Report - 2023 03 14 A30968 D257313 Bill Report 1266 S Sbr Bfgt Ta 23

Summary

A Senate Bill Report on SHB 1266, concerning email communication by the Office of the Insurance Commissioner, as of March 9, 2023, prepared by non-partisan staff of the Senate Committee on Business, Financial Services, Gaming & Trade. The bill passed the House on 2/28/23, 97-0. The report states that licensees must respond to OIC inquiries within 15 business days and summarizes the bill's rules for when the OIC may communicate by email, including sending at least two emails marked response required and a final inquiry by certified mail. It also describes a process for licensees penalized for email-based violations before July 1, 2023 to petition for removal of disciplinary records and receive refunds of fines. The report lists an effective date of July 1, 2023 and summarizes supporting public testimony, including from the OIC.

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

Full text

                             SENATE BILL REPORT
                                  SHB 1266

                                       As of March 9, 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.

     Staff Summary of Public Testimony: PRO: This bill comes from a result of a constituent
     casework. One of my constituents had received a letter in the mail from the OIC informing
     him that his license, which he has held for 30 years, was being rescinded. He had allegedly
     received an email from the OIC, and he did not respond. The first communication he
     received from the OIC was that one regarding his license being revoked. This measure lays
     out clear procedures for the OIC to follow if a license is at risk. Many insurance licensees
     have been affected by this. If someone is not able to practice and apply their craft, how will
     they support their families?

     I have been licensed for over 35 years. My license was revoked, and OIC refused to stop the
     matter. I had to pay an attorney, to assist in getting my license reinstated. It was incredibly
     costly in both time and money. I never initially received the OIC's email with the survey.
     The procedure needs to be fairer and include a registered letter.

     This problem has been faced by about 340 agents because of this survey. The survey asked
     if they charge fees. It did not include language that not responding would affect their
     license. The circumstances of going through an administrative law judge can cost a person
     thousands of dollars. Actions against an insurance producer's license can affect their ability
     to work with a company, their livelihood. The OIC is in support of this legislation and is
     incredibly sorry for the issues Karl, and others, faced. The OIC periodically conducts
     compliance audits, which is what brought about this issue. When the survey was sent out, it
     was not clear whether the survey was optional or required. In the summer of 2022, the
     survey language was changed. And the OIC has now implemented a requirement of sending
     a letter by certified mail. This bill codifies the changes already made and establishes clear


Senate Bill Report                              -3-                                       SHB 1266
     authority for refunding fines and expunging records that were negatively affected by this
     issue.

     Persons Testifying: PRO: Representative Sharon Tomiko Santos, Prime Sponsor; Bryon
     Welch, Office of the Insurance Commissioner; Karl Robinson, Robinson Group, Inc.; Bill
     Stauffacher, Independent Insurance Agents and Brokers of Washington.

     Persons Signed In To Testify But Not Testifying: No one.




Senate Bill Report                           -4-                                     SHB 1266


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