WSR 14-21-178
[Insurance Commissioner Matter No. R 2013-26—Filed October 22, 2014, 10:29 a.m., effective November 22, 2014]
Effective Date of Rule: Thirty-one days after filing.
Other Findings Required by Other Provisions of Law as Precondition to Adoption or Effectiveness of Rule: RCW 48.30.010 requires that [the] commissioner include a detailed description of the facts upon which he relied and of facts upon which he failed to rely in defining the method of competition or other act or practice in the conduct of insurance to be unfair or deceptive in the concise explanatory statement.
Purpose: The rule amends WAC 284-23-550 to provide for a variable interest rate to be paid by the insurer based upon current interest rates, rather than a set rate. The rule also amends WAC 284-23-550 to provide that it does not apply to policies with a death benefit of more than $5,000 rather than $25,000.
Citation of Existing Rules Affected by this Order: Amending WAC 284-23-550.
Statutory Authority for Adoption: RCW 48.02.060 and 48.30.010.
Adopted under notice filed as WSR 14-18-067 on August 29, 2014.
A final cost-benefit analysis is available by contacting Jim Tompkins, P.O. Box 40258, Olympia, WA 98504-0258, phone (360) 725-7036, fax (360) 586-3109, e-mail
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0.
Date Adopted: October 22, 2014.
Mike Kreidler
Insurance Commissioner
AMENDATORY SECTION (Amending WSR 89-21-004, filed 10/5/89, effective 11/5/89)
WAC 284-23-550 Relationship of death benefits to premiums—Unfair practice defined.
(1) It is an unfair practice for any insurer or fraternal benefit society to provide life insurance coverage on any person through a policy or certificate of coverage delivered on or after July 1, 1989, to or on behalf of such person in this state, unless the benefit payable at death under such policy or certificate will equal or exceed the cumulative premiums, as defined in subsection (4) of this section, paid for the policy or certificate, plus interest thereon at the rate of ((five percent per annum)) the monthly average of the five-year Constant Maturity Treasury rate reported by the Federal Reserve for the calendar month in which application for the policy is made compounded annually to the tenth anniversary of the effective date of coverage.
(2) This section applies to death benefits in relation to premiums, subject to the following provisions:
(a) When determining the relationship between benefits and premiums as set forth in subsection (1) of this section, neither premiums nor death benefits shall be adjusted for maturity benefits, surrender benefits, or policy loans.
(b) Annuity benefits, including annuity death benefits, and the premiums therefor shall be disregarded in applying this section.
(c) The following benefits, but not the premiums therefor, shall be disregarded in applying this section:
(i) Accidental death benefits;
(ii) Permanent disability benefits; and
(iii) Any benefit similar to (c)(i) or (ii) of this subsection.
(3) For coverage which varies by duration, including coverage provided through dividends, the "benefit payable at death" for purposes of this section is the sum of the least death benefit during each policy year, for the lesser of ten years or the term of the coverage, including renewals, divided by the number of death benefits included in said sum.
(4) "Cumulative premiums," for purposes of this section, means all sums paid as consideration, net of dividends paid in cash in an orderly progression, for the coverage during the first ten years of the coverage, excluding amounts which are designated in the policy or certificate as providing for annuity benefits.
(5) The benefits required by this section shall be provided contractually.
(6) This section does not apply to:
(a) Life insurance where the minimum death benefit is ((twenty-five)) five thousand dollars or more; or
(b) Coverage under group life insurance policies unless the insured pays all or substantially all of the premium and coverage under individual conversions from such excluded policies; or
(c) Limited payment whole life insurance where the premiums are level at all times, if the least death benefit payable at any time equals or exceeds the total of all premiums which, in the absence of death, would have been paid over the entire limited payment period.
(7) This section does not apply with respect to optional additional contributions paid to the insurer or fraternal benefit society under the terms of a universal life policy, which policy:
(a) Provides a guaranteed plan of insurance of at least ten years' duration on the basis of specified premiums and complies with subsections (1) through (5) of this section; and
(b) Contains a carefully expressed provision which clearly, fairly, and fully discloses the optional plan and the choice to participate therein; and
(c) Is designed so that the charges for, and the benefits to be derived from, the optional contributions are no less favorable to the insured than those which are applicable to the guaranteed plan required by (a) of this subsection.
(8) Approval of policy forms which do not comply with this section is withdrawn.