Washington Insurance Commissioner Mike Kreidler will have expanded authority under a new law for earlier intervention to protect consumers and policyholders when an insurer experiences financial distress.
“This new law provides extra protection for consumers and policyholders by allowing the Office of the Insurance Commissioner to step in when a company first begins to experience financial distress,” Kreidler said. “Previously, we couldn’t do anything until the company had gone well down the road to financial disaster. And often that is too late to do any real good.”
HB 1034, signed recently by Gov. Christine Gregroire, authorizes the OIC to assume administrative supervision of a company under a number of conditions, including when the company experiences financial distress, fails to comply with applicable state law or fraudulently conducts business.
Under administrative supervision, the Insurance Commissioner appoints a deputy with authority to supervise and approve all transactions and company business. The company’s management team stays in place. The OIC supervisor has full access to company information and authority to approve day-to-day business operations.
In less than two years under the previous law, Kreidler assumed control of three insurance companies and continued control of a fourth that preceded his administration. All four have been placed in court-approved receivership for financial insolvency. Companies currently in receivership and under control of the OIC include:
* Western United Life Assurance Company, of Spokane
* KPS Health Plans, of Bremerton
* Washington Casualty Co, of Issaquah
* Cascade National Insurance Company, of Bellevue.
“This means that I am essentially the CEO for a total of four insurance companies with assets in excess of $1 billion,” he said. “The new law means that the OIC can become involved much earlier, perhaps heading off the need for a company to be placed in receivership.”
The new law requires Kreidler to adopt rules establishing guidelines for administrative supervision of a company. Those rules currently are under development.
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