WSR 97-15-150

PROPOSED RULES

INSURANCE COMMISSIONER'S OFFICE

[Insurance Commissioner Matter No. R 96-11--Filed July 23, 1997, 11:38 a.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 96-24-106.

Title of Rule: Continuing education requirements for licensees involved in the transaction of long-term care or long-term care partnership policies.

Purpose: These rules clarify existing continuing education requirements and add a certification form for use by issuers.

Statutory Authority for Adoption: RCW 48.02.060, 48.17.150, and 48.85.030.

Statute Being Implemented: RCW 48.01.030, 48.17.150, 48.85.030, and 48.85.040.

Summary: These rules clarify to whom the current continuing education requirements apply, allow the required six-hour course to apply towards the prescribed total hours of continuing education, and establish a reporting process and add a certification form for use by issuers to ensure compliance of continuing education rules adopted last year.

Reasons Supporting Proposal: Licensees requested clarification. Agents asked the commissioner to include the six-hour course of study in the total of thirty-two hours of continuing education required every two years.

Name of Agency Personnel Responsible for Drafting: Jon Hedegard, Olympia, Washington, (360) 664-4615; Implementation: Sue Davidson, Lacey, Washington, (360) 438-7708; and Enforcement: Bill Frandsen, Lacey, Washington, (360) 438-7697.

Name of Proponent: Deborah Senn, Insurance Commissioner, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: WAC 284-17-220 was amended, and WAC 284-85-085 was adopted, in 1996 to require six hours of specialized continuing education every two years for brokers and agents engaged in the transaction of either long-term care or long-term care partnership insurance. This was in addition to the thirty-two hours of continuing education already required every two years for all agents and brokers. Since adoption, the commissioner has received numerous calls from licensees asking if the new rules apply to them and requesting that they be allowed to apply the specialized course to the total thirty-two hour continuing education requirement. These rules clarify who must comply with this requirement and allow the course to be applied toward the total continuing education hours required to renew a license. Finally, they clarify the requirement that the issuer of a long-term care or long-term care partnership policy may accept only policies submitted by licensees who have completed this requirement. To make it easier for issuers to comply with this requirement, a certification form attesting to compliance is provided.

The changes should eliminate confusion, ensure compliance, and result in more competent, better-educated licensees in the fields of long-term care and long-term care partnership.

Proposal Changes the Following Existing Rules: WAC 284-17-220 and 284-85-085 are both amended. The changes clarify who must complete this educational course. Also, they allow the existing six-hour long-term care and long-term care partnership education requirement to be included in the total thirty-two continuing education hours needed for license renewal. Previously, the long-term and long-term care partnership education requirements were additional to the thirty-two hours necessary for license renewal. The proposed rule provides a standard form for companies issuing long-term care or long-term care partnership policies to certify that affiliated licensees selling long-term care or long-term care partnership policies have fulfilled all of the requirements of WAC 284-17-220. This form is provided for the convenience of issuers and does not require issuers to provide any new information.

No small business economic impact statement has been prepared under chapter 19.85 RCW. No small business economic impact statement was prepared because this rule does not impose any new requirements on licensees. The rules only clarify or reduce the impact on licensees. See Explanation of Rule above.

Introduction: This report analyzes a proposed rule to modify the educational requirements for agents selling long-term care (LTC) and long-term care partnership (LTCP) policies. The changes are proposed to improve the clarity of the requirements, simplify the filing process, and expand the benefits of continuing education for courses concerning LTC and LTCP. This evaluation is completed to demonstrate that the proposed rule increases the probable benefits of the rule while imposing no additional costs on the regulated industry. An analysis of the economic impact on small businesses is also included as part of this evaluation.

Background: In 1996, the Insurance Commissioner adopted a rule requiring agents of long-term care (LTC) and long-term care partnership (LTCP) to take additional continuing education in their respective fields. The requirements were placed in chapter 284-17 WAC, the chapter pertaining to licensing and continuing education requirements for all agents. During the last year, staff from the Office of the Insurance Commissioner (OIC) received a number of calls from agents with questions regarding the rule and to whom it applies. It did not appear to be clear to the agents that the requirements were directed only to persons selling LTC and LTCP policies. The proposed rule improves the clarity of these requirements.

In addition to questions regarding the clarity of the rule, the commissioner received a number of requests to allow continuing education credits earned in the field of LTC and/or LTCP to count toward the thirty-two continuing education credit hours required by all agents. The rule, as written in 1996, required agents selling LTC or LTCP policies to take six hours of LTC or LTCP continuing education in addition to the thirty-two hours required for all agents. The proposed rule allows an approved six-hour course in long-term care and long-term care partnership to count toward the thirty-two required continuing education credit hours set forth in WAC 284-17-220 (2)(a). To simplify the filing process, the proposed rule provides a standard form for companies issuing LTC or LTCP policies to certify that affiliated licensees selling LTC or LTCP policies fulfill all of the requirements of WAC 284-17-220.

