Insurance commissioner and industry back bill to modernize financial-responsibility rules for service-contract providers

John Kim, committee staff, briefed House Bill 1006 to the Senate Business, Financial Services, Gaming & Trade Committee on March 13. The bill revises financial-responsibility requirements for providers of service contracts and protection-product guarantees, aligning options across providers and permitting additional insurance instruments to satisfy backing requirements.

Under current law, providers must register with the Office of the Insurance Commissioner (OIC) and meet financial-responsibility rules that vary by product type. The bill allows ‘‘failure to perform contractual liability’’ insurance in addition to full-reimbursement policies, allows a mix of multiple insurance policies to meet obligations, and synchronizes options for meeting financial-responsibility requirements (reserve account/security deposit or minimum net worth). It also clarifies when consumers may file claims directly with reimbursement insurers if a provider fails to meet obligations.

Tyler Langford, policy analyst for the Office of the Insurance Commissioner, testified in support and said the OIC worked with the Service Contract Industry Council on the bill. Travis Moore, general counsel for the Service Contract Industry Council, said the measure improves market stability and risk management and aligns Washington with approaches used in other states. The committee was told the bill has an estimated operating cost to OIC of about $157,000 in the current biennium.

Public testimony concluded in committee; a Senate companion bill (SB5108) previously passed the full Senate 49–0, and the House companion passed 96–0, committee staff said.