Washington Senate Bill Report SHB 1266 (March 8, 2023)

Summary

A Senate Bill Report on SHB 1266, concerning email communication by the Office of the Insurance Commissioner, prepared for the Senate Committee on Business, Financial Services, Gaming & Trade and dated as of March 8, 2023. The report states the bill passed the House on 2/28/23 by a 97-0 vote and was originally sponsored by Representatives Santos, Corry and Reeves. It describes the current rule that licensees respond to commissioner inquiries within 15 business days. The bill would require mail for communications affecting a license, set conditions for email correspondence including at least two emails marked as requiring a response, and create a petition process to remove records and refund fines for email-based violations before July 1, 2023. The three-page report notes an emergency clause with an effective date of July 1, 2023.

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Full text

                             SENATE BILL REPORT
                                  SHB 1266

                                       As of March 8, 2023

Title: An act relating to the use of email by the office of the insurance commissioner when
     communicating with licensees.

Brief Description: Concerning email communication by the office of the insurance
     commissioner.

Sponsors: House Committee on Consumer Protection & Business (originally sponsored by
    Representatives Santos, Corry and Reeves).

Brief History: Passed House: 2/28/23, 97-0.
     Committee Activity: Business, Financial Services, Gaming & Trade: 3/09/23.


                                     Brief Summary of Bill
           • Establishes new procedures the Office of the Insurance Commissioner
             must follow to communicate with licensees by email.
           • Creates a process by which licensees may petition and obtain a refund of
             fines incurred for prior failures to respond to an email from the Office of
             the Insurance Commissioner.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: Office of the Insurance Commissioner. The Office of the Insurance
     Commissioner (OIC) provides oversight to the insurance industry in Washington through
     insurance producer and insurance company licensing. The OIC also reviews and approves
     the insurance products that carriers and insurers sell, making sure policies conform to state
     laws and regulations.




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                        SHB 1266
     Required Timely Response by Licensees. Every insurance licensee in this state must reply
     promptly in writing to an inquiry of the OIC related to the business of insurance. A timely
     response is one that is received by the OIC within 15 business days from receipt. Failure by
     a licensee to make a timely response constitutes a violation which may result in a fine or
     other disciplinary action against their license.

     Summary of Bill: Required Mail to Licensee. Any written communication, including
     notification of investigation, audit and findings resulting from an audit, which directly
     affects a person's license must be sent by mail from the OIC to the person's last address of
     record.

     Email Correspondence Between the Office of the Insurance Commissioner and Licensees.
     Every licensee shall provide the OIC with a current email address and inform the OIC of a
     change of email address within 30 days.

     The OIC may send a written communication by email to the licensee's email address if:
        • the communication is not otherwise required to be sent to the person's mailing
          address;
        • the person has consented to receive communication from the OIC by email; and
        • the email from the OIC does not require a response or, if a response is required, the
          certain requirements regarding timely response are met prior to the commissioner
          sending an email.

     Email communication sent to an applicant prior to the issuance of a license, and auto-
     generated system emails regarding a license application or license renewal process, are
     excluded from these requirements.

     Every insurance producer, title insurance agent, adjuster, surplus line broker, or other
     person licensed by the OIC must timely respond in writing to an inquiry of the OIC sent to a
     person's email address.

     When an email requires a response, the OIC must send at least two separate emails with a
     subject line stating: "Response required" and prominently display in large font that failure
     to respond to the email is a violation of state law and may result in certain penalties
     including fines and license revocation. Additional requirements are set forth for the OIC if
     the email is undeliverable.

     A licensee is in violation of not responding to the email after a third and final written
     inquiry by certified mail has been delivered to the person's last known mailing address and
     the OIC fails to receive a response in 15 business days.

     Refunds for Licensees Affected by an Email-Based Violation. An email-based violation is
     one that resulted in a licensee's failure to provide a timely response to the OIC.



Senate Bill Report                            -2-                                      SHB 1266
     The OIC shall develop and implement a process for a licensee, who was penalized for an
     email-based violation as it existed prior to July 1, 2023, to petition for the removal of any
     disciplinary investigations and orders in the public disciplinary record. Upon receipt of the
     petition, the OIC shall immediately remove the disciplinary investigations and orders
     affecting the licensee's public disciplinary record and send notice to both the National
     Insurance Producer Registry with a request to expunge the record of an administrative
     action. The affected licensee must receive, by certified mail, a copy of the commissioner's
     notice to the Registry.

     The OIC shall refund any fines collected by any licensee who was penalized by the failure
     to provide a timely response to an email.

     Appropriation: None.

     Fiscal Note: Available.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: The bill contains an emergency clause and takes effect on July 1, 2023.




Senate Bill Report                             -3-                                      SHB 1266


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