Washington Legislative Update for February 7, 2022

February 7, 2022
12:47 pm

February 3 Policy Committee Deadline Kills Bills—Fiscal Committee Deadline Requires Bills to be Approved by Monday, February 7The February 3 deadline for policy committees in the House and Senate to approve their own bills has resulted in many measures being left behind.   Since Friday, February 4, attention has been focused on the fiscal committees in the House and Senate, which face their own cutoff deadline on Monday, February 7 to approve bills that have been referred for the consideration of fiscal notes.

The cutoff deadlines usually mean that a large number of bills are left behind, without coming to a vote. This year, however, many committees have forwarded a comparatively large number of bills along in the process, which will put pressure on the fiscal committees to weed out the bills that will not move forward.

The House Appropriations Committee and Senate Ways and Means Committee both have hearings scheduled for Saturday, February 5. Meanwhile, the House and Senate Transportation Committees both cancelled their hearings that were scheduled for Saturday. None of the fiscal committees have scheduled hearings for Sunday, February 6. This leaves them with only the final day, on Monday, February 7, to approve bills that are not otherwise exempt from the cutoff deadlines.

After the fiscal committee deadline on Monday, February 7, legislators will have until 5:00 p.m. on Tuesday, February 15 to pass measures off of the floors of the House and Senate. Budget bills, and measures necessary to implement the budget, are exempt from the cut-off timelines. The 2022 Legislative Session is scheduled to adjourn on Thursday, March 10.Senate Committee Considers Measure Establishing a Work Group to Study Credit-Based Insurance Scoring and Restricting the OIC from Adopting RulesOn Tuesday, February 1, the Senate Business, Financial Services & Trade Committee held a hearing to consider draft legislation (later introduced as SB 5969), that would have established a 10-person work group to study credit-based insurance scoring, and bring recommendations to the legislature for consideration in 2023 aimed at assisting those with low credit scores to have access to affordable insurance. The bill would have also imposed a restriction on the OIC with respect to the adoption of rules on credit-based insurance scoring until June 30, 2023.

The Governor’s Office, Washington Build-Back Black Alliance, and Washington Insurers testified in support of the bill. The Poverty Action Network and the OIC testified in opposition. SB 5969 died in committee, however, when it was not brought to a vote of the committee before the February 3 deadline for approval.

Senate Committee Kills Bill Allowing Insurers to Use Credit-Based Insurance Scores, But Only if the Credit Information Improves the Consumer’s RateThe Senate Business, Financial Services & Trade Committee has killed SB 5623—a measure that was introduced Senator Mark Mullet (D, 5^th District). The bill would have established a “better only” structure for the use of credit-based insurance scores, modeled after legislation that has been enacted in Oregon. The bill would have allowed Credit-Based Insurance Scores (CBIS) as a factor in rating new personal lines policies, but for renewals, CBIS would only be able to be used as a factor if it improves the consumer’s rate. The bill was killed when it was not brought to a vote of the committee before the February 3 deadline for approval. At the hearing for the bill on January 11, licensed insurance producers representing the Professional Insurance Agents WA/AK and the Independent Insurance Agents and Brokers of Washington testified in support of the measure. They pointed to the premium increases that consumers experienced immediately after the OIC’s emergency rules were adopted that banned credit-based insurance scores, and expressed strong support for the restoration of consumers’ “good credit discounts”. The Northwest Insurance Council also provided testimony, indicating that although insurers would likely prefer to retain full risk-based underwriting, the bill is workable, based on the experience in Oregon. Representatives from the Office of the Insurance Commissioner and the Consumer Federation of America testified against the bill, arguing that insurers should be restricted from using credit.On his website, Insurance Commissioner Kreidler, continues to express support for SB 5010, which was introduced in the 2021 Legislative Session. As introduced, SB 5010 would have banned the use of CBIS in personal lines of property and casualty insurance. Following hearings on the bill, the measure was amended to provide that CBIS could be used, but only if it improves a consumer’s insurance score and lowers premiums. Commissioner Kreidler expressed vigorous opposition to the amended version of the bill. The amended bill died on the Senate floor at the end of the 2021 Legislative session, when it was not brought to a vote on the Senate floor. The measure has been referred to the “X file” in the Senate Rules Committee, and it appears unlikely to be considered during the 2022 Legislative session.

