PROPOSED RULES
INSURANCE COMMISSIONER
Original Notice.
Preproposal statement of inquiry was filed as WSR 00-22-117.
Title of Rule: Annual statement filing instructions.
Purpose: Insurers and carriers currently file quarterly financial reports with the insurance commissioner. The proposed rule would require that the report be filed with the NAIC also. Filing of the quarterly financial statements of insurers and carriers with the NAIC is an NAIC accreditation standard. This amendment will bring the rule into compliance. The rule will also assist the insurance commissioner in monitoring the financial condition of domestic insurers.
Other Identifying Information: R 2000-09.
Statutory Authority for Adoption: RCW 48.02.060, 48.44.050, 48.46.200.
Statute Being Implemented: RCW 48.05.073.
Summary: The quarterly reports are currently required to be filed with the insurance commissioner. The rule will require insurers and carriers to file the reports with the NAIC also.
Reasons Supporting Proposal: The rule will aid in NAIC accreditation review and will assist in the financial oversight of insurers and carriers.
Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Jim Tompkins, Lacey, Washington, (360) 407-0537.
Name of Proponent: Mike Kreidler, Insurance Commissioner, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: Insurers and carriers currently file quarterly financial reports with the insurance commissioner. The proposed rule would require that the report be filed with the NAIC also. Filing of the quarterly financial statements of insurers and carriers with the NAIC is an NAIC accreditation standard. This amendment will bring the rule into compliance. The rule will also assist the insurance commissioner in monitoring the financial condition of domestic insurers.
Proposal Changes the Following Existing Rules: WAC 284-07-050 is amended to include the NAIC as a recipient of the quarterly financial reports.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Is the Rule Required by Federal Law or Federal Regulation? This rule is not required by federal law or regulation.
What Industry is Affected by the Proposed Rule? The rules would impact insurers as defined in RCW 48.01.050 and health care service contractors (HCSCs) and health maintenance organizations (HMOs). The only impacted insurers and carriers are domestics. The industry codes that would be affected by the proposed rules include: Hospital and Medical Service Plans, #6324; Group and Blanket Disability Carriers, #6321; Life Insurers, #6311; Fire, Marine & Casualty Insurers, #6331; Surety Insurers, #6351; and Title Insurers, #6351.
List the Specific Parts of the Proposed Rule, Based on the Underlying Statutory Authority (RCW Section), Which May Impose a Cost to Business: The rule requires that quarterly financial reports of domestic insurers, HCSCs, and HMOs currently produced and filed with the insurance commissioner also be filed with the National Association of Insurance Commissioners (NAIC).
What Will Be the Compliance Costs for the Industries Affected? The only compliance costs that could be incurred due to the rule are the nominal costs to duplicate and mail quarterly reports that are already produced. It is the commissioner's understanding that these reports are currently sent to the NAIC as a general matter of course. Thus, no or little costs should be entailed.
What Percentage of the Industries in the Four-digit Standard Industrial Classification Will Be Affected by the Rule? The proposed rule would affect 100% of the insurers and carriers subject to regulation by the insurance commissioner.
Will the Rule Impose a Disproportionately Higher Economic Burden on Small Businesses Within the Four-digit Classification? No, the proposed rule will not impose a disproportionately higher economic burden on smaller carriers. The rules should not be an economic burden for any carrier and should have little to no economic impact.
Can Mitigation Be Used to Reduce the Economic Impact of the Rule on Small Businesses and Still Meet the Stated Objective of the Statutes That are the Basis of the Proposed Rule? No mitigation is possible and none should be necessary. The NAIC requested the rule change as a part of accreditation. The rule change will aid in Washington's accreditation review and should incur little to no additional costs. It does not appear that this goal can be achieved in any more efficient fashion.
What Steps Will the Commissioner Take to Reduce the Costs of the Rule on Small Businesses? See above.
Which Mitigation Techniques Have Been Considered and Incorporated into the Proposed Rule? No changes have been suggested. If any changes are proposed, they will be considered and discussed throughout the remainder of the rule-making process.
