House Committee Approves Slightly-Amended Bill Dealing with Auto Insurance Claims and Appraisers
On 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 Sublimits
On 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, 41st Legislative District), that would have required all sublimits on homeowners insurance policies to be included on the declarations page. 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.
Senate Passes Key Amendment on Controversial Prejudgment Interest Bill Before Passing the Measure; House Committee Considers Similar Proposal
On Wednesday, January 19, the Senate approved an amendment to E2SSB 5155 that was offered by Senator Shelly Short (R, 7th 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 will be 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.
On Tuesday, January 11, the House Civil Rights and Judiciary Committee held a hearing to consider HB 1754—a measure that was introduced by Rep. David Hackney (D, 11th 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 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.
Senate Committee Considers Bill Allowing Insurers to Use Credit-Based Insurance Scores, But Only if the Credit Information Improves the Consumer’s Rate
The Senate Business, Financial Services & Trade Committee held a hearing on Tuesday, January 11 to consider SB 5623—a measure that has been introduced Senator Mark Mullet (D, 5th District). The bill would establish a “better only” structure for the use of credit-based insurance scores, modeled after legislation that has been enacted in Oregon. The bill would allow 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.
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.
The Senate Business, Financial Services & Trade Committee has not yet scheduled a vote for SB 5623 following the hearing for the measure.
Senate Committee Considers Bill Enacting the NCOIL Model Authorizing Insurers to Provide Flexibility for Policyholders Due to “Extraordinary Life Circumstances”
On Thursday, January 20, the Senate Business, Financial Services & Trade Committee held a hearing to consider SB 5879—a measure that has been introduced by Senator Perry Dozier (R, 16th 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, 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.
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.
The bill has not yet been scheduled for a vote of the committee.
House Committee Considers New Data Privacy Bill
On Tuesday, January 25, the House Civil Rights and Judiciary Committee held a hearing to consider HB 1850—a measure that has been introduced by Representative Vandana Slatter (D, 48th 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. Insurance stakeholders indicated opposition to the bill. Business groups and others concerned about the private right of action in the bill testified in opposition to the measure. The bill has tentatively been scheduled for a vote of the committee on February 2
The measure is similar to previous measures on the issue that have been introduced by Senator Reuvan Carlyle (D, 36th 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. In prior years the measure failed due to disagreements between the House and Senate over whether a private right of action should be included in the bill.
Senate Committee Considers Bill Regulating “Data Brokers”
On Thursday, January 20, the Senate Environment, Energy & Technology Committee held a hearing to consider SB 5813—a measure that has been introduced by Senator Reuven Carlyle (D, 36th District) that would regulate “data brokers”. At the hearing, 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.
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. SB 5813 has not yet been scheduled for a vote of the committee.
Insurance Stakeholders Testify In Opposition to Measure Restricting State Agencies from Selling Data
On Monday, January 10, the House State Government & Tribal Affairs Committee held a hearing to consider HB 1552—a measure that would prohibit the state from selling personal data to third parties. 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 has not been set for a vote of the committee.
OIC Prepares Legislative Proposals
Insurance 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 Bills
The 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
