Report - 2024 01 23 A31727 D265996 Bill Report 5806 Sbr Bfgt Ta 24

Summary

A Senate Bill Report on SB 5806, as of January 16, 2024, concerning the confidentiality of insurance company data, prepared by staff of the Senate Committee on Business, Financial Services, Gaming & Trade. Sponsors listed are Senators Kuderer, Hunt, Dhingra, Hasegawa and Nobles. The report summarizes the bill as exempting from the Public Records Act certain emergency management and hazard mitigation information received by the Office of the Insurance Commissioner, and data requested from property and casualty entities to study market conditions. It states the bill lets state agencies receive confidential information from the OIC and lets the OIC publish reports using aggregate data. It also records a fiscal note requested January 10, 2024 and summarizes pro and other public testimony, including concerns over Subsection 8.

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                            SENATE BILL REPORT
                                  SB 5806

                                      As of January 16, 2024

Title: An act relating to the confidentiality of insurance company data.

Brief Description: Concerning the confidentiality of insurance company data.

Sponsors: Senators Kuderer, Hunt, Dhingra, Hasegawa and Nobles.

Brief History:
     Committee Activity: Business, Financial Services, Gaming & Trade: 1/16/24.


                                     Brief Summary of Bill
           • Excludes from public disclosure under the public records act certain
             information pertaining to emergencies and hazard mitigation received by
             the Office of the Insurance Commissioner (OIC) from insurance entities
             or the federal government.
           • Allows state agencies to receive confidential and privileged information
             from the OIC if confidentiality is maintained.
           • Permits certain data from regulated property and casualty (P&C) entities
             to be disclosed under an agency action.
           • Establishes that the OIC may prepare and publish reports using certain
             data from P&C companies if the data is in aggregate.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: The Public Records Act and Office of the Insurance Commissioner. The
     Public Records Act (PRA) requires state agencies to make public records available to the
     public unless the records are explicitly exempted from disclosure or are otherwise made




     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-                                             SB 5806
     confidential in statute.

     Under state law information the Office of the Insurance Commissioner (OIC) obtains from
     an insurer during financial or market conduct examination is exempt from PRA disclosure.

     Permissible Disclosures of Confidential Information and Documents by the Office of the
     Insurance Commissioner. The OIC may:
         • share and receive confidential and privileged documents with the National
           Association of Insurance Commissioners and its affiliates, regulatory and law
           enforcement officials of other states and nations, the federal government, and
           international authorities if confidentiality is maintained; and
         • enter into agreements governing the sharing and use of the information.

     No waiver of an existing claim of confidentiality or privilege may occur due to sharing of
     this information or permissible disclosures.

     Agency Action Exception to Public Records Act Exemption. Unless cited in connection
     with an agency action, working papers, documents, and materials produced by, obtained by,
     or disclosed to the OIC during a financial or market conduct examination—confidential and
     privileged documents, or desk audit, are exempt from disclosure.

     Parties involved must be notified within five business days before disclosure in connection
     with an agency action. The notified party may seek injunctive relief in any Washington
     State superior court to prevent disclosure it believes is confidential or privileged.

     An agency action includes acts related to licensing, the implementation or enforcement of a
     statute, the adoption or application of an agency rule or order, the imposition of sanctions,
     or the granting or withholding of benefits. It does not include certain decisions by an agency
     related to contracting and procurement, disputes related to collective bargaining, property
     transactions, or granting of a license or trademark.

     Summary of Bill: Additional Exemptions from the Public Records Act. In addition to
     confidential and privileged documents already exempt from public disclosure under the
     PRA, the following are also exempt:
        • certain documents, materials, or information provided to the OIC by the federal
           government related to emergency management, hazard mitigation, and the National
           Flood Insurance Program; and
        • data requested by the OIC from property and casualty (P&C) entities for the purpose
           of understanding and studying insurance market conditions outside of the context of
           market conduct action.

     Agency Action Exception. Data related to understanding and studying insurance market
     conditions from P&C entities may be subject to public disclosure if cited by the OIC in
     connection with an agency action.


Senate Bill Report                             -2-                                         SB 5806
     Use of Data in Aggregate. OIC may prepare and publish reports, analysis, or other
     documents using data received from individual P&C companies if the data is in aggregate
     form. Data in the aggregate form is considered open records available for public inspection.

     Permissible Disclosure of Confidential and Privileged Information by the Office of the
     Insurance Commissioner. State agencies are added as entities who may receive confidential
     and privileged documents, materials, and information from the OIC if confidentiality is
     maintained.

     Appropriation: None.

     Fiscal Note: Requested on January 10, 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 going to help OIC in their
     regulatory and oversight functions. This allows other state agencies to have access to
     information needed during or after a state emergency, such as DNR. The first person I
     reached out to this about this idea was Roland Thompson, and they do not have a concern
     about this. The authority by OIC already exists regarding data, and the exception to the
     PRA exemption, regarding an agency action, is already permissible in statute. The new
     language is a targeted exemption, which allows data to be public in only very certain
     instances. OIC has the vital duty to study the insurance market and should not have to worry
     about any issues related to that. This bill would assist insurance companies in protecting
     proprietary information. OIC already has the ability of collecting this information under
     RCW 48.02 and RCW 48.37. Wildfire risk underwriting is changing. It is common for
     states to do post disaster data calls, and this helps policy makers understand market issues
     around the emergency.

     OTHER: There have been discussions for many years about protecting this proprietary
     information. There is a clause in Subsection 8 that we are concerned over. It says that data
     will be protected unless cited under an agency action. This covers everything that the
     agency does. That information is protected and proprietary and needs to be kept
     confidential. Subsection 8 undoes everything. - There is distinction that needs to be made
     between the current law allowing for market conduct examination and the reference in
     Subsection 8 on studying market condition outside the market conduct action. To have a
     data call regarding anything, and then have that open to public disclosure, could allow for
     anything to be disclosed. Please strike the APA/PRA part of this section or amend it. We
     need to keep this proprietary information confidential.

     Persons Testifying: PRO: Senator Patty Kuderer, Prime Sponsor; David Forte, Office of


Senate Bill Report                            -3-                                        SB 5806
     the Insurance Commissioner .

     OTHER: Jean Leonard, WA Insurers; Kris Tefft, American Property Casualty Insurance
     Association (APCIA); Kenton Brine, NW Insurance Council.

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




Senate Bill Report                         -4-                                  SB 5806


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