Which Mitigation Techniques Were Considered for Incorporation into the Proposed Rule but Were Rejected, and Why? See above.
Briefly Describe the Reporting, Record-keeping, and Other Compliance Requirements of the Proposed Rule. There are no new record-keeping requirements as a result of this rule. An additional copy of a current report may have to be produced and mailed.
List the Kinds of Professional Services That a Small Business is Likely to Need in Order to Comply with the Reporting, Record-keeping, and Other Compliance Requirements of the Proposed Rule: It is expected that no new professional services will be needed by smaller businesses.
Cost of Equipment: There is no anticipated additional cost of equipment.
Cost of Supplies: There are minimal anticipated additional costs of supplies for copying if an additional copy is needed.
Cost of Labor: There should be no more than minimal labor costs associated with making and mailing an additional copy if an additional copy is necessary.
Cost of Increased Administration: There may be some minimal costs associated with reading and comprehending the new rule.
Compare the Cost of Compliance for Small Business with the Cost of Compliance for the Largest Business in the Same Four-digit Classification, Using One or More of the Following: The cost of compliance should be proportional for small businesses. There should be no proportional differences in costs of equipment, supplies, labor, or administration.
Have Businesses That Will Be Affected Been Asked What the Economic Impact Will Be? All parties were informed of the commissioner's intent to revisit this subject and to draft rules on November 1, 2000. The proposal was published in the Washington State Register and was posted on the insurance commissioner's website. Interested and affected parties, including smaller businesses, were mailed the CR-101. The CR-101 stated that an additional copy of the quarterly statements would be required to be mailed to the NAIC. The CR-101 requested comments and gave agency contact numbers for parties interested in participating in the rule-making process. In late March of 2001, the commissioner notified domestic carriers of the possibility of filing the proposed text and requested comments.
How Did the Commissioner Involve Small Business in the Development of the Proposed Rule? See above.
How and When Were Affected Small Businesses Advised of the Proposed Rule? The CR-101 was filed on November 1, 2000. The proposal was published in the Washington State Register and was posted on the insurance commissioner's website. Interested parties and all health carriers, including smaller carriers, were mailed the CR-101. The CR-101 requested comments and gave agency contact numbers for parties interested in participating in the rule-making process. In late March of 2001, the commissioner notified domestic carriers of the possibility of filing the proposed text and requested comments.
A copy of the statement may be obtained by writing to Kacy Brandeberry, P.O. Box 40255, Olympia, WA 98504-0255, e-mail Kacyb@oic.wa.gov, phone (360) 664-3784, fax (360) 664-2782.
RCW 34.05.328 applies to this rule adoption. It is a significant legislative rule.
Hearing Location: Insurance Building, Room 200A, 14th and Water, Olympia, Washington, on May 8, 2001, at 9:00 a.m.
Assistance for Persons with Disabilities: Contact Lori Villaflores by May 1, 2001, TDD (360) 407-0409.
Submit Written Comments to: Kacy Brandeberry, P.O. Box 40255, Olympia, WA 98504-0255, e-mail Kacyb@oic.wa.gov, fax (360) 664-2782, by May 7, 2001.
Date of Intended Adoption: May 11, 2001.
April 4, 2001
Mike Kreidler
Insurance Commissioner
OTS-4506.1
AMENDATORY SECTION(Amending Matter No. R - 99-3, filed 7/28/99,
effective 8/28/99)
WAC 284-07-050
Annual statement instructions.
(1) For the
purpose of this section, the following definitions shall apply:
(a) "Insurer" shall have the same meaning as set forth in RCW 48.01.050. It also includes health care service contractors registered under chapter 48.44 RCW and health maintenance organizations registered under chapter 48.46 RCW.
(b) "Insurance" shall have the same meaning as set forth in RCW 48.01.040. It also includes prepayment of health care services as set forth in RCW 48.44.010(3) and prepayment of comprehensive health care services as set forth in RCW 48.46.020(1).
