Individual State Agency Fiscal Note — 5319 SB, Pet Insurance, Office of Insurance Commissioner
Summary
Individual State Agency Fiscal Note for 5319 SB, titled Pet Insurance, from the Office of Insurance Commissioner (agency 160). Part I lists operating expenditures of $152,468 in FY 2024, $85,453 in FY 2025 and $237,921 for 2023-25 from the Insurance Commissioners Regulatory Account-State, with estimated cash receipts of NONE; the box for new rule making is marked X. The narrative says Section 3(1) requires insurers to use the definitions set forth in the bill and that Section 4(2)(a) gives pet insurance applicants a right to examine and return the policy and to have the premium refunded. It states that normal rulemaking is required in FY2024 to address wellness program marketing practices on websites that contain insurance products.
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“Individual State Agency Fiscal Note — 5319 SB, Pet Insurance, Office of Insurance Commissioner.”
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Individual State Agency Fiscal Note
Bill Number: 5319 SB Title: Pet Insurance Agency: 160-Office of Insurance
Commissioner
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Operating Expenditures from:
FY 2024 FY 2025 2023-25 2025-27 2027-29
FTE Staff Years 1.1 0.7 0.9 0.7 0.7
Account
Insurance Commissioners Regulatory 152,468 85,453 237,921 170,906 166,797
Account-State 138-1
Total $ 152,468 85,453 237,921 170,906 166,797
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: 01/11/2023
Agency Preparation: David Forte Phone: 360-725-7042 Date: 01/16/2023
Agency Approval: Michael Wood Phone: 360-725-7007 Date: 01/16/2023
OFM Review: Jason Brown Phone: (360) 742-7277 Date: 01/17/2023
Form FN (Rev 1/00) 177,988.00 Request # 23-16-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 5319 SB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Significant provisions of the bill and any related workload or policy assumptions that have revenue or expenditure impact on the responding agency by
section number.
Section 3(1) requires insurers to use the definitions set forth in section 2 and include the definition of the terms in the policy
if the insurer uses any of the terms in a policy of pet insurance.
Section 4(2)(a) gives the right to pet insurance applicants, unless the insured has filed a claim under the pet insurance policy,
to examine and return the policy, certificate, or endorsement to the company or an insurance producer appointed by the
company within 15 days of its receipt and to have the premium refunded if the applicant is not satisfied for any reason.
Section 4(2)(b) requires pet insurance policies, certificates, and endorsements to have a notice prominently printed on the
first page or attached thereto including specific instructions to accomplish a return.
Section 4(1), and 4(3) through 4(10) establishes pet insurance disclosure requirements for pre-existing conditions, hereditary
disorders, congenital anomalies/disorders, chronic conditions, other policy exclusions, waiting periods, coverage limits,
underwriting company name, summary description of claim payment basis or formula, benefit schedules, usual and
customary fee limitation provisions, medical examinations required to effectuate coverage, and waiting periods and the
requirements applicable to them. Insurers must provide a separate document disclosing these policy provisions to
consumers and post the document through a clear and conspicuous link on the main page of either the pet insurer’s website
or the pet insurer’s program administrator’s website.
Section 5 establishes the parameters for pre-existing condition exclusions and waiting periods for sickness and injury.
Pre-existing conditions may be excluded with proper disclosure to the insured. Waiting periods for injury are not allowed and
those for illness are limited to 30 days.
Section 8 authorizes the OIC to adopt rules necessary to implement and administer the chapter.
Section 10 creates an effective date of January 1, 2024.
II. B - Cash receipts Impact
Cash receipts impact of the legislation on the responding agency with the cash receipts provisions identified by section number and when appropriate, the
detail of the revenue sources. Description of the factual basis of the assumptions and the method by which the cash receipts impact is derived. Explanation
of how workload assumptions translate into estimates. Distinguished between one time and ongoing functions.
II. C - Expenditures
Agency expenditures necessary to implement this legislation (or savings resulting from this legislation), with the provisions of the legislation that result in
the expenditures (or savings) identified by section number. Description of the factual basis of the assumptions and the method by which the expenditure
impact is derived. Explanation of how workload assumptions translate into cost estimates. Distinguished between one time and ongoing functions.
Section 3(1) requires insurers to use the definitions set forth in section 2 and include the definition of the terms in the policy
if the insurer uses any of the terms in a policy of pet insurance.
Section 4(2)(a) gives the right to pet insurance applicants, unless the insured has filed a claim under the pet insurance policy,
to examine and return the policy, certificate, or endorsement to the company or an insurance producer appointed by the
company within 15 days of its receipt and to have the premium refunded if the applicant is not satisfied for any reason.
Section 4(2)(b) requires pet insurance policies, certificates, and endorsements to have a notice prominently printed on the
first page or attached thereto including specific instructions to accomplish a return.
Section 4(1), and 4(3) through 4(10) establishes pet insurance disclosure requirements for pre-existing conditions, hereditary
disorders, congenital anomalies/disorders, chronic conditions, other policy exclusions, waiting periods, coverage limits,
underwriting company name, summary description of claim payment basis or formula, benefit schedules, usual and
Pet Insurance 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 177,988.00 Request # 23-16-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 5319 SB
customary fee limitation provisions, medical examinations required to effectuate coverage, and waiting periods and the
requirements applicable to them. Insurers must provide a separate document disclosing these policy provisions to
consumers and post the document through a clear and conspicuous link on the main page of either the pet insurer’s website
or the pet insurer’s program administrator’s website.
