HOUSE BILL REPORT

HB 234

BYRepresentatives Lux, Prince, Nutley, Dellwo, Meyers, Locke, Cole, Crane, Leonard, Unsoeld, Jacobsen, Belcher, Sayan, Heavey, Allen, Braddock, Rayburn, Fisch, Nelson, Pruitt, Sprenkle, Bristow, Ebersole, K. Wilson, Basich, Holm, Taylor, Wang and Rasmussen

Authorizing insurance commission to establish standard provisions in fire, home, and auto insurance.

House Staff:Financial Institutions & Insurance

Majority Report:     Do Pass.  (11)

     Signed by Representatives Lux, Chair; Betrozoff, Chandler, Crane, Day, Dellwo, Ferguson, Meyers, Niemi, Silver and Winsley.

House Staff:John Conniff (786-7119)

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE

JANUARY 26, 1987

BACKGROUND:

Under existing law, the Insurance Commissioner is required to adopt rules to effectuate uniformity in basic contracts of fire insurance.  The Commissioner is also required to adopt rules establishing minimum standards for disability insurance contracts, medicare supplemental health insurance contracts, specified disease insurance contracts, and long term care insurance contract.

SUMMARY:

The Insurance Commissioner is authorized to adopt rules establishing reasonable minimum standard conditions, benefits, and terminology for dwelling fire, homeowner and vehicle insurance policies.  Such rules may not contravene other provisions of the Insurance Code.

Fiscal Note:    Not Requested.

House Committee ‑ Testified For:     Dennis Martin, Washington State Trial Lawyers Association; and Scott Jarvis, Insurance Commissioner's Office.

House Committee - Testified Against: Basil Badley, American Insurance Association; and Hal Fosso, State Farm Insurance Company.

House Committee - Testimony For:     The Insurance Code already authorizes the Commissioner to establish minimum standards for life and health insurance.  There is no reason why the Commissioner should not protect consumers who purchase personal auto and homeowner policies by requiring such policies to comply with minimum standards, especially in the use of certain key policy definitions and provisions.  Many such provisions differ dramatically between insurers and serve to confuse the consumer.

House Committee - Testimony Against: The Commissioner already has all the necessary authority to regulate auto and homeowner policies.  The Commissioner can reject any policy that is unfair to consumers when the policy is filed for his approval.  Granting the Commissioner such broad authority will have an adverse impact upon competition in these insurance markets.  The policyholder's agent or broker is responsible for ensuring that the policy holder understands the policy.