Senate Bill Report — HB 1230, Experience-Rated Group Disability Income Insurers (As of March 13, 2025)

Summary

A Senate Bill Report on HB 1230, as of March 13, 2025, for the Senate Committee on Business, Financial Services & Trade. The bill is an act relating to requiring that experience-rated group disability income insurers include all applicable rating factors and credibility formulas in rate manual filings with the insurance commissioner. The report lists Representative Hackney as sponsor and records that the bill passed the House on March 6, 2025, 97-0. Its Summary of Bill states that such insurers must include experience rating formulas, rating factors and credibility formulas as part of the rate manual. It also gives background on disability income insurance and rate filings, and lists Appropriation: None.

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Issuer: Congressional materials
Document type: Report
Date: 2025-03-19
Case: 2025 03 19 A33054 D284685 Bill Report 1230 Sba Bft 25

Cite this document

“Senate Bill Report — HB 1230, Experience-Rated Group Disability Income Insurers (As of March 13, 2025).” Original at app.leg.wa.gov, dated 2025-03-19. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2025-03-19-2025-03-19-a33054-d284685-bill-report-1230-sba-bft-25/, SHA-256 66548ae581a193f32b157f76a9aca9e838fbceab3c9f73febaaeecf0cfc6b515.

Full text

SENATE BILL REPORT
HB 1230

As of March 13, 2025

Title: An act relating to requiring that experience-rated group disability income insurers include
all applicable rating factors and credibility formulas in rate manual filings with the
insurance commissioner.

Brief Description: Requiring that experience-rated group disability income insurers include all
applicable rating factors and credibility formulas in rate manual filings with the insurance
commissioner.

Sponsors: Representative Hackney.

Brief History: Passed House: 3/6/25, 97-0.
Committee Activity: Business, Financial Services & Trade: 3/19/25.

Brief Summary of Bill
• Specifies rate filing requirements for experience-rated group disability
income insurers.

SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

Staff: John Kim (786-7453)

Background: Disability Income Insurance. Disability income (DI) insurance provides
income to individuals who cannot work because of an illness or injury. Group DI
insurance, including short- and long-term coverage, is tied to employment and is offered as
a benefit by some employers.

Group Disability Income Insurance Rate Filings. Before using rates charged for DI
insurance premiums, insurers must make rate filings with the Office of the Insurance
Commissioner (OIC), which reviews filed rates to ensure they are not excessive,
inadequate, or unfairly discriminatory. A rate filing for a particular insurance product

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- HB 1230
includes a manual of classification, manual of rules and rates, and any modifications.

A group DI insurer may make a rate filing covering rates for multiple groups through a rate
manual filing. In a rate manual filing, rates are developed through a standard rating
methodology without using a group’s partial or entire disability claim experience. The rate
manual must account for all rules and formulas the company uses to calculate the premium
charged. If a group’s rate is developed from the rate manual, OIC must be able, when given
the demographics of the group, to replicate the group’s rate from the rate manual.

In a March 2023 technical assistance advisory, OIC reiterated that if a group’s rate cannot
be replicated exactly using the rate manual, it cannot be filed through a rate manual filing.
If a DI insurer develops premium rates for a single group based on the group's disability
claim experience, it may not file one rate that applies to all experience-rated groups, as the
insurer is relying on each group's unique claim experience to develop its rates.

OIC advised that an experience-rated insurer must instead submit an additional filing unique
to each particular group called a single case or an employer group filing. OIC stated its
expectation that single case filings should focus on the justifications for the experience
rating; would be not more than a few pages each; should incorporate the approved rate
manual and other filing aspects by reference only; and must include an actuarial
certification.

Credibility. In ratemaking, credibility measures how much predictive weight should be
given to the group's own claims experience versus the weight given to other data in
determining future claims. A fully credible group is one where the data sample size is large
enough that based on a selected confidence interval, its subject experience is assigned full
predictive value. A partially credible group requires blending its subject experience with
information from one or more sets of related experience in order to improve the estimate of
expected values.

Summary of Bill: Experience-rated group DI insurers must include in their rate filings
their experience rating formulas including all applicable rating factors and credibility
formulas as part of the rate manual. Such filings must be detailed enough to confirm that a
group is fully or partially credible and to allow OIC to replicate the premium rates for the
experience-rated group if given the experience and demographics of the group.

Appropriation: None.

Fiscal Note: Available.

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

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

Senate Bill Report -2- HB 1230

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Original: app.leg.wa.gov