(2) Each authorized insurer is required to file with the commissioner an annual statement for the previous calendar year in the general form and context as promulgated by the National Association of Insurance Commissioners (NAIC) for the kinds of insurance to be reported upon, and shall also file a copy thereof with the NAIC. To effectuate RCW 48.05.250, 48.05.400, 48.44.095 and 48.46.080 and to enhance consistency in the accounting treatment accorded various kinds of insurance transactions, the valuation of assets, and related matters, insurers shall adhere to the appropriate Annual Statement Instructions and the Accounting Practices and Procedures Manuals promulgated by the NAIC.
(3) This section does not relieve an insurer from its obligation to comply with specific requirements of the insurance code or rules thereunder.
(4) Number of statements:
(a) For domestic insurers, the statements are to be filed in triplicate to assist with public viewing and copying. Two statements must be permanently bound on the left side. The third statement must be unbound. The statements are to be filed in the Olympia office.
(b) For foreign insurers, except for health care service contractors and health maintenance organizations, one statement shall be filed in the Olympia office. For health care service contractors and health maintenance organizations, two left side permanently bound and one unbound statement shall be filed in the Olympia office to assist with public viewing and copying.
(5) Each domestic insurer shall file quarterly reports of its financial condition with the commissioner and with the NAIC. Each foreign insurer shall file quarterly reports of its financial condition with the NAIC. The commissioner may require a foreign insurer to file quarterly reports with the commissioner whenever, in the commissioner's discretion, there is a need to more closely monitor the financial activities of the foreign insurer. The reports shall be filed in the commissioner's office not later than the forty-fifth day after the end of the insurer's calendar quarters. Such quarterly reports shall be in the form and content as promulgated by the NAIC for quarterly reporting by insurers, shall be prepared according to appropriate Annual and Quarterly Statement Instructions and the Accounting Practices and Procedures Manuals promulgated by the NAIC and shall be supplemented with additional information required by this title and by the commissioner. The statement is to be completed and filed in the same manner and places as the annual statement. Quarterly reports for the fourth quarter are not required.
(6) As a part of any investigation by the commissioner, the commissioner may require an insurer to file monthly financial reports whenever, in the commissioner's discretion, there is a need to more closely monitor the financial activities of the insurer. Monthly financial statements shall be filed in the commissioner's office no later than the twenty-fifth day of the month following the month for which the financial report is being filed. Such monthly financial reports shall be the internal financial statements of the company. In addition, the commissioner may require these internal financial statements to be accompanied by a schedule converting the financial statements to reflect financial position according to statutory accounting practices and submitted in a form using the same format and designation as the insurer's quarterly financial reports of insurers.
(7) Health care service contractors shall use the Hospital, Medical, Dental Service or Indemnity Corporation's Statement Form promulgated by the NAIC for their statutory filings.
(8) Each health care service contractor's and health maintenance organization's annual statement shall be accompanied by a monthly enrollment data form (IC-16-HC/IC-15-HMO) and additional data statement form (IC-13A-HC/IC-14-HMO).
(9) An insurer who on December 31, 1996, has not previously filed its annual or quarterly statements with the NAIC, shall comply with this rule for the year ending December 31, 1996, and each year thereafter. To enhance the intrastate and interstate surveillance of the insurer's financial condition earlier application is permitted.
(10) The commissioner may allow a reasonable extension of the time within which such financial statements shall be filed.
[Statutory Authority: RCW 48.02.060, 48.44.050 and 48.46.200. 99-16-035 (Matter No. R - 99-3), 284-07-050, filed 7/28/99, effective 8/28/99; 96-17-079 (Matter No. R 95-18), 284-07-050, filed 8/21/96, effective 9/21/96. Statutory Authority: RCW 48.02.060. 92-19-040 (Order R 92-10), 284-07-050, filed 9/9/92, effective 10/10/92.]