Senate Committee Kills Bill Enacting the NCOIL Model Authorizing Insurers to Provide Flexibility for Policyholders Due to “Extraordinary Life Circumstances”The Senate Business, Financial Services & Trade Committee has killed SB 5879—a measure that was introduced by Senator Perry Dozier (R, 16^th Legislative District), that would enact the NCOIL model language related to “Extraordinary Life Circumstances”, regarding insurers’ use of credit-based insurance scoring in property and casualty lines of insurance. At the hearing for the measure on January 20, APCIA, NAMIC, and agent/broker groups, and testified in support of the measure, arguing that Washington consumers deserve rights that are provided in others states to have extraordinary life circumstances considered by insurers when credit-based insurance scoring is used. The OIC, together with the Consumer Federation of America, testified in opposition. The OIC and other opponents did not seem to make much headway with members of the committee. The bill was killed when it was not brought to a vote of the committee before the February 3 deadline for passage.Formally enacted or authorized in almost all states, the NCOIL extraordinary life circumstances provision authorizes an insurer that uses credit information, upon written request of an applicant or insured, to provide reasonable exceptions to the insurer’s rates, rating classifications, company or tier placement, or underwriting rules or guidelines if the consumer has experienced certain events and they have directly influenced the consumer’s credit information. Those events include, among others, catastrophic events, as declared by the federal or state government; serious illness or injury: identity theft; the temporary involuntary loss of employment, and other events.House Committee Approves Slightly-Amended Bill Dealing with Auto Insurance Claims and AppraisersOn Thursday, January 27, the House Consumer Protection & Business Committee approved a slightly-amended version of HB 1979—a measure that would impose new requirements regarding adjusters and auto insurance claims, which would appear to provide auto repair shops with more leverage in dealing with insurers, increasing the likelihood of questionable claims or unreasonable charges being paid. The amended bill was approved by the committee on a divided vote of 4-3, with all Democrat members of the committee voting in favor of the measure, and all Republican members voting against it.

Prior to passage, the committee adopted an amendment providing that an insurer must reimburse an insured for the costs of an appraisal process only if there is a difference of $500 or more between the amount of loss the insurer adjusted before the appraisal process, and the amount of loss determined through the appraisal process.

The bill was previously considered at a hearing before the committee on Monday, January 14. APCIA and other insurance stakeholders testified against the bill. Auto repair shops and plaintiff lawyers testified in support of the bill, along with the Office of the Insurance Commissioner.   Insurance stakeholders testified that the bill is objectively unfair, and that it will lead to more disputes, higher claims costs, and increased insurance rates if the bill is enacted. Insurers observed that under the bill, for an insurer that disputes claims and charges, the costs of the dispute could exceed the amount of the repairs.
The bill has been referred to the House Rules Committee.

Senate Committee Approves Heavily-Amended Measure on Insurance SublimitsOn Thursday, January 27, the Senate Business, Financial Services & Trade Committee approved a heavily-amended version of SSB 5527, and referred the amended bill to the Senate Rules Committee. On Thursday, January 13, the committee held a hearing to consider the underlying bill—a measure that was introduced by Senator Lisa Wellman (D, 41^st Legislative District), that would have required all sublimits on homeowners insurance policies to be included on the declarations page. APCIA and other insurance stakeholders testified in opposition to the measure, arguing the including a recital of all sublimits would make the declarations page less useful and readable for insurance consumers. The OIC and Senator Wellman testified in support of the bill. The amendment that the committee approved simply requires each residential insurance policy’s declarations page to include a statement that the policy may limit the amount of coverage available for certain losses, and the insured should review the policy carefully.

