AN
ACT Relating to institutions conducting a charitable gift annuity business;
amending RCW 48.38.010, 48.38.020, 48.38.040, 48.38.050, and 48.31.020; and
adding new sections to chapter 48.38 RCW.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
48.38.010 and 1979 c 130 s 6 are each amended to read as follows:
The
commissioner may grant a certificate of exemption to any insurer or
educational, religious, charitable, or scientific institution conducting a
charitable gift annuity business:
(1)
Which is organized and operated exclusively as, or for the purpose of aiding,
an educational, religious, charitable, or scientific institution which is
organized as a nonprofit organization without profit to any person, firm,
partnership, association, corporation, or other entity;
(2)
Which possesses a current tax exempt status under the laws of the United
States;
(3)
Which serves such purpose by issuing charitable gift annuity contracts only for
the benefit of such educational, religious, charitable, or scientific
institution;
(4)
Which appoints the insurance commissioner as its true and lawful attorney upon
whom may be served lawful process in any action, suit, or proceeding in any
court, which appointment shall be irrevocable, shall bind the insurer or
institution or any successor in interest, shall remain in effect as long as
there is in force in this state any contract made or issued by the insurer or
institution, or any obligation arising therefrom, and shall be processed in
accordance with RCW 48.05.210;
(5)
Which is fully and legally organized and qualified to do business and has been
actively doing business under the laws of the state of its domicile for a
period of at least three years prior to its application for a certificate of
exemption;
(6)
Which has and maintains minimum unrestricted net assets of five hundred
thousand dollars. "Unrestricted net assets" means the excess of
total assets over total liabilities that are neither permanently restricted nor
temporarily restricted by donor-imposed stipulations;
(7)
Which files with the insurance commissioner its application for a certificate
of exemption showing:
(a)
Its name, location, and organization date;
(b)
The kinds of charitable annuities it proposes to offer;
(c)
A statement of the financial condition, management, and affairs of the
organization and any affiliate thereof, as that term is defined in RCW ((48.31A.010))
48.31B.005, on a form satisfactory to, or furnished by the insurance
commissioner;
(d)
Such other documents, stipulations, or information as the insurance
commissioner may reasonably require to evidence compliance with the provisions
of this chapter;
(((7)))
(8) Which subjects itself and any affiliate thereof, as that term is
defined in RCW ((48.31A.010)) 48.31B.005, to periodic
examinations conducted under chapter 48.03 RCW as may be deemed
necessary by the insurance commissioner;
(((8)))
(9) Which files with the insurance commissioner for the commissioner's
advance approval a copy of any policy or contract form to be offered or issued
to residents of this state. The grounds for disapproval of the policy or
contract form shall be those set forth in RCW 48.18.110; and
(((9)))
(10) Which:
(a)
Files with the insurance commissioner on or before March 1 of each year a copy
of its annual statement prepared pursuant to the laws of its state of domicile,
as well as such other financial material as may be requested, including the
annual statement or other such financial materials as may be requested relating
to any affiliate, as that term is defined in RCW ((48.31A.010)) 48.31B.005;
and
(b)
Coincident with the filing of its annual statement, pays an annual filing fee
of twenty-five dollars plus five dollars for each charitable gift annuity
contract written for residents of this state during the previous calendar year;
and
(c) Which includes on or attaches to the first page of the annual
statement the statement of a qualified actuary setting forth the actuary's opinion
relating to annuity reserves and other actuarial items. "Qualified
actuary" as used in this subsection means a member in good standing of the
American academy of actuaries or a person who has otherwise demonstrated
actuarial competence to the satisfaction of the insurance regulatory official
of the domiciliary state.
Sec.
2. RCW
48.38.020 and 1979 c 130 s 7 are each amended to read as follows:
(1)
Upon granting to such insurer or institution under RCW 48.38.010 a certificate
of exemption to conduct a charitable gift annuity business, the insurance
commissioner shall require it to establish and maintain a ((reserve)) separate
reserve fund adequate to meet the future payments under its charitable gift
annuity contracts ((and, in any event, the reserve fund shall)).
(2)
The assets of the separate reserve fund:
(a)
Shall be held legally and physically segregated from the other assets of the
certificate of exemption holder;
(b)
Shall be invested in the same manner that persons of reasonable prudence,
discretion, and intelligence exercise in the management of a like enterprise,
not in regard to speculating but in regard to the permanent disposition of
their funds, considering the probable income as well as the probable safety of
their capital. Investments shall be of sufficient value, liquidity, and
diversity to assure the insurer or institution's ability to meet its
outstanding obligations; and
(c)
Shall not be liable for any debts of the insurer or institution holding a certificate
of exemption under this chapter, other than those incurred pursuant to the
issuance of charitable gift annuities.
