WSR 08-21-094




[ Insurance Commissioner Matter No. R 2008-25 -- Filed October 15, 2008, 1:49 p.m. ]

Subject of Possible Rule Making: Discretionary clauses.

Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 48.20.450, 48.20.460, 48.23.370, 48.30.010, 48.44.050, 48.46.200, 48.66.050(1), 48.84.050.

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: The commissioner will consider rule making options to clarify that discretionary clauses are prohibited in life, annuity, disability income, medicare supplement, long-term care and health policies. Benefits as written in these policies are guaranteed, and when the carrier has unfettered authority to decide what benefits are due a conflict of interest occurs. Prohibiting discretionary clauses will prohibit carriers from reserving discretion and interpreting the terms of the contract, and provide standards of interpretation or review that are consistent with Washington law.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: None.

Process for Developing New Rule: Send written comments by December 2, 2008, to Kacy Scott, P.O. Box 40255, Olympia, WA 98504-0255, fax (360) 586-3109, e-mail

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting Kacy Scott, P.O. Box 40255, Olympia, WA 98504-0255, fax (360) 586-3109, e-mail

October 15, 2008

Mike Kreidler

Insurance Commissioner

Washington State Code Reviser's Office