Individual State Agency Fiscal Note - 5623 SB, Use of Credit History in Insurance Premium Setting
Summary
An Individual State Agency Fiscal Note from the Office of Insurance Commissioner on 5623 SB, Use of Credit History in Insurance Premium Setting. Part I lists no estimated cash receipts and operating expenditures of 150,423 in FY 2023 and 8,650 in 2023-25 from the Insurance Commissioners Regulatory Account-State, and checks the box for new rule making. Part II describes section 2, which allows credit history beginning July 1, 2023 to be used only for new applicants or to lower a premium at renewal, and lets policyholders ask for a rerate. The agency states that rule making is needed because current requirements to calculate premiums using the most recent insurance score conflict with the bill.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Individual State Agency Fiscal Note - 5623 SB, Use of Credit History in Insurance Premium Setting.”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-01-11-a29378-d237028-5623-fn-partial-01-10-22-c53fe1c873/
, SHA-256 b49cd7e41a3c353a4f98e96765ba66d4dbaebcec2b466b991bc3503cab8ef763.Full text
Individual State Agency Fiscal Note
Bill Number: 5623 SB Title: Use of Credit History in Insurance Premium Agency: 160-Office of Insurance
Setting Commissioner
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Operating Expenditures from:
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.0 1.0 0.5 0.0 0.0
Account
Insurance Commissioners Regulatory 0 150,423 150,423 8,650 8,650
Account-State 138-1
Total $ 0 150,423 150,423 8,650 8,650
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact . Factors impacting the precision of these estimates ,
and alternate ranges (if appropriate ), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50 ,000 per fiscal year in the current biennium or in subsequent biennia , complete entire fiscal note
X
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia , complete this page only (Part I).
Capital budget impact, complete Part IV.
X Requires new rule making, complete Part V.
Legislative Contact: Kellee Gunn Phone: 786-7429 Date: 01/04/2022
Agency Preparation: Michael Walker Phone: 360-725-7036 Date: 01/10/2022
Agency Approval: Mark Dietzler Phone: 360-725-7106 Date: 01/10/2022
OFM Review: Jason Brown Phone: (360) 742-7277 Date: 01/10/2022
Form FN (Rev 1/00) 170,466.00 Request # 22-06-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 5623 SB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe by section number , the significant provisions of the bill , and any related workload or policy assumptions , that have revenue or
expenditure impact on the responding agency .
Section 2(2)(c) allows credit history, beginning July 1, 2023, to only be used by insurers as a factor or attribute in
determining an insurance score for personal insurance policies for new applicants or for improving an insured’s score at
renewal by rerating a policy that results in a lower premium.
Section 2(3)(g) prohibits insurers from using credit history to increase rates or premiums at renewal for any personal
insurance policyholder beginning July 1, 2023.
Section 2(5) authorizes the Office of Insurance Commissioner to adopt rules to implement section 2.
Section 2(6) requires insurers to permit policyholders to request the insurer rerate the policy based on current credit
information. The policyholder’s current credit history report or insurance score shall only be used if the result of the
rerate reduces the consumer’s premium.
Section 2(7) allows insurers to resume the consideration of credit history via a note to reviewer or a new filing. If an
insured’s premium was previously determined using credit history, the prior credit history may be used at the first
renewal after enactment of this act.
Section 2(8) requires that rate filings submitted in compliance with this section do not violate RCW 48.19.020 (premium
rates for insurance shall not be excessive, inadequate, or unfairly discriminatory).
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency , identifying the cash receipts provisions by section number
and when appropriate the detail of the revenue sources . Briefly describe the factual basis of the assumptions and the method by which the cash receipts
impact is derived. Explain how workload assumptions translate into estimates . Distinguish between one time and ongoing functions .
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation ), identifying by section number the
provisions of the legislation that result in the expenditures (or savings ). Briefly describe the factual basis of the assumptions and the method by which the
expenditure impact is derived . Explain how workload assumptions translate into cost estimates . Distinguish between one time and ongoing functions .
Section 2(2)(c) allows credit history, beginning July 1, 2023, to only be used by insurers as a factor or attribute in
determining an insurance score for personal insurance policies for new applicants or for improving an insured’s score at
renewal by rerating a policy that results in a lower premium.
Section 2(3)(g) prohibits insurers from using credit history to increase rates or premiums at renewal for any personal
insurance policyholder beginning July 1, 2023.
Section 2(6) requires insurers to permit policyholders to request the insurer rerate the policy based on current credit
information. The policyholder’s current credit history report or insurance score shall only be used if the result of the
rerate reduces the consumer’s premium.
Section 2(7) allows insurers to resume the consideration of credit history via a note to reviewer or a new filing. If an
insured’s premium was previously determined using credit history, the prior credit history may be used at the first
renewal after enactment of this act.
Section 2(8) requires that rate filings submitted in compliance with this section do not violate RCW 48.19.020 (premium
rates for insurance shall not be excessive, inadequate, or unfairly discriminatory).
