Senate Bill Report SB 5798: Extending Certain Insurance Notice Requirements (January 11, 2024)

Summary

This Senate Bill Report on SB 5798, as of January 11, 2024, concerns extending the required notice of cancellation or nonrenewal of certain types of insurance policies to 60 days. The Brief Summary states that the bill extends the written notice requirement for an auto insurance policy from 20 days to 60 days, and for health, and property and casualty insurance policies from 45 days to 60 days. It lists Senators Kuderer, Shewmake, Hasegawa and Wellman as sponsors and states a fiscal note was requested on January 5, 2024. Persons testifying PRO are Senator Patty Kuderer, Prime Sponsor, and David Forte of the Office of the Insurance Commissioner, and Kenton Brine of NW Insurance Council testified OTHER.

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Full text

                            SENATE BILL REPORT
                                  SB 5798

                                      As of January 11, 2024

Title: An act relating to extending the required notice of cancellation or nonrenewal of certain
     types of insurance policies to 60 days.

Brief Description: Extending certain insurance notice requirements.

Sponsors: Senators Kuderer, Shewmake, Hasegawa and Wellman.

Brief History:
     Committee Activity: Business, Financial Services, Gaming & Trade: 1/11/24.


                                     Brief Summary of Bill
           • Extends the written notice requirement for cancellation or nonrenewal of
             an auto insurance policy from 20 days to 60 days.
           • Extends the written notice requirement for cancellation or nonrenewal of
             health, and property and casualty insurance policies from 45 days to 60
             days.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: Written Notice Required for the Cancellation or Nonrenewal of an Insurance
     Policy. An insurance contract establishes conditions in which the insurer may cancel or not
     renew an insurance policy. Though the reasons for cancellation or nonrenewal are contract
     dependent, they may be the result of nonpayment, increased risk, excessive claims, or fraud
     or misrepresentation by the insured. By state law, an insurer must give the insured a certain
     number of days written notice prior to the effective date of the cancellation or nonrenewal.
     The amount of written notice an insurer is required to give is dependent on the type of
     insurance policy and whether it is for nonpayment of a premium.




     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.

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     The following lists insurance policies and the amount of written notice required to be given
     by the insurer before the effective date of the nonrenewal or cancellation as prescribed
     under Washington State Law:
        • property and casualty insurance policies require 45 days' notice;
        • auto insurance policies require 20 days' notice;
        • fire insurance policies for abandoned and at-risk buildings requires either 5 days’ or
           20 days’ notice, dependent on the situation; and
        • medical malpractice insurance policies require 90 days' notice.

     If there is nonpayment of a premium for a health, property and casualty or medical
     malpractice insurance policy the amount of written notice required is 10 days before the
     effective date of cancellation. If there is nonpayment of a premium for an auto insurance
     policy, or it is within the first 30 days of the contract, the amount of written notice required
     for cancellation by the insurer is also at least 10 days.

     Written notice may be delivered by mail, electronic facsimile, or personal delivery.

     Summary of Bill: The amount of time an insurer must give written notice for either
     cancellation or nonrenewal of an auto insurance policy is extended from 20 days' to 60 days'
     notice before the effective date.

     The amount of time an insurer must give written notice for a cancellation or nonrenewal of
     a property and casualty insurance policy is extended from 45 days' to 60 days' notice before
     the effective date.

     Appropriation: None.

     Fiscal Note: Requested on January 5, 2024.

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

     Effective Date: Ninety days after adjournment of session in which bill is passed.

     Staff Summary of Public Testimony: PRO: This bill is simple and comes from a
     constituent. The constituent received a cancellation notice because of the type of roof she
     had. The current notice is 45 days for property and casualty, and 20 days for auto insurance.
     This simply extends that notice requirement. As auto insurance is required of all drivers in
     Washington, this was an important addition. This would not affect an insurer for
     cancellation of nonpayment of premium, or whether the insurance risk has changed. This
     just provides an additional 2 weeks notice for insureds.

     OTHER: We are aware that the property insurance market is challenging. The market for
     auto insurance is robust and competitive. Insurers were not contacted by the agency or the


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     bill sponsor on this bill. Changing the notice will be a costly system change. A nonrenewal
     typically occurs when the risk exposure has changed. Cancellation happens when some
     bigger issues are occurring. Auto insurance contracts are only six months long, extending it
     to 60 days will be problematic.

     Persons Testifying: PRO: Senator Patty Kuderer, Prime Sponsor; David Forte, Office of
     the Insurance Commissioner.

     OTHER: Kenton Brine, NW Insurance Council.

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




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