2571-S

AN ACT Relating to capital and surplus requirements of insurers; and amending RCW 48.05.340.

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

Sec. 1. RCW 48.05.340 and 1993 c 462 s 50 are each amended to read as follows:

(1) Subject to RCW 48.05.350 and 48.05.360 to qualify for authority to transact any one kind of insurance as defined in chapter 48.11 RCW or combination of kinds of insurance as shown below, a foreign or alien insurer, whether stock or mutual, or a domestic insurer hereafter formed shall possess ((~~and thereafter maintain~~)) unimpaired paid-in capital stock, if a stock insurer, or unimpaired surplus if a mutual insurer, and ((~~shall possess when first so authorized~~)) additional funds in surplus, as follows, and shall thereafter maintain unimpaired a combined total of: (a) The paid-in capital stock if a stock insurer or surplus if a mutual insurer, plus (b) such additional funds in surplus equal to the total of the following initial requirements:

Paid-in capital

Kind or kinds stock or Additional

of insurance basic surplus surplus

Life ................................. $2,000,000 $2,000,000

Disability............................ 2,000,000 2,000,000

Life and disability .................. 2,400,000 2,400,000

Property.............................. 2,000,000 2,000,000

Marine & transportation ............. 2,000,000........................ 2,000,000

General casualty...................... 2,400,000 2,400,000

Vehicle............................... 2,000,000 2,000,000

Surety................................ 2,000,000 2,000,000

Any two of the following

kinds of insurance:

Property, marine &

transportation, general

casualty, vehicle,

surety, disability................. 3,000,000 3,000,000

Multiple lines (all insurances

except life and title

insurance) ........................ 3,000,000 3,000,000

Title (in accordance with the

provisions of chapter 48.29 RCW)

(2) Capital and surplus requirements are based upon all the kinds of insurance transacted by the insurer wherever it may operate or propose to operate, whether or not only a portion of such kinds are to be transacted in this state.

(3) ((An)) Until December 31, 1996, a foreign or alien insurer holding a certificate of authority to transact insurance in this state immediately prior to ((~~July 1, 1991~~)) the effective date of this act, may continue to be authorized to transact the same kinds of insurance as long as it is otherwise qualified for such authority. A domestic insurer holding a certificate of authority to transact insurance in this state immediately prior to the effective date of this act may continue to be authorized to transact the same kinds of insurance as long as it is otherwise qualified for such an authority and thereafter maintains unimpaired the amount of paid-in capital stock, if a stock insurer, or basic surplus, if a mutual or reciprocal insurer, and special or additional surplus as required of it under laws in force immediately prior to ((such effective date; and any proposed domestic insurer which is in process of formation or financing under a solicitation permit which is outstanding immediately prior to July 1, 1991, shall, if otherwise qualified therefor, be authorized to transact any kind or kinds of insurance upon the basis of the capital and surplus requirements of such an insurer under the laws in force immediately prior to such effective date. The requirements for paid-in capital stock, basic surplus, and special surplus that were in effect immediately before July 1, 1991, apply to any completed application for a certificate of authority from a foreign or alien insurer that is on file with the commissioner on July 1, 1991)) the effective date of this act.

(4) The commissioner may, by rule, require insurers to maintain additional capital and surplus based upon the type, volume, and nature of insurance business transacted consistent with the methods then adopted by the National Association of Insurance Commissioners for determining the appropriate amount of additional capital and surplus to be required. In the absence of an applicable rule, the commissioner may, after a hearing or with the consent of the insurer, require an insurer to have and maintain a larger amount of capital or surplus than prescribed under this section or the rules under this section, based upon the volume and kinds of insurance transacted by the insurer and on the principles of risk-based capital as determined by the National Association of Insurance Commissioners. This subsection applies only to insurers authorized to write life insurance, disability insurance, or both.