HOUSE BILL REPORT

SB 5152

BYSenators von Reichbauer and Smitherman

Amending insurance form filing requirements.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (13)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Chandler, Ranking Republican Member; Anderson, Baugher, Beck, Crane, Day, Dorn, P. King, Nutley, K. Wilson and Winsley.

House Staff:John Conniff (786-7124)

AS PASSED HOUSE APRIL 4, 1989

BACKGROUND:

Almost all insurance policy forms and property/casualty rates must be filed with the Insurance Commissioner for review before the policy form or rates may be used by an insurance company. The Commissioner has 15 days to review the policy forms and rates submitted. If the Commissioner does not disapprove the form or policy rate within 15 days, the form or rate is deemed approved by the Commissioner unless the Commissioner extends the review period for an additional 15 days. The Commissioner has 30 days to disapprove casualty insurance rates.

Property/casualty insurance companies are required to consider the following factors in the formulation of all rates: loss experience from Washington and other states, the potential for catastrophic losses, profit, and other factors. Insurers must submit with a rate filing any plan or guidelines concerning risk classifications and rating schedules.

Although insurance companies are permitted to apply for deviations from property and casualty insurance rates filed with the Commissioner, insurers are not statutorily authorized to apply for deviations from forms filed with the Commissioner. Nevertheless, the Commissioner permits insurers to apply for such form deviations.

If the premium for an insurance policy can only be determined when the policy period ends, the insurer must submit a statement of the basis and rates upon which the final premium will be determined to an examining bureau and to the insured upon request.

SUMMARY:

Provisions governing insurance rate and form filings are amended to permit the Commissioner 30 days to review all rate and form filings, to alter and refine the analysis required by insurers for rate filings, to authorize deviations from form filings upon application to the Commissioner, to require certain policies to contain a statement of the basis and rate upon which a final premium will be calculated, and to provide uniformity in rate and form filing procedures.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Lee Barclay, Property and Casualty Actuary, Insurance Commissioner's Office; Alan Morrow, Senior Rate Analyst, Insurance Commissioner's Office; and Jean Leonard, State Farm Insurance Company.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    These changes to the insurance rate and form filing laws will formalize many procedures currently followed by the Commissioner's Office, will give the Commissioner more tools to ensure fair insurance rates, and will reduce the severity of rate increases by forcing insurers to examine rates more often.

House Committee - Testimony Against:      None Presented.