OFFICE OF THE
[Insurance Commissioner Matter R 2020-01—Filed September 1, 2020, 7:59 a.m.]
Preproposal statement of inquiry was filed as WSR 20-03-092.
Title of Rule and Other Identifying Information: Raise the allowable amount for risk reduction goods and services.
Hearing Location(s): On October 30, 2020, at 9:00 a.m., at Office of the Insurance Commissioner, 302 Syd Snyder Avenue S.W., Suite 200, Olympia, WA 98501.
Remote access information for public testimony will be made available at the webpage https://www.insurance.wa.gov/increasing-allowable-amount-risk-reduction-goods-and-services-r-2020-01.
Date of Intended Adoption: November 5, 2020.
Submit Written Comments to: David Forte, P.O. Box 40260, Olympia, WA 98504-0260, email email@example.com, fax 360-586-3109.
Assistance for Persons with Disabilities: Contact Melanie Watness, phone 360-725-7013, fax 360-586-2023, TTY 360-586-0241, email MelanieW@oic.wa.gov.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The commissioner is considering amending WAC 284-33-030 to increase the allowable amount for risk reduction goods and services. For the noncommercial insurance companies that offer these types of goods and services, the twelve month aggregate limit would be raised to $7,500.
Reasons Supporting Proposal: Reducing property damage claims is to the benefit of the insured and the insurance company. For insureds, property damage claims can be very disruptive and lengthy to get their property back to pre-loss condition and may raise their premiums post loss. For insurance companies, claim cost can equal hundreds of millions of dollars (homeowner line of business for Washington state for 2018 had $941 million in incurred losses). Raising the allowable amount a noncommercial insurer can provide its insured over a twelve month aggregate period for risk mitigation goods and services further encourages insurance companies to assist their insureds in decreasing claim frequency and severity.
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: David Forte, P.O. Box 40260, Olympia, WA 98504-0260, 360-725-7042; Implementation and Enforcement: Molly Nollette, P.O. Box 40255, Olympia, WA 98504-0255, 360-725-7000.
A school district fiscal impact statement is not required under RCW 28A.305.135
A cost-benefit analysis is required under RCW 34.05.328
. A preliminary cost-benefit analysis may be obtained by contacting David Forte, P.O. Box 40260, Olympia, WA 98504-0260, phone 360-725-7042, email DavidF@oic.wa.gov
This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:
Explanation of exemptions: To better understand the market and the number of companies that may be impacted by this proposed rule, prior to filing the Preproposal statement of inquiry the commissioner issued a survey to all insurance companies that write noncommercial property policies in Washington state. Of the one hundred twenty-nine companies that responded, seven distinct insurance groups informed the commissioner they offer, or plan to offer, risk reduction goods and services to their insured that may be impacted by the rule making. RCW 19.85.025
(4) does not require the commissioner to provide a small business economic impact statement (SBEIS) if the rule does not affect small businesses. RCW 19.85.020
(3) defines a small business in this context as a corporation that has fifty or fewer employees. The seven insurance companies have reported employees that number between two hundred and thirty-nine thousand. Therefore, none of these companies impacted by the proposed rule may be considered small business[es] under RCW 19.85.020
(3) and therefore the commissioner is exempt from developing an SBEIS.
September 1, 2020
AMENDATORY SECTION(Amending WSR 18-24-084, filed 12/3/18, effective 1/3/19)
WAC 284-33-030Goods and services.
(1) All goods or services, or both, that are approved by the commissioner to be included within a property insurer's risk reduction program, or pilot risk reduction program, or both, must be implemented by the insurer to reduce either the probability of damage or extent of damage, or both, by a peril covered under the property policy, and may include:
(a) Smoke alarms;
(b) Fire extinguishers;
(c) Natural gas detectors;
(d) Brush and other wildfire fuel source removal services;
(e) Water monitors;
(f) Water shut off systems;
(g) Earthquake strapping;
(h) Locking mechanisms to secure property;
(i) Lightning protection devices;
(j) Security lighting;
(k) Security camera systems;
(l) Home safety monitoring systems; and
(m) Other goods or services, or both, the commissioner may approve through a form filing.
(2) A voucher provided from the insurer to the insured for either goods or services, or both, is only permissible for those items as described in subsection (1) of this section and must fully redeem either the goods or services, or both, being used in the risk reduction program.
(3) Under RCW 48.18.559, the commissioner may increase the value of goods and services permitted under RCW 48.18.558. The limit to the value of goods and services to be provided is increased to seven thousand five hundred dollars in value in aggregate in any twelve-month period if the insurer: (a) Submits a rate filing with the information required by RCW 48.19.530; and
(b) Includes an explanation and exhibit in the filing showing that the present value of the expected reduction in claims costs arising from the goods and services, over the service life of the goods and services, is greater than, or equal to, the total cost to the insurer of the goods and services.