(3)
The amount of the separate reserve fund shall be:
(a)
For contracts issued prior to July 1, 1998, not ((be)) less than an
amount computed in accordance with the standard of valuation based on the 1971
individual annuity mortality table((, or any modification of this table
approved by the insurance commissioner,)) with six percent interest for
single premium immediate annuity contracts and four percent interest for all
other individual annuity contracts;
(b)
For contracts issued on or after July 1, 1998, in an amount not less than the
aggregate reserves calculated according to the standards set forth in RCW
48.74.030 for other annuities with no cash settlement options;
(c)
Plus a surplus of ten percent of the combined amounts under (a) and (b) of this
subsection.
(4)
The general assets of the insurer or institution holding a certificate of
exemption under this chapter shall be liable for the payment of annuities to
the extent that the separate reserve fund is inadequate.
(((2))) (5) For any failure on its part to establish
and maintain the ((reserve)) separate reserve fund, the insurance
commissioner shall revoke its certificate of exemption.
Sec.
3. RCW
48.38.040 and 1979 c 130 s 9 are each amended to read as follows:
(1)
An insurer or institution holding a certificate of exemption under this chapter
shall be exempt from all other provisions of this title except as specifically
enumerated in this chapter by reference.
(2) An insurer or institution holding a certificate of exemption
under this chapter is subject to chapter 48.31 RCW.
Sec.
4. RCW
48.38.050 and 1979 c 130 s 10 are each amended to read as follows:
(1)
The insurance commissioner may refuse to grant, or may revoke or suspend, a
certificate of exemption if the insurance commissioner finds that the insurer
or institution does not meet the requirements of this chapter or if the
insurance commissioner finds that the insurer or institution has violated RCW
48.01.030 or any provisions of chapter 48.30 RCW or is found by the
insurance commissioner to be in such condition that its further issuance of
charitable gift annuities would be hazardous to annuity contract holders and
the people of this state.
(2)
After hearing or with the consent of the insurer or institution and in addition
to or in lieu of the suspension, revocation, or refusal to renew any
certificate of exemption, the commissioner may levy a fine upon the insurer or
institution in an amount not more than ten thousand dollars. The order levying
such a fine shall specify the period within which the fine shall be fully paid
and which period shall not be less than fifteen nor more than thirty days from
the date of the order. Upon failure to pay such a fine when due the
commissioner shall revoke the certificate of exemption of the insurer or
institution if not already revoked, and the fine shall be recovered in a civil
action brought in behalf of the commissioner by the attorney general. Any fine
so collected shall be paid by the commissioner to the state treasurer for the
account of the general fund.
NEW
SECTION. Sec. 5. A
new section is added to chapter 48.38 RCW to read as follows:
An
insurer or institution holding a certificate of exemption to issue charitable
gift annuities under this chapter shall not transact or be authorized to
transact a variable annuity business as described in chapter 48.18A RCW.
NEW
SECTION. Sec. 6. A
new section is added to chapter 48.38 RCW to read as follows:
The
commissioner may adopt rules to implement and administer this chapter.
NEW
SECTION. Sec. 7. A
new section is added to chapter 48.38 RCW to read as follows:
After June 30, 1998, an insurer or institution which does not have
the minimum unrestricted net assets required by RCW 48.38.010(6) may not issue
any new charitable gift annuities until the insurer or institution has and
maintains the minimum unrestricted net assets required by RCW 48.38.010(6).
Sec.
8. RCW
48.31.020 and 1989 c 151 s 1 are each amended to read as follows:
For
the purposes of this chapter, other than as to RCW 48.31.010, and in addition
to persons included under RCW ((48.31.110)) 48.99.010, the term
"insurer" shall be deemed to include an insurer authorized under
chapter 48.05 RCW, an insurer or institution holding a certificate of
exemption under RCW 48.38.010, a health care service contractor registered
under chapter 48.44 RCW, and a health maintenance organization registered under
chapter 48.46 RCW, as well as all persons engaged as, or purporting to be
engaged as insurers, institutions issuing charitable gift annuities,
health care service contractors, or health maintenance organizations in this
state, and to persons in process of organization to become insurers, institutions
issuing charitable gift annuities, health care service contractors, or
health maintenance organizations.
