WSR 16-13-127 PROPOSED RULES OFFICE OF
INSURANCE COMMISSIONER
[Insurance Commissioner Matter No. R 2015-15—Filed June 21, 2016, 1:38 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 15-21-051.
Title of Rule and Other Identifying Information: Clarifying data use for setting P&C premiums.
Hearing Location(s): Office of Insurance Commissioner (OIC), Training Room (TR-120), 5000 Capitol Boulevard S.E., Tumwater, WA 98504-0255, on July 26, 2016, at 9:00 a.m.
Date of Intended Adoption: July 30, 2016.
Submit Written Comments to: Stacy Middleton, P.O. Box 40260, Olympia, WA 98504-0260, e-mail rulescoordinator@oic.wa.gov, fax (360) 586-3109, by July 26, 2016.
Assistance for Persons with Disabilities: Contact Lorie Villaflores by July 18, 2016, TTY (360) 586-0241 or (360) 725-7087.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: In light of expenses associated with updating credit scores and potential market disruption arising from rescoring, OIC has been willing to approve rate filings that provided for reordering credit scores at least once every three years. It was requested by an insurer that OIC adopt a rule to ensure that all insurers are held to the same standard.
This proposed rule will add a new section to chapter 284-24 WAC, requiring each insurer that uses credit history for rating personal lines of property/casualty insurance to update the credit history and resulting insurance score no less often than once every three years. This section applies to insurers using insurance scores for rating of personal insurance under the provisions of RCW 48.19.035.
Reasons Supporting Proposal: All insurers are held to the same standard.
Statute Being Implemented: RCW 48.19.035.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Mike Kreidler, insurance commissioner, governmental.
Name of Agency Personnel Responsible for Drafting: Stacy Middleton, 302 Sid Snyder Avenue, Olympia, WA 98504-0260, (360) 725-9651; Implementation: Lee Barclay, 5000 Capitol Boulevard, Tumwater, WA 98504-0255, (360) 725-7115; and Enforcement: AnnaLisa Gellermann, 5000 Capitol Boulevard, Tumwater, WA 98504-0255, (360) 725-7050.
No small business economic impact statement has been prepared under chapter 19.85 RCW. This proposed rule imposes no new significant costs on any small businesses.
A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Stacy Middleton, P.O. Box 40260, Olympia, WA 98504-0260, phone (360) 725-9651, fax (360) 586-3109, e-mail rulescoordinator@oic.wa.gov.
June 21, 2016
Mike Kreidler
Insurance Commissioner
NEW SECTION
WAC 284-24-140 Updating insurance scores.
(1) This section applies to insurers using insurance scores for rating of personal insurance under the provisions of RCW 48.19.035.
(2) If an insurer uses insurance scores to calculate renewal premiums, the insurer must:
(a) Update each policyholder's insurance score no less often than once every three years; and
(b) Calculate premiums for each policy using the insurer's most recently determined insurance score for the policy.
(3) For the purposes of this section, if an insurance score is used to assign a policy to a particular class or tier, then it is considered using an insurance score to calculate renewal premiums if the insurer:
(a) Leaves that policy in the same class or tier upon renewal; or
(b) Assigns the policy to a class or tier that depends on the prior insurance-score-based class or tier.
(4) When an insurer updates an insurance score, it must update all information necessary to determine the insurance score, rather than partially update the score. This process must include updating credit information on policyholders who were previously classified as "no hit" or "no score," as defined in WAC 284-24A-055(2).
(5) An insurers' filed manual of rates and rules should specify the conditions under which insurance scores will be updated and how updated insurance scores will be used in the calculation of renewal premiums. If, however, an insurer uses insurance scores to calculate renewal premiums and its filed manual of rates and rules does not specify the conditions under which insurance scores will be updated, the insurer must update each policyholder's insurance score at each renewal.
(6) In the rate filing process, rates and rating rules that do not satisfy the requirements of this section will be considered to be unfairly discriminatory and in violation of RCW 48.19.020.
(7) Nothing in the section prohibits an insurer from:
(a) Updating insurance scores more frequently than once every three years, including updating insurance score upon policyholder request; or
(b) Using a rating system that includes insurance scores in the rating of new business but not in the rating of renewal business.
(8) This section applies to rates and rating rules in effect on and after January 1, 2017.
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