2014 legislative priorities
The Insurance Commissioner sponsored three bills during the 2014 legislative session.
Insurance Company Solvency (House Bill 2461)
This bill would give the Insurance Comissioner tools to protect consumers from financial crises like the global recession of 2008 by instituting two model acts created by the National Association of Insurance Commissioners (NAIC) to prevent such financial disaster from adversely affecting consumers. The bill did pass the Legislature this year.
One, called the Own Risk and Solvency Assessment (ORSA) Model Act, would require companies to create a plan for self-assessing and reporting their current and future financial information related to their two- to five-year business plans. It is designed to be an internal process for companies to ensure their solvency and to prevent financial disasters.
The other, called the Holding Company Act, would enhance the Insurance Commissioner’s s ability to monitor any insurance or other company under a parent company or holding company system. The bill would also give the Insurance Commissioner the appropriate tools to notify consumers when their investments or insurance policies are at great risk, in cases similar to Metropolitan Mortgage of Spokane, which went bankrupt in 2004. If the language contained in the model act is not adopted under state law by Jan. 1, 2016, Washington risks losing its NAIC accreditation.
If Washington loses accreditation, other state regulators would no longer be able to accept Washington's financial exams of insurers. As a result, insurers would be subject to examinations in other states at a cost of $100,000 to $1 million per state. The costs would most likely be passed on to consumers through higher premiums for all types of insurance policies.
It may also have broader economic effects if insurers whose home headquarters is Washington opt to transfer that status to other states to avoid those costs, which could result in job losses and less tax revenue for Washington’s economy.
The Insurance Commissioner will request the Holding Company Act next year.
Alien Insurer State of Entry (House Bill 1402/SB 5489)
This bill would modernize the terms under which international insurance companies—called “alien insurers”--could enter the U.S. market through Washington state. It would have required alien insurers to meet the same financial-strength standards and play by the same rules as U.S. companies that do business in Washington.
Although it had broad bipartisan support, the legislation did not receive a final vote in the Senate.
K-12 Data Study Funding Restoration
The legislature passed Senate Bill 5940 (www.leg.wa.gov) in 2012, requiring the Insurance Commissioner to conduct a study of K-12 employee benefits and report the findings annually. The bill included an original appropriation of $1.3 million, but the funding was reduced last year to $300,000. The supplemental state budget the Legislature passed in 2014 year includes $127,000 to pay for the next study during the 2015-17 biennium.
- View more results from the 2014 legislative session: 2014 legislative session a mixed bag for Insurance Commissioner, consumers