WSR 06-11-177




[ Insurance Commissioner Matter No. R 2006-03 -- Filed May 24, 2006, 11:15 a.m. ]

     Original Notice.

     Preproposal statement of inquiry was filed as WSR 06-07-095.

     Title of Rule and Other Identifying Information: Washington essential property and casualty inspection and placement program (FAIR plan) expansion.

     Hearing Location(s): Insurance Commissioner's Office, Room TR 120, 5000 Capitol Boulevard, Tumwater, WA 98504-0255, on June 28, 2006, at 9:00 a.m.

     Date of Intended Adoption: July 10, 2006.

     Submit Written Comments to: Kacy Scott, P.O. Box 40255, Olympia, WA 98504-0258, e-mail, fax (360) 586-3109, by June 27, 2006.

     Assistance for Persons with Disabilities: Contact Lori Villaflores by June 26, 2006, TDD (360) 586-0241.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of these amendments is to expand the Washington essential property inspection and placement program (FAIR plan) to all counties within Washington state.

     Reasons Supporting Proposal: Presently, only properties in all or part of three counties designated "urban areas," as defined in WAC 284-19-050(5), are eligible to apply for coverage in the FAIR plan. Certain properties outside of these designated areas cannot obtain property coverage and do not have access to the FAIR plan. In particular, information from insurance brokers indicates consumers with older homes in some rural areas of Washington have difficulty obtaining property insurance. This causes contract problems and economic insecurity for property owners outside the boundaries of the defined urban areas. Expanding the geographic area of the FAIR plan to include all counties in Washington helps address this problem.

     Statutory Authority for Adoption: RCW 48.02.060.

     Statute Being Implemented: RCW 48.58.010.

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

     Name of Proponent: Insurance Commissioner Mike Kreidler, governmental.

     Name of Agency Personnel Responsible for Drafting: Chris Carlson, P.O. Box 40255, Olympia, WA 98504-0256 [98504-0255], (360) 725-7042; Implementation: Pete Cutler, P.O. Box 40255, Olympia, WA 98504-0256 [98504-0255], (360) 725-7037; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed regulations will not have a negative economic impact on small businesses regulated by the office of the insurance commissioner.

     A cost-benefit analysis is not required under RCW 34.05.328. This is not a significant legislative rule for the purposes of RCW 34.05.328.

May 24, 2006

Mike Kreidler

Insurance Commissioner


AMENDATORY SECTION(Amending Matter No. R 98-10, filed 6/16/98, effective 7/17/98)

WAC 284-19-020   Purposes of program.   The purposes of the program are:

     (1) To assure stability in the property insurance market of this state.

     (2) To encourage maximum use, in obtaining essential property insurance, of the available, normal insurance market provided by authorized insurers.

     (3) To make essential property insurance available where it cannot be obtained through the normal insurance market, subject to the conditions stated in this chapter.

     (4) To encourage the improvement of the condition of properties located in ((the urban areas of)) the state of Washington and to further orderly community development.

     (5) To establish a FAIR plan (fair access to insurance requirements), an industry placement facility and a joint reinsurance association for the equitable distribution and placement of risks among insurers in the manner and subject to the conditions stated in this chapter.

[Statutory Authority: RCW 48.02.060. 98-13-095 (Matter No. R 98-10), § 284-19-020, filed 6/16/98, effective 7/17/98; Order R-69-1, § 284-19-020, filed 1/28/69.]

AMENDATORY SECTION(Amending Matter No. R 98-10, filed 6/16/98, effective 7/17/98)

WAC 284-19-050   Definitions.   (1) "Insurer" means any insurance company or other organization licensed to write and engage in writing property insurance business, including the property insurance components of multiperil policies, on a direct basis, in this state.

     (2) "Essential property insurance" means the coverage against direct loss to real and tangible personal property at a fixed location that is provided in the standard fire policy and extended coverage endorsement, and shall include also the perils of vandalism and malicious mischief and such additional lines of property insurance as may be designated by the commissioner. Essential property insurance specifically includes insurance against direct loss to property which is being constructed or rehabilitated (builder's risk coverage). It does not include automobile insurance or insurance on farm or manufacturing risks.

     (3) "Industry placement facility" (referred to as the facility) means the organization formed by insurers to assist applicants ((in urban areas)) in securing essential property insurance and to administer the FAIR plan and the joint reinsurance association.

     (4) "Inspection bureau" means the Washington Surveying and Rating Bureau.

     (((5) "Urban area" includes the following municipalities and counties and such additional counties, municipalities, and definitive political subdivisions as may be added by the commissioner:))

((Pasco - All
King County - All
Tacoma     - All))

     (6))) (5) "Premiums written" means gross direct premiums (excluding that portion of premiums on risks ceded to the joint reinsurance association) charged during the second preceding calendar year with respect to property in this state on all policies of property insurance and property insurance components of all multiperil policies, as defined and computed by the facility, less return premiums, dividends paid or credited to policyholders, or the unused or unabsorbed portions of premium deposits.

     (((7))) (6) A "service insurer" means any company designated by the facility and approved by the commissioner to issue policies under this program.

     (((8))) (7) "Commissioner" means the commissioner of insurance of the state of Washington.

[Statutory Authority: RCW 48.02.060. 98-13-095 (Matter No. R 98-10), § 284-19-050, filed 6/16/98, effective 7/17/98; Order R-73-2, § 284-19-050, filed 3/30/73; Order R-70-1, § 284-19-050, filed 7/31/70; Order R-69-1, § 284-19-050, filed 1/28/69.]

AMENDATORY SECTION(Amending Matter No. R 98-10, filed 6/16/98, effective 7/17/98)

WAC 284-19-060   FAIR plan -- Inspections and reports.   (1) Any person having an insurable interest in real or tangible personal property at a fixed location ((in an urban area)) is entitled to an inspection of the property by the inspection bureau at no cost, upon application to the facility. The inspection may be requested by the property owner, a representative of the property owner, the insurer, or the insurance producer and need not be in writing. Requests for inspections shall be transcribed on a form approved by the facility. A deposit premium is not required as a precondition to inspection.

     (2) The owner of the building need not be present for a tenant to obtain an inspection, but the inspection bureau must be provided full access to the property for which insurance is sought.

     (3) An inspection report shall be made for each property inspected. The report shall cover pertinent structural and occupancy features as well as the general condition of the building and surrounding structures. A representative photograph of the property may be taken during the inspection.

     (4) During the inspection, the inspector shall point out features of structure and occupancy to the applicant or a representative of the applicant, if present, and shall indicate those features which may result in condition charges if the risk is accepted. The inspector has no authority to advise whether the facility will provide the coverage.

     (5) The report shall include a rate make-up statement, including any condition charges or surcharges imposed by inspection or under the program, or under any substandard rating plan approved by the commissioner. A copy of the inspection report shall be made available to the applicant or the applicant's agent upon request.

[Statutory Authority: RCW 48.02.060. 98-13-095 (Matter No. R 98-10), § 284-19-060, filed 6/16/98, effective 7/17/98; Order R-69-1, § 284-19-060, filed 1/28/69.]

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