Senate Bill Report SB 6144
- Issuer
- Congressional materials
- Document type
- Report
- Date
- 2020-02-04
- Case
- 2020 02 04 A26451 D213404 Bill Report 6144 Sba Fiet 20 Ta
Summary
A Senate Bill Report on SB 6144, an act relating to implementation credits and performance standards, current as of January 21, 2020 and prepared by nonpartisan staff of the Senate Committee on Financial Institutions, Economic Development & Trade. The bill is sponsored by Senators Hasegawa and Das by request of the Insurance Commissioner. The report reviews existing limits on rebates and inducements insurers may offer and a 2019 change allowing payments to offset a group policyholder's costs of changing insurers. It summarizes the bill's caps on implementation credits by lives covered: $1 million for 1000 or more, $500,000 for 51-1000 and $50,000 for less than 50. It also notes an actuarial certification requirement, rulemaking authority for the insurance commissioner, an effective date of July 1, 2020 and a staff summary of supporting testimony.
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Full text
SENATE BILL REPORT
SB 6144
As of January 21, 2020
Title: An act relating to implementation credits and performance standards.
Brief Description: Concerning implementation credits and performance standards.
Sponsors: Senators Hasegawa and Das; by request of Insurance Commissioner.
Brief History:
Committee Activity: Financial Institutions, Economic Development & Trade: 1/21/20.
Brief Summary of Bill
Creates regulatory structure for implementation credits.
Limits the amount of implementation credits an insurer can provide to a
group policyholder based on the number of lives covered.
SENATE COMMITTEE ON FINANCIAL INSTITUTIONS, ECONOMIC
DEVELOPMENT & TRADE
Staff: Clint McCarthy (786-7319)
Background: Insurers, insurance producers, and title insurance agents are limited in the
noncontractual benefits they may offer insureds or prospective insureds. Except to the extent
provided for in a filing with the Office of the Insurance Commissioner (OIC), no insurer,
insurance producer, or title insurance agent may, directly or indirectly, offer or pay to any
insured, potential insured, or an employee of an insured, any rebate, discount, or reduction of
premium, or any other valuable consideration or inducement whatsoever, not expressly
provided for in the insurance policy. Insurers, insurance producers, and title insurance agents
are prohibited from providing or offering, as inducements to insureds or prospective insureds,
any shares of stock or other securities or any kind of contract or agreement providing for or
promising profits or special returns or dividends.
There are various exceptions to the above prohibitions, including the following:
advertising or promotional programs conducted by insurers or insurance producers—
but not title insurers or title insurance agents—in which prizes, goods, gift cards, or
merchandise, not exceeding $100 in value per person in the aggregate in any 12-
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This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not a part of the legislation nor does it
constitute a statement of legislative intent.
Senate Bill Report -1- SB 6144
month period, are given to all insureds or prospective insureds under similar
qualifying circumstances;
certain health wellness programs conducted by a health carrier or disability insurer;
commissions paid to an insurance producer or title insurance agent for insurance
placed on their own property or risk;
the allowance by a marine insurer, or marine insurance producer, to any insured, in
connection with marine insurance, of such discount as is sanctioned by custom among
marine insurers as being additional to the insurance producer's commission; and
certain sales or purchases of securities.
During the 2019 session, prohibition against inducements or rebates to purchase insurance
statutes were amended to allow an insurer issue payment to offset documented expenses
incurred by a group policy holder in changing coverage from one insurer to another. Insurers
are required to describe such payments in the group insurance policy. Medicare
supplemental insurance is not allowed to offer payments to offset expenses. The payment by
the insurer must be included in the calculation of the premium tax.
Summary of Bill: Insurers are directed to describe implementation credits provided to a
policy holder and file the policy with the commissioner. Implementation credits are limited
as follows based on the number of lives covered:
for 1000 or more lives covered—$1 million;
for 51-1000 lives covered—$500,000; or
for less than 50 lives covered—$50,000.
The premium rate filing must include a certification that the implementation credit is
considered in the premium development, and the benefits provided are reasonable in relation
to the premium charged for the contract by a member of the American Academy of Actuaries
or other person approved by the insurance commissioner. An insurer offering
implementation credits must offer them to all similarly situated policyholders, with regard to
risk, exposure factors, and expense elements.
The insurance commissioner is provided rulemaking authority for oversight of
implementation credits.
Appropriation: None.
Fiscal Note: Requested on January 14, 2020.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: July 1, 2020
Staff Summary of Public Testimony: PRO: This legislation is a companion to the SHB
1075 in 2019. The OIC is attempting to set out some sideboards on how much can be
provided for implementation credits. Most of the contracts that HCA has have performance
standards. These standards are critical to make sure carriers are responsive on behalf of the
employees in the state. Counties and cities use implementation credits in procurements for
insurance as well.
Senate Bill Report -2- SB 6144
Persons Testifying: PRO: Senator Bob Hasegawa, Prime Sponsor; Lonnie Johns-Brown,
Office of the Insurance Commissioner; Cade Walker, Washington Health Care Authority.
Persons Signed In To Testify But Not Testifying: No one.
Senate Bill Report -3- SB 6144
File and source
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- 2020-02-04_a26451_d213404_bill-report-6144-sba-fiet-20-ta.pdf
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- Original
- app.leg.wa.gov