Use of Credit History in Insurance Premium Setting 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 170,466.00 Request # 22-06-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 5623 SB
Sections 2(2), 2(3) and 2(6) requires insurers that use credit information for rating to file revised rating plans. The
revisions to the standards for using credit scoring factors will require the Office of Insurance Commissioner (OIC) to
develop and apply new review standards for property and casualty personal lines rate filings. It is also anticipated that 10
insurers will contact OIC needing assistance regarding the meaning and impact of the new standards and that each
contact will take two hours of staff time. Based on the number of rate filings submitted in 2021 to comply with OIC’s
emergency rule temporarily banning the use of credit scoring, the OIC assumes insurers will submit 190 rate filings and
190 disclosure form filings. Each rate filing will take an average of 25 minutes to review, and each disclosure form filing
will take an average of 30 minutes to review. In FY2023, one-time costs of 8 hours of an Actuary 2 to update rate filing
review standards, update checklist documents, and train staff; 20 hours (10 insurers x 2 hours) of an Actuary 3 to assist
insurers with inquires; 80 hours (190 rate filings x 25 minutes) of an Actuary 2 to conduct the rate filing review; and 95
hours (190 form filings x 30 minutes) of a Functional Program Analyst 4 to conduct the form filing reviews will be
required.
The provisions of Sections 2(2), 2(3), 2(6), 2(7) and 2(8) will lead to a modest increase in referrals for enforcement.
Based on past enforcement actions related to credit matters, OIC anticipates one additional enforcement action per year
will be required to address credit scoring matters. Investigations generally take anywhere between 25-80 hours per case
and enforcement actions require the equivalent of approximately 25 hours per case. For purposes of this fiscal note, it is
assumed that investigations will require an average of 25 hours per case and enforcement actions will require an average
of 25 hours per case requiring 25 hours of an Investigator 3 and 25 hours of an Insurance Enforcement Specialist
beginning in FY2023.
Section 2(5) authorizes the OIC to adopt rules to implement section 2. ‘Complex’ rulemaking, in FY2023, is required to
revise or repeal sections of WAC 284-24.
Ongoing costs:
Salary, benefits and associated costs for .02 FTE Investigator 3 and .02 FTE Insurance Enforcement Specialist beginning
in FY2023.
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2022 FY 2023 2021-23 2023-25 2025-27
138-1 Insurance State 0 150,423 150,423 8,650 8,650
Commissioners
Regulatory Account
Total $ 0 150,423 150,423 8,650 8,650
Use of Credit History in Insurance Premium Setting 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 170,466.00 Request # 22-06-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 5623 SB
III. B - Expenditures by Object Or Purpose
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 1.0 0.5 0.0 0.0
A-Salaries and Wages 90,859 90,859 5,144 5,144
B-Employee Benefits 29,479 29,479 1,776 1,776
C-Professional Service Contracts
E-Goods and Other Services 30,085 30,085 1,730 1,730
G-Travel
J-Capital Outlays
M-Inter Agency/Fund Transfers
N-Grants, Benefits & Client Services
P-Debt Service
S-Interagency Reimbursements
T-Intra-Agency Reimbursements
9-
Total $ 0 150,423 150,423 8,650 8,650
III. C - Operating FTE Detail: List FTEs by classification and corresponding annual compensation . Totals need to agree with total FTEs in
Part I and Part IIIA
Job Classification Salary FY 2022 FY 2023 2021-23 2023-25 2025-27
Actuary 2 128,436 0.1 0.0
Actuary 3 164,364 0.0 0.0
Functional Program Analyst 4 78,408 0.2 0.1
Insurance Enforcement Specialist 87,852 0.0 0.0 0.0 0.0
Investigator 3 74,604 0.0 0.0 0.0 0.0
Senior Policy Analyst 99,996 0.7 0.3
Total FTEs 1.0 0.5 0.0 0.0
III. D - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and describe potential financing methods
NONE
IV. D - Capital FTE Detail: List FTEs by classification and corresponding annual compensation . Totals need to agree with total FTEs in
Part IVB
NONE
Part V: New Rule Making Required
Identify provisions of the measure that require the agency to adopt new administrative rules or repeal/revise existing rules .
Section 2(5) authorizes the Office of Insurance Commissioner to adopt rules to implement section 2 of the bill. ‘Complex’
Use of Credit History in Insurance Premium Setting 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 170,466.00 Request # 22-06-1
FNS063 Individual State Agency Fiscal Note 4 Bill # 5623 SB
rulemaking, in FY2023, will be necessary for regulatory updates and guidance in Chapter 284-24 WAC (Rates). Specifically,
WAC 284-24-140(2)(b) requires insurers to calculate premiums for each policy using the insurer's most recently determined
insurance score for the policy. This conflicts with the bill, which does not permit insurers to calculate premiums using
insurance scores if it results in a premium increase. In addition, WAC 284-24-140 requires insurers to update each
policyholder's insurance score no less often than once every three years. This conflicts with the bill, which does not require
insurers to re-check credit at renewal unless the policyholder requests the credit check.
Use of Credit History in Insurance Premium Setting 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 170,466.00 Request # 22-06-1
FNS063 Individual State Agency Fiscal Note 5 Bill # 5623 SB
File and source
- File
- 2022-01-11_a29378_d237028_5623-fn-partial-01-10-22.pdf
- Size
- 119,345 bytes
- SHA-256
- b49cd7e41a3c353a4f98e96765ba66d4dbaebcec2b466b991bc3503cab8ef763
- Original
- No public link identified.