HOUSE BILL REPORT
SB 5195
As Amended by the House
BYSenators Moore, Bender and Metcalf; by request of Insurance Commissioner
Revising provisions on insurance.
House Committe on Financial Institutions & Insurance
Majority Report: Do pass with amendments. (13)
Signed by Representatives Lux, Chair; Zellinsky, Vice Chair; Betrozoff, Chandler, Crane, Day, Dellwo, Ferguson, Meyers, Niemi, Nutley, Silver and Winsley.
House Staff:John Conniff (786-7119)
AS OF HOUSE SECOND READING APRIL 6, 1987
BACKGROUND:
When the Insurance Commissioner has issued an order suspending, revoking, or refusing to renew an agent's, broker's, solicitor's, or adjuster's license, the person denied the license may appeal the order and if the person posts a bond in the amount of $500, the order may be suspended pending the outcome of the appeal.
If an insurer loses their authority to do business in Washington, the insurer may no longer issue or renew policies in this state.
Fees for taking an exam to obtain a license as an agent, broker, solicitor, or adjuster are $5 for processing the first examination for a license, $50 for a broker's license, and $10 for all other examinations except those conducted by an independent testing service whose fees are approved by the commissioner.
If another state establishes a fine or penalty of a certain amount for violations of that state's laws upon insurers of this state, Washington may impose a fine or penalty of a similar amount, for similar violations of Washington laws, upon insurers of the other state. This statute is commonly referred to an a "retaliatory" provision designed to ensure equal treatment of insurers headquartered in Washington when they do business in other states.
A person may not obtain an agent or broker license if the person intends to use the license primarily to obtain insurance on his/her own risks as defined by statute.
If an application for insurance has been rejected by the life or disability insurer of the agent submitting the application, the agent may submit the application with another insurer even if the agent is not an agent of the other insurer.
No agent or broker may compensate an unlicensed person to solicit or assist in the procurement of business unless the compensation is in the form of a salary paid irrespective of whether a policy is actually issued.
If the commissioner finds that the public safety is in jeopardy, the commissioner may temporarily suspend an agent's license. However, the suspension is effective only until revocation proceedings are concluded. This notice must be given at least three days prior to the effective date of the suspension and must include a notice of revocation.
Agents and brokers are permitted to charge a fee for services provided beyond those customarily provided during an insurance sale.
No lender may sell insurance for the protection of real property until the lender has made a commitment to lend money.
Last year, the legislature created a joint underwriting association for daycare liability insurance. A joint underwriting association requires the participation of all similar types of insurers in bearing the costs and expenses of insuring a risk that is not insurable through the standard market.
Typically, an insurer will be chosen to underwrite and administer a policy sold to a person or business that was unable to obtain the coverage through ordinary methods. At the end of each policy period the losses are calculated and each insurer of a similar type doing business in Washington is assessed an amount to cover the losses.
The insurance code prohibits insurers from unfairly discriminating against applicants for insurance and against policyholders. While insurers may not discriminate on the basis of race, color, creed, or national origin, insurers may discriminate on the basis of age and sex if the insurer can prove that differences in age and sex results in differences in expected losses under a policy. However, the insurance code provisions prohibiting unfair discrimination are inconsistent.
The Long Term Care Insurance Act set minimum standards for nursing home insurance contracts and similar long term care insurance policies last year.
SUMMARY:
The Insurance Commissioner is required to provide assistance to consumers in resolving complaints and to provide information concerning insurers and other licensees.
The provision of the insurance code that permits a stay of suspension, revocation, or refusal to issue an agents license upon the posting of a $500 bond is repealed.
Insurers are required to report loss and expense data by May 1 of each year rather than March 1 of each year.
A policy that has been issued by an insurer who loses their authority to transact business may be renewed and continued in force despite the loss of authorization.
The application fees charged for processing an initial examination to obtain an agent's licensee and for a broker's examination are deleted. A $10 fee will be assessed for all agent and broker exams administered by the commissioner. In addition, a technical amendment is made to the section authorizing independent testing services to collect a fee for administering exams. Independent testing services may now also keep the fee for their services.
The "retaliatory" tax provision of the insurance code is amended to delete the reference to "fines and penalties" thereby permitting Washington to impose a fine or penalty for delinquent taxes in addition to the retaliatory tax imposed.
The provision prohibiting agents from obtaining a license if the principal purpose of the license is to place coverage for the agent's own risks is deleted.
An agent who places insurance with another company after the agent's own company rejects an insurance application is deemed to be the agent of the other company as to the policy issued.
Payment for services furnished by an unlicensed person who does not participate in the insurance transaction and whose compensation is not contingent upon an insurance sale is permitted.
The commissioner may temporarily suspend an agent's license after notice of revocation if the public safety or welfare is threatened.
Title insurance agents are exempt from provisions requiring a separate account for money received for title insurance.
Agents and brokers who provide services beyond those customarily provided in conjunction with an insurance sale may reduce the fee charged for these additional services to the extent a full fee would result in the client's double payment for the same services.
Lenders are prohibited from selling insurance to a borrower prior to making a commitment to lend money for personal property as well as real property.
The Insurance Commissioner is authorized to require property and casualty insurers to participate in a joint underwriting association for any type or property of casualty insurance that is not reasonably available in Washington.
Insurance code provisions governing unfair discrimination by insurers are amended so that every section of the code prohibits the same type of unfair discrimination. No substantive changes are made.
No long term care insurance contract may contain a "prior hospitalization" provision that requires a stay of longer than three days in order to qualify for policy benefits. No long term care contract issued or renewed on or after January 1, 1989, may contain a "prior hospitalization" provision that requires a stay of any duration unless the insurer can actuarially prove that the provision is available to prevent overuse of benefits.
Fiscal Note: Not Requested.
House Committee ‑ Testified For: Scott Jarvis, Insurance Commissioner's Office.
House Committee - Testified Against: None Presented.
House Committee - Testimony For: These provisions are technical changes to the insurance code and are necessary to clarify, update and improve the insurance code.
House Committee - Testimony Against: None Presented.