Section 5 establishes the parameters for pre-existing condition exclusions and waiting periods for sickness and injury.
Pre-existing conditions may be excluded with proper disclosure to the insured. Waiting periods for injury are not allowed and
those for illness are limited to 30 days.
Sections 3, 4, and 5 will require insurers issuing pet insurance products to make a one-time filing to refile rates and forms to
account for policy definitions and provisions, waiting periods, disclosure document, and the 15-day free look period. There
are currently 43 approved pet insurance product rate filings, with an average of 9 rate filing updates received each year,
and 127 approved pet insurance product form filings. Each rate filing takes an average of 4 hours, and each form filing
takes an average of 1.5 hours to review. In FY2024, one-time costs of 12 hours of a Functional Program Analyst 4 (FPA4)
to update filing review standards, update checklist documents, and train staff; and one-time costs of 136 hours (34 rate
filings x 4 hours) of an Actuary 2 and 190.5 hours (127 form filings x 1.5 hours) of a Functional Program Analyst 3 (FPA3)
to conduct rate and form filing reviews will be required.
Sections 3 through 7 create conditions that are new to the pet insurance line of business and will require additional market
analysis and market conduct examinations of pet insurers. The OIC conducted 11 pet insurance company market analysis
reviews and 8 market conduct examinations between 2017 and 2022. Market analysis reviews require an average of 50
hours and market conduct examinations require an average of 120 hours per insurer to complete. The OIC assumes an
additional 6 market analysis reviews and 6 market conduct examinations will be required each year beginning in FY2024
requiring 300 hours (6 market reviews x 50 hours) of a FPA4 and 720 hours (6 market conduct examinations x 120 hours)
of a FPA3 to ensure the use of definitions are correct, disclosure required have been transmitted and properly written,
waiting periods and use of preexisting conditions are closely followed, wellness plans are not intermingled with insurance
products, and insurers are monitoring that producers have the required training.
OIC further assumes this bill will provide market clarity and uniformity across states that adopt the model. It is much more
cost beneficial for insurance companies to enter marketplaces that have a uniform standard the same as other markets they
are already in, because they do not have to create unique products and pricing. OIC assumes this will result in one new
insurer entering the WA marketplace each year for at least for the next five years. Each new company application takes an
average of 40 hours, each rate filing takes an average of 4 hours, and each form filing takes an average of 1.5 hours to
review. For FY2024 through FY2028, costs of 40 hours of a FPA4, 4 hours of an Actuary 2 and 1.5 hours of a FPA3 to
conduct rate and form filing reviews will be required each year.
Section 8 authorizes the OIC to adopt rules necessary to implement and administer the chapter. In FY2024, normal
rulemaking is required to address wellness program marketing practices on websites that contain insurance products,
provide a format for the disclosure document referenced in section 4, and to define "service provider" in section 6 that is not
defined in section 2.
Ongoing Costs:
Salary, benefits and associated costs for .22 FTE Functional Program Analyst 4 and .44 FTE Functional Program Analyst 3.
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2024 FY 2025 2023-25 2025-27 2027-29
138-1 Insurance State 152,468 85,453 237,921 170,906 166,797
Commissioners
Regulatory Account
Total $ 152,468 85,453 237,921 170,906 166,797
Pet Insurance 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 177,988.00 Request # 23-16-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 5319 SB
III. B - Expenditures by Object Or Purpose
FY 2024 FY 2025 2023-25 2025-27 2027-29
FTE Staff Years 1.1 0.7 0.9 0.7 0.7
A-Salaries and Wages 90,567 50,043 140,610 100,086 97,658
B-Employee Benefits 31,407 18,319 49,726 36,638 35,779
C-Professional Service Contracts
E-Goods and Other Services 30,494 17,091 47,585 34,182 33,360
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 $ 152,468 85,453 237,921 170,906 166,797
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 2024 FY 2025 2023-25 2025-27 2027-29
Actuary 2 132,612 0.1 0.0
Functional Program Analyst 3 73,260 0.6 0.4 0.5 0.4 0.4
Functional Program Analyst 4 80,952 0.3 0.2 0.3 0.2 0.2
Senior Policy Analyst 108,432 0.2 0.1
Total FTEs 1.1 0.7 0.9 0.7 0.7
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
Acquisition and construction costs not reflected elsewhere on the fiscal note and description of potential financing methods.
NONE
IV. D - Capital FTE Detail: FTEs listed by classification and corresponding annual compensation. Totals agree with total FTEs in Part IVB.
NONE
Part V: New Rule Making Required
Provisions of the bill that require the agency to adopt new administrative rules or repeal/revise existing rules.
Section 8 authorizes the OIC to adopt rules necessary to implement and administer the chapter. In FY2024, normal
rulemaking is required to address wellness program marketing practices on websites that contain insurance products, provide
a format for the disclosure document referenced in section 4, and to define "service provider" in section 6 that is not defined in
Pet Insurance 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 177,988.00 Request # 23-16-1
FNS063 Individual State Agency Fiscal Note 4 Bill # 5319 SB
section 2.
Pet Insurance 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 177,988.00 Request # 23-16-1
FNS063 Individual State Agency Fiscal Note 5 Bill # 5319 SB
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