Federal Law and other State Law: The proposed rule is not required by federal law or federal regulation. This rule does not require any person to take an action that violates requirements of any other federal or state law. A task force was formed to address issues regarding LTC and LTCP policies in 1996. The task force is made up of providers, consumers, insurers, agents, attorneys and representatives from multiple state agencies and advocacy groups. Rule drafters consulted with members of this task force regarding the proposed changes to the rule.

Industry Codes: The proposed rule would affect all licensees and insurers selling LTC or LTCP policies in the state of Washington. This would affect Accident and Health Insurance Companies (industry code #6321), Hospital and Medical Service Plans (industry code #6324), and Insurance Agents, Brokers, and Services (industry code #6411).

Probable Costs: The proposed rule does not impose any direct costs on the regulated industry. The proposed rule improves the efficiency and clarity of regulation concerning continuing education requirements. The rule does not impose new educational or filing requirements. The proposed rule provides a standard form for companies issuing LTC or LTCP policies to certify that affiliated licensees selling LTC or LTCP policies fulfill all of the requirements of WAC 284-17-220. This form is provided for the convenience of the issuers and does not request issuers to provide any new information.

The commissioner recognizes the potential for costs associated with the time required to read and comprehend the amended rule. These probable costs would be insignificant relative to the benefits associated with the rule. The Office of Insurance Commissioner will need to devote staff time to administer the new continuing education requirements and track the information requested. These impacts should be minor and the OIC will bear the costs of its administration.

Probable Benefits: The rule increases opportunities for agents to earn continuing education credit by allowing LTC or LTCP courses to count toward the thirty-two hours of required continuing education. Representatives from insurance agent groups and insurance companies support these changes. Consumers of LTC and LTCP policies would potentially benefit from working with agents who have received additional training and knowledge from the required LTC/LTCP classes.

This rule also improves the clarity of regulation concerning continuing education. The licensing division of the OIC has received a number of calls with questions regarding these requirements. The improved clarity should reduce the confusion of those having to comply with the requirements as well as the time spent by OIC staff answering questions regarding this issue.

Small Business Impact: The proposed rule does not impose a disproportionately higher economic burden on small businesses within the four-digit classification. Agents and agent groups selling LTC and LTCP policies are the smallest of the businesses affected by this rule. The proposed rule would have a beneficial impact on these agents.

There are no new filing requirements associated with this rule. The rule has been amended to include a standard filing form for the convenience of the issuers of these policies. Small businesses will not be required to change their business practices in any way to comply with the proposed rule.

Mitigation: Mitigation to reduce the economic impact of the proposed rule on small businesses is not necessary because there are no cost impacts on small businesses. The proposed rule could be considered a form of mitigation itself, because it reduces compliance costs and provides for additional benefits. In order to reduce potential filing preparation costs to the issuers of these policies, the OIC provides a form with a standard certification statement.

Industry Involvement: Businesses that will be affected by the proposed rules were invited to provide assistance to the OIC throughout the rule-writing process. Rule writers consulted with participants of a task force formed to implement LTC regulation throughout the rule-drafting process. The commissioner solicited and received comments from insurance agents, insurance company representatives, insurance consultancy groups, insurance associations, legislators on health care committees from both parties, consumers, and staff from the Department of Social and Health Services and the Health Care Authority.

Conclusion: The proposed rule improves the efficiency of regulation by potentially increasing the educational credits earned by agents selling LTC/LTCP policies without increasing the costs of compliance. The proposed rule also clarifies continuing education requirements and simplifies the filing process. This rule does not impose any direct costs on the regulated industry. The proposed rule benefits agents and insurers selling LTC and LTCP policies as well as consumers of these policies. Because this rule increases potential benefits without imposing any direct costs, it is reasonable to conclude that the probable benefits of this proposed rule are greater than probable costs.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. This is not a "significant legislative rule" as defined at RCW 34.05.328 (5)(c)(iii).

Hearing Location: 14th and Water, Insurance Building, 2nd Floor Conference Room, Room 200, on August 26, 1997, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Steve Carlsberg by August 22, 1997, TDD (360) 664-3154.

Submit Written Comments to: Kacy Brandeberry, P.O. Box 40255, Olympia, WA 98504-0255, Internet e-mail inscomr@aol.com, FAX (360) 586-3535, by August 22, 1997.

Date of Intended Adoption: September 4, 1997.

July 23, 1997

Ida T. Zodrow

Deputy Commissioner

AMENDATORY SECTION (Amending Matter No. R 95-16, filed 8/13/96, effective 9/13/96)

WAC 284-17-220 Continuing education requirement. (1) Twenty-four credit hours of approved continuing education must be presented as a prerequisite to each license renewal or reinstatement.

(2)(a) Effective July 1, 1996, the number of required continuing education credit hours will be increased from twenty-four to thirty-two hours for each two-year licensing period.