House Committee Kills Prejudgment Interest Bill; Senate Adopts Key Amendment on Senate Version of Prejudgment Interest Measure Before PassageThe House Civil Rights and Judiciary Committee has killed HB 1754—a measure that was introduced by Rep. David Hackney (D, 11^th District) that would establish prejudgment interest on most actions accruing from the date of the cause of action. The bill sets the interest to run at two points above the prime interest rate. The bill was killed when it was not brought to a vote of the committee before the February 3 deadline for approval. At the hearing for the measure on January 11, the Liability Reform Coalition, together with the Washington State Medical Association, Washington State Hospital Association, Washington School Risk Management Pool, Schools Insurance Association, Washington Defense Trial Lawyers, the City of Tacoma, the Association of Washington Cities, and the American Property Casualty Insurance Association all testified against the bill. They argued that the bill would increase costs for defendants, and that defendants have no control over when a plaintiff decides to file a lawsuit. The bill was scheduled for a vote of the committee on January 14, but the vote never took place, and the measure is still in committee.On Wednesday, January 19, the Senate approved an amendment to E2SSB 5155 that was offered by Senator Shelly Short (R, 7^th Legislative District), which exempts public entities from the measure. When the amendment appeared for consideration, proponents of the underlying bill frantically tried to keep it from being approved. The amendment was adopted, however, on a razor-thin 25-24 vote, but it was an unrecorded vote, so there is no record of which Senators voted for or against the amendment. The amended bill was then approved on a final vote of 31-18. The bill now goes to the House for consideration, where it has been referred to the House Civil Rights and Judiciary Committee. E2SSB 5155 would establish prejudgment interest on most actions accruing from the date of the cause of action, but it was amended in committee last year to provide that interest on judgments involving medical malpractice claims runs from the date of the entry of judgment, and not from the date that the cause of action accrued. Thus, the Senate-passed bill now excludes medical malpractice claims from prejudgment interest, and it also exempts public entities from the bill. The measure has been referred to the House Civil Rights & Judiciary Committee, where it has not yet been scheduled for a hearing.

House Committee Considers New Data Privacy BillOn Saturday, February 5, the House Appropriations Committee held a hearing to consider HB 1850—a measure that has been introduced by Representative Vandana Slatter (D, 48^th District) which appears to be the most recent effort to enact privacy standards for consumer data that are similar to protections that have been approved in California and Europe. HB 1850 remains under review by interested stakeholders, and there will be keen interest and concern within the business community about provisions that establish a private right of action for violations of the bill. APCIA and other insurance stakeholders indicated opposition to the bill. Business groups and others expressed concern about the private right of action in the bill, and testified in opposition to the measure. The bill was previously considered and approved by the House Civil Rights and Judiciary CommitteeThe measure is similar to previous measures on the issue that have been introduced by Senator Reuvan Carlyle (D, 36^th District). 2SSB 5062, in 2021, was Senator Carlyle’s third data privacy bill in three legislative sessions to have been introduced by Senator Carlyle, and all have failed to be enacted due to unresolved disagreements. In 2021, the disagreements were concentrated within the House. 2SSB 5062 remains in the Senate Rules Committee, but it is available to be considered during the 2022 Legislative session, and Senator Carlyle has expressed his continued interest in advancing comprehensive data privacy legislation.Large portions of the technology industry and the general business community have consistently expressed support for the substance of Senator Carlyle’s proposals dealing the data privacy, but they have made it clear that they cannot support a proposal that includes a private right of action, and 2SSB 5062 does not include a private right of action in the measure. In prior years, the data privacy proposals have failed due to disagreements between the House and Senate over whether a private right of action should be included in the bill.

Senate Committee Kills Bill Regulating “Data Brokers”The Senate Environment, Energy & Technology Committee has killed SB 5813—a measure that was introduced by Senator Reuven Carlyle (D, 36^th District) that would regulate “data brokers”. At the hearing for the bill on January 20, business, technology, insurance, health care, and banking stakeholders expressed opposition or concern about the measure. Several groups asked for exemptions regarding various federal privacy provisions including HIPAA, Gramm-Leach-Bliley, the Fair Credit Reporting Act, and other provisions. Concerns were expressed about possible overlapping and conflicting implications that the bill poses with respect to these federal requirements. The bill was killed when it was not brought to a vote of the committee before the February 3 deadline for approval. Legislation on data brokers has apparently been enacted in California, Vermont, and Colorado, but it appears that SB 5813 is more substantive than any of those measures.

