . . Additional dues or membership fees are currently $. . . . per . . . . Membership costs (may/will not) increase in future years. You will also have the ((insurance)) premiums to pay.


The ((insurance)) coverage (can/can not) be discontinued by the group. It (can/can not) be terminated by the insurer. If the group organization ceases to exist, your coverage (would/would not) terminate. You (are/are not) entitled by the contract to convert your coverage to your own ((insurance)) policy.


(( (Group organization's name) and (insurance company's name) (are/are not) directly or indirectly subject to common control with respect to their management and policies, through ownership, by contract, or otherwise.)) (Group organization's name) (will/will not) be paid for its participation in this insurance program. (An explanation of payments ((may)) must be inserted here.) .


((Apart from its involvement in insurance such as that offered to you, the organization engages in the following activities of value to its members: . . . . . . . . . . . The organization has approximately . . . . members, at this time. About . . . . % of them do not participate in the group's health insurance program.))


If you apply for this coverage, you (will/will not) have a "free look" (of . . . . days*) during which you may cancel your contract and recover your premium without obligation. Your membership fee to join the group (is/is not) refundable. *(Omit phrase, "of . . . . days", if there is no "free look.")


DELIVERED to the applicant this . . . . . . . day of ((. . . . . . )) (month) , ((199. . . )) (year) , by

(Signed) . . . . . . . . . . . . . . . . . . (agent, solicitor or broker).


Printed Name: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


((RECEIPT HEREOF IS ACKNOWLEDGED)) I ACKNOWLEDGE THAT I HAVE RECEIVED AND UNDERSTAND THIS DISCLOSURE STATEMENT
: . . . . . Applicant.


(3) This section does not apply with respect to coverage provided to individuals under a group contract which is provided for a group of a type described in RCW 48.24.035, 48.24.040, 48.24.060, ((48.24.070,)) 48.24.080, 48.24.090, or 48.24.095.

[Statutory Authority: RCW 48.02.060 (3)(a) and 48.30.010. 91-03-073 (Order 90-14), 284-30-610, filed 1/16/91, effective 4/1/91.]

Washington State Code Reviser's Office