(b)(i) ((Effective June 1, 1997, an additional six hours in every two-year period of continuing education credits will be required of agents and brokers engaged in the transaction of long-term care partnership insurance business. The commissioner will prescribe the course of study. Each course for these special lines of insurance shall be approved by the commissioner in advance.

(ii) Effective January 1, 1998, an additional six hours in every two-year period of continuing education credits will be required of agents and brokers engaged in the transaction of long-term care insurance business.

(iii) Agents involved in the transaction of both long-term care and long-term care partnership insurance are required to pass only six total hours of specialized long-term care and long-term care partnership continuing education combined.

(iv) An issuer shall annually certify to the commissioner that its appointed agents have completed the required education. Such reports shall be attached to the annual long-term care partnership report required at RCW 48.85.030 (2)(d).)) Licensees engaged in the transaction of long-term care insurance, long-term care partnership insurance, or both, are required to take an approved six-hour course on long-term care, long-term care partnership, or both, every two years. The commissioner shall prescribe the content of the course. Each course shall be approved by the commissioner in advance.

(ii) Effective January 1, 1998, a licensee shall not submit an application for a long-term care or long-term care partnership policy to an issuer unless the licensee has completed the approved course.

(iii) The approved six-hour course may count towards the thirty-two required continuing education credit hours set forth in (a) of this subsection.

(iv) An issuer of long-term care or long-term care partnership policies shall annually certify to the commissioner that:

(A) Its affiliated licensees involved in the transaction of long-term care or long-term care partnership policies have completed the approved six-hour course requirement every two years; and

(B) The issuer has only accepted applications from licensees in compliance with the provisions of (b)(i) of this subsection.

The certification shall be filed with the commissioner on or before March 31 of each year.

(c) Each course credit applied toward satisfaction of the continuing education requirement must have been completed within the twenty-four month period immediately preceding the licensee's assigned license renewal date and the credit may not have been used previously to comply with the continuing education requirement.

(3) The course participated in and for which credit is received shall be reported to the commissioner as part of the application for license renewal and shall be subject to verification by audit.

(4) Repeating an approved course for which the licensee has previously claimed credit will not satisfy the continuing education requirement.

(5) The licensee must retain the certificate of completion for three years from the date on the certificate and must present the original of such certificate upon request of or audit by the commissioner.

[Statutory Authority: RCW 48.02.060, 48.17.150, 48.20.450, 48.85.030 and 48.85.040. 96-17-029 (Matter No. R 95-16), 284-17-220, filed 8/13/96, effective 9/13/96. Statutory Authority: RCW 48.01.030, 48.02.060(3), 48.14.010, 48.17.150(2), 48.17.160 (1)(5) and 48.17.500(3). 94-14-033 (Order R 94-14), 284-17-220, filed 6/28/94, effective 7/29/94. Statutory Authority: RCW 48.02.060. 89-19-037 (Order R 89-10), 284-17-220, filed 9/15/89, effective 10/16/89. Statutory Authority: RCW 48.02.060 and 48.17.150. 81-18-049 (Order R 81-5), 284-17-220, filed 8/31/81. Statutory Authority: RCW 48.17.150 as amended by 1979 ex.s. c 269 7,10. 80-04-042 (Order R 80-3), 284-17-220, filed 3/20/80.]

NEW SECTION

WAC 284-54-750 Standards for education of licensees soliciting long-term care contracts. (1) Every issuer shall annually certify to the commissioner that each licensee involved in the transaction of long-term care insurance has completed an approved six-hour course on long-term care or long-term care and long-term care partnership every two years in accordance with WAC 284-17-220 (2)(b)(i). Applications may only be accepted if the licensee involved in the transaction meets all of the requirements of WAC 284-17-220 (2)(b)(i).

(2) Beginning with the calender year 1998, issuers shall file a copy of the following certification report with the commissioner on or before March 31 of each year:

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Reviser's note: The spelling error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.

AMENDATORY SECTION (Amending Matter No. R 95-16, filed 8/13/96, effective 9/13/96)

WAC 284-85-085 Standards for education of ((agents)) licensees soliciting long-term care partnership contracts. (1) Every issuer shall annually certify to the commissioner that each ((agent appointed by the issuer involved in the solicitation of a long-term care partnership contract or the conversion of a long-term care contract or partnership contract, that each such agent has passed six hours of specialized education specifically related to insurance coverage under the Washington Long-Term Care Partnership Act in every two-year period beginning with the calendar year 1998, as required at WAC 284-17-220.)) licensee involved in the transaction of long-term care partnership insurance has completed an approved six-hour course on long-term care partnership or long-term care partnership and long-term care every two years in accordance with WAC 284-17-220 (2)(b)(i). Applications may only be accepted if the licensee involved in the transaction meets the requirements of WAC 284-17-220 (2)(b)(i).

(2) Beginning with the calendar year 1998, issuers shall file a copy of the following certification report with the commissioner on or before March 31 of each year:

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