Under a new bill, insurance companies would be required to follow a national framework for managing and reporting their business activity.
Proponents of SB 5069 say the measure will help the Office of the Insurance Commissioner (OIC) manage insurance companies by requiring an extensively vetted governance model. They argue this would also allow the public and regulators to better understand how those businesses operate, so they can suggest changes as needed. Insurance representatives indicated they had no qualms with the bill as written and support its passage.
The bill’s prime sponsor is State Sen. Jan Angel (R-26), with State Sen. Mark Mullet (D-5) cosponsoring.
On February 7, Angel told members of the House Business and Financial Services Committee: “This bill will provide the Office of the Insurance Commissioner with improved insight into the corporate governance framework of an insurer or an insurance group to allow for more frequent review and assessment.”
Angel continued by saying that the increased understanding of those companies would also offer better protections for Washington consumers.
She added that it is critical for lawmakers to pass the bill as written for insurers to receive the National Association of Insurance Commissioners’ (NAIC) accreditation.
The companion bill, HB 2321, already passed out of the House committee on January 16 and has since been referred to Rules. Its prime sponsor is State Rep. Steve Bergquist (D-11).
Under SB 5069, the NAIC annual disclosure model act would be adopted, and each year, insurers or insurer groups must submit a corporate governance disclosure to OIC.
NAIC helps develop model standards for states to use when regulating insurance. The association’s governance model rule requires insurers to include its governance structure and policies for managing the business when filing governance disclosures.
Under the measure, OIC must adopt NAIC’s corporate governance model rule each year and require disclosures to contain the same information. Finally, an insurer failing to timely file the disclosure must pay $500 for each day they are late.
Although public commentary was brief, stakeholders indicated the bill was favorable for insurance companies.
Lonnie Johns-Brown, OIC Legislative Director, told lawmakers that since the bill was identical to the one the office supported in committee one month ago, OIC hopes it becomes law quickly.
Jean Leonard, a lobbyist for Washington Insurers and the National Association of Mutual Insurance Companies, agreed the bill was vital for the continuance of insurance businesses. He added the insurance companies he represents rely on the accreditation allowed for in this bill.
Melvin Sorensen, a lobbyist representing the Property Casualty Insurers Association of America, the American Council of Life Insurers and America’s Health Insurance Plans, said those trade associations and their member companies “completely support the remarks of the prime sponsor” and support the bill’s passage.
SB 6059 is not currently scheduled for executive session.