House Committee Kills Measure Restricting State Agencies from Selling DataThe House State Government & Tribal Affairs Committee has killed HB 1552—a measure that would have prohibited the state from selling personal data to third parties. At the hearing for the bill on January 10, APCIA, NAMIC, and NWIC testified in opposition to the measure, noting that insurers and data vendors purchase over 2 million motor vehicle record abstracts each year that are used for underwriting and rating purposes, and that prohibiting access to these records would have adverse impacts on insurance consumers who rely on accurate risk classification. The Consumer Data Industry Association also testified in opposition to the bill. The bill was killed when it was not brought to a vote of the committee before the February 3 deadline for approval.

House Committee Considers/Approves Service Contract BillOn Thursday, January 13 the House Consumer Protection and Business Committee unanimously approved HB 1704—a measure that would allow registered service contract providers to demonstrate financial responsibility with a “default CLIP” rather than a “first dollar CLIP”. The bill would also allow a registered service contract provider to use multiple CLIP’s to demonstrate financial responsibility. The bill was introduced by Representative Steve Kirby (D, 29^th District) together with Representative Brandon Vick (R, 18^th District) and Representative Cindy Ryu (D, 32^nd District). Representative Kirby is the Chair of the House Consumer Protection & Business Committee, and Representative Vick is the Ranking Republican on the committee. At the hearing for the bill on January 12, the Service Contract Industry Council and APCIA testified in support of the measure, noting that the bill would fully maintain consumer protections, but that it would allow greater flexibility for service contract providers to cost-effectively provide service contract products to consumers in Washington state. The SCIC also pointed to data indicating that the bill would more closely align Washington’s requirements with provisions in most other states. The OIC testified in opposition to the measure, arguing that the bill would reduce consumer protections and delay timely payment of service contract benefits to consumers. Committee members seemed skeptical of the OIC’s testimony, and asked for data to back up their assertions. The bill has been referred referred the bill to the House Rules Committee. Senate Committee Kills NAIC Cybersecurity Model BillThe Senate Business, Financial Services & Trade Committee has killed SB 5956—a bill that was introduced by Senator Derek Stanford (D, 1^st Legislative District) at the request of Insurance Commissioner Kreidler. The bill was intended to enact the NAIC Cybersecurity Model. The bill was killed when it was not considered and approved by the committee before the February 3 deadline for passage. In December, APCIA, together with AHIP, the ACLI, and NAMIC jointly offered red-line revisions to the OIC’s draft bill, consistent with revisions that have been jointly supported in other states that have considered the measure. The OIC never officially responded to the joint-trades’ suggested revisions. The bill will not be considered further during the 2022 Legislative Session

OIC Prepares Legislative ProposalsInsurance Commissioner Mike Kreidler has prepared a package of legislative proposals that he intends to submit to the 2022 Legislature. A link to the OIC’s legislative priorities can be found at https://www.insurance.wa.gov/legislative-priorities .The OIC’s request bills include:-Updates to the Balance Billing Protection Act (HB 1688/SB 5618 Protecting consumers from charges for out-of-network health care services).  Insurance Commissioner Kreidler is proposing legislation to align state and federal law, while preserving critical consumer protections in Washington’s Balance Billing Protection Act.-Washington Life and Disability Insurance Guaranty Association (SB 5508 Concerning the insurance guaranty fund). The OIC’s proposal expands the Washington State Life and Disability Guaranty Association membership, adding HMO’s and Health Care Service Contractors to the membership of the WLDGA to provide for larger assessment capacity. The measure also provides equitable distributions of assessments, in order to protect Washington state insurance policyholders.-A proposal to prohibit property and casualty insurers from using credit-based insurance scoring in personal lines of insurance. See SB 5010;-Insurance Data Security. Insurance Commissioner Kriedler previously suggested they would seek legislation to enact the NAIC cybersecurity model act.

Legislature Approves Cut-Off Resolution for the Consideration of BillsThe House and Senate have approved SCR 8404—a cut-off resolution establishing dates for the consideration of bills. The cut-off dates that are included in this resolution are as follows:February 3—the last day for committees in the House of origin to take action on bills;February 7—the last day for Fiscal committees in the House of origin to take action on bills;February 15—the last day for the House of origin to take action on bills;February 24—the last day for committees in the opposite House to take action on bills;February 28—the last day for Fiscal committees in the opposite House to take action on bills;March 4—the last day for the opposite House to take action on bills (except exempt bills and bills passed by both Houses in different forms);March 10—the last day of the 2022 Regular Legislative Session

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