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Washington: Commissioner's 2006 Legislative Session Technical Bill Overview Suggests Smooth Sailing

The Office of the Insurance Commissioner (OIC) released its Technical Bill Overview earlier this month and it appears from the list of OIC-sponsored bills that the 60-day legislative session should be relatively calm. The primary bills of interest to the property/casualty insurance industry are:

Insurance Fraud Investigation Unit bill - This draft legislation was created by an Interim Legislative Committee that studied the issue of insurance fraud this past summer. The proposed bill would create a fraud division within the OIC to investigate and prosecute fraud against the insurance industry. The initial fraud unit would be comprised of 11 staff members, including one chief investigator, five investigators, one research analyst, two prosecuting attorneys and two administrative support employees. The annual cost of the fraud unit would be funded from the insurance commissioner's regulatory account.

NAMIC and the insurance industry will work with the OIC to assist it in its efforts to fight insurance fraud, which is estimated to cost the average household more than $950 per year in additional premiums, according to the National Insurance Crime Bureau (NICB).

An Act Relating to Compensating the Victims of Uninsured and Underinsured Motorists - This bill would redefine the legal term "accident" to mean "an occurrence that is unexpected and unintended from the standpoint of the covered person." Insurance carriers would be required to provide uninsured and underinsured motorist coverage to insureds that are injured as a result of an event that was intentionally caused by a third party. Although, NAMIC typically oppose legislation that infringes upon an insurance carrier's freedom to underwrite risks of loss, NAMIC and the insurance industry will work with the OIC to draft legislation to protect innocent victims against injuries caused by "automobile collisions" of uninsured and underinsured motorists.

The OIC will most likely also offer several other insurance related bills:

Underinsured Motorist Property Damage Waivers bill - Would amend the current law so that a named insured and his/her spouse, who choose a property damage coverage that has a lower limit than their third party liability coverages for property damage, do not have to sign a written rejection of a policy with a greater coverage limit. NAMIC applauds the OIC for removing this unnecessary and costly administrative procedure that did nothing more than create a needless burden for the consumer and the insurance carrier.

Broker Disclosure bill - This amendment would extend the provisions relating to compensation paid by an insurer to a broker to all lines of insurance, not just property/casualty insurance.

Fire Marshal bill - This amendment would separate the Fire Marshal's Office from the OIC.

Federal Flood Insurance Education and Training bill - This new provision would require all licensed insurance agents who sell federal flood insurance policies to comply with minimum training requirements of the Flood Insurance Reform Act of 2004 and other federal flood education training laws.

Property and Casualty Actuarial Opinions bill - This proposed legislation would require every property/casualty insurer doing business in the state to submit an annual actuarial opinion of an appointed actuary to the OIC in a manner consistent with the model act of the National Association of Insurance Commissioners (NAIC). NAMIC, in collaboration with the insurance industry, will work with the OIC to draft legislation designed to promote financial solvency of the insurance industry without creating onerous administrative procedures that will increase the cost of insurance for the consumer.

Since the legislative session is still several weeks away, NAMIC will provide an updated status report on bills introduced the first week of the legislative session. NAMIC will continue to work with its member companies, its state advocacy partner, the Washington Insurers, and members of the insurance industry to promote insurance legislation that encourages administrative efficiency, facilitates market competition, and promotes the best interests of the insurance consumer.

• Review the proposed draft bills

Direct questions to NAMIC State Affairs Manager Christian Rataj.