BILL REQ. #:  H-3988.1 

Read first time 01/14/2004.   Referred to Committee on Financial Institutions & Insurance.

     AN ACT Relating to creating a joint underwriting association for adult family homes; and adding a new chapter to Title 48 RCW.

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

NEW SECTION.  Sec. 1   Adult family homes have experienced significant problems in both availability and affordability of liability insurance. Currently, many adult family homes are unable to find liability insurance coverage in both the admitted and nonadmitted insurance market, which threatens their continued operation. Several adult family homes have had to close their doors or refuse service to certain types of high-risk clients. Adult family homes provide a valuable alternative to institutional care and promote a high degree of independent living for residents. The continued viability of adult family homes is an essential long-term care option for our aging population. The legislature intends to increase the availability of cost-effective, high quality adult care. Therefore, the legislature intends to require all insurers authorized to write commercial or professional liability insurance to be members of a joint underwriting association created to provide liability insurance for adult family home services.

NEW SECTION.  Sec. 2   Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Association" means the not-for-profit joint underwriting association established under this chapter.
     (2) "Adult family home insurance" means insurance coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death or injury of any person as the result of negligence or malpractice in rendering professional service by any licensee.
     (3) "Licensee" means any person or facility licensed as an adult family home under chapter 70.128 RCW.

NEW SECTION.  Sec. 3   The commissioner must approve by July 1, 2004, a reasonable plan for the establishment of a nonprofit, joint underwriting association for adult family home insurance, subject to the conditions and limitations contained in this chapter.

NEW SECTION.  Sec. 4   The association must be comprised of all insurers possessing a certificate of authority to write and engage in writing general casualty insurance within this state on a direct basis, including the liability portion of multiperil policies, but not of ocean marine insurance. Every such insurer must be a member of the association and must remain a member as a condition of its authority to continue to transact business in this state.

NEW SECTION.  Sec. 5   Any licensee may apply to the association to purchase adult family home insurance and the association must offer a policy with reasonable liability limits as determined by the association based on standard insurance industry practices. The commissioner must require the use of a rating plan for adult family home insurance that permits rates to be modified according to the type, size, and past loss experience of the licensee including any other difference among licensees that can be demonstrated to have a probable effect upon losses.

NEW SECTION.  Sec. 6   The commissioner may select an insurer to administer a plan established under this chapter. The insurer must be admitted to transact the business of insurance in the state of Washington.

NEW SECTION.  Sec. 7   The commissioner may adopt all rules necessary to ensure the efficient, equitable operation of the association, including but not limited to rules requiring or limiting certain policy provisions.

NEW SECTION.  Sec. 8   Sections 1 through 7 of this act constitute a new chapter in Title 48 RCW.