Original Notice.

     Preproposal statement of inquiry was filed as WSR 13-01-089.

     Title of Rule and Other Identifying Information: Surplus line broker licensing requirements.

     Hearing Location(s): Insurance Commissioner's Office, TR 120, 5000 Capitol Boulevard, Tumwater, WA 98504-0255, on May 7, 2013, at 1:30 p.m.

     Date of Intended Adoption: May 8, 2013.

     Submit Written Comments to: Jim Tompkins, P.O. Box 40258, Olympia, WA 98504-0258, e-mail rulescoordinator@oic.wa.gov, fax (360) 586-3109, by May 6, 2013.

     Assistance for Persons with Disabilities: Contact Lorrie [Lorie] Villaflores by May 6, 2013, TTY (360) 586-0241 or (360) 725-7087.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The commissioner is proposing this amendment to the existing rule to eliminate the requirement for surplus line brokers to have a concurrent Washington insurance producer license in order to be licensed as a surplus line broker. This amendment to the rule will permit the commissioner to license both resident and nonresident surplus line brokers without requiring a concurrent Washington insurance producer license, thereby making Washington licensing requirements reciprocal with other states.

     Reasons Supporting Proposal: The federal Graham-Leach-Bliley Act requires states to reciprocate in regards to insurance producer licensing. Current Washington rules require that for both resident and nonresident surplus line brokers to become licensed, the broker must have a concurrent Washington insurance producer license. Other states do not have the requirement that nonresident surplus line brokers have a concurrent producer license in that state in order to be licensed as a surplus line broker.

     Statutory Authority for Adoption: RCW 48.02.060 and 48.15.015.

     Statute Being Implemented: RCW 48.15.070 and 48.15.073.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Mike Kreidler, insurance commissioner, governmental.

     Name of Agency Personnel Responsible for Drafting: Jim Tompkins, P.O. Box 40258, Olympia, WA 98504-0258, (360) 725-7036; Implementation and Enforcement: John Hamje, P.O. Box 40256, Olympia, WA 98504-0256, (360) 725-7262.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. Because this rule would simply eliminate the requirement that surplus line brokers also be licensed as insurance producers with both property and casualty lines of authority, it eliminates a licensing cost for surplus line brokers without adding any new costs. Therefore, no small business economic impact statement is required.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Jim Tompkins, P.O. Box 40258, Olympia, WA 98504-0258, phone (360) 725-7036, fax (360) 586-3109, e-mail rulescoordinator@oic.wa.gov.

April 1, 2013

Mike Kreidler

Insurance Commissioner

OTS-5186.1

AMENDATORY SECTION(Amending Matter No. R 2008-06, filed 1/6/09, effective 7/1/09)

WAC 284-15-010   Brokers -- Surplus line brokers -- Qualifications and examination.   (1) Each applicant for a resident surplus line broker's license must take and pass the required examination and pay the required fee prior to acting as a surplus line broker. The examination will test an applicant's qualifications and competence in all areas of surplus line insurance. Current information about testing procedures and examination dates is available on the commissioner's web site at: www.insurance.wa.gov.

     (2) ((Before the commissioner can issue a surplus line broker's license, the applicant must be licensed in this state as an insurance producer with both property and casualty lines of authority. This requirement may be satisfied if the licenses are issued simultaneously.

     (3))) The commissioner deems that a nonresident person holding a surplus line broker's license, or the equivalent, in the applicant's home state is qualified, competent and trustworthy and, therefore, meets the minimum standards of this state for holding a surplus line broker's license. For that reason, the commissioner will waive the Washington surplus line broker's examination for a person who has and maintains a current resident surplus line broker's license, or the equivalent, in the applicant's home state.

[Statutory Authority: RCW 48.02.060, 48.17.005. 09-02-073 (Matter No. R 2008-06), § 284-15-010, filed 1/6/09, effective 7/1/09. Statutory Authority: RCW 48.02.060, 48.15.040(4), 48.15.073(2), and 48.15.160(2). 08-14-169 (Matter No. R 2008-04), § 284-15-010, filed 7/2/08, effective 8/2/08. Statutory Authority: RCW 48.02.060. 81-03-082 (Order R 81-1), § 284-15-010, filed 1/21/81.]