Washington Will Soon Require Insurers to Inform their Washington Insureds of the Availability of Agency Assistance

From the desk of Jean Kang and Cliff Wilson: Insurers and claims professionals who do business in Washington are no strangers to the relatively unfriendly legal landscape created by state statute and case law. Insurers are subject to strict regulation under statutory schemes like the Insurance Fair Conduct Act (IFCA) and Consumer Protection Act (CPA), each of which expose insurers to hefty penalties for even the most minor of violations. Washington is about to add yet another statutory requirement that insurers conducting business in the state must follow. Read on to see how you might end up being impacted by this significant statutory development.

WAC 284-30-770 (effective August 1, 2020).

Effective August 1st, 2020, Washington will require insurers to inform insureds that they may seek guidance from state insurance regulators (Washington Insurance Commissioner) if the insurer takes certain adverse actions. Washington Administrative Code WAC 284-30-700, will require that the following specific language appear on all “adverse notifications:”

“If you have questions or concerns about the actions of your insurance company or agent, or would like information on your rights to file an appeal, contact the Washington state Office of the Insurance Commissioner’s consumer protection hotline at 1-800-562-6900 or visit www.insurance.wa.gov. The insurance commissioner protects and educates insurance consumers, advances the public interest, and provides fair and efficient regulation of the insurance industry.”

The required language “must appear on the first page, at the end of the adverse notification, or where this notice currently exists if adverse notices are already provided.”

The statute provides specific guidance as to what constitutes “adverse notification,” defining it as any notice or statement from an insurer to their insured which describes one or more of the following:

A claim denial;

A final claim payment for less than the amount of the claim submitted (not including a claim that is paid less than the original amount to reflect the contracted health care provider’s rate);

An adverse benefit determination as defined in RCW 48.43.005(2) [view here]; and

Rescission, cancellation, termination or nonrenewal of a policy unless initiated by an insured (does not apply to the end of a scheduled policy term or cancellation due to nonpayment of premium).

The rule is intended to apply to all adverse notifications sent into Washington regardless of the type of insurance, location of the risk, or where the policy was issued. The advisory must be printed in the same font and no smaller size than the majority of the rest of the notification, and be placed on the front page, end, or in the same location as such advisories are currently printed.

To be clear, the advisory must appear on all “notice(s), statement(s), or document(s)” describing claim denials, final benefits payments for less than the insured requested, certain health care benefit determinations, and rescission, cancellation, termination, or nonrenewal notices initiated by the insurer.

It is important to note that, unlike other WAC provisions that explicitly state that violation of the rule does not impose IFCA liability, this provision does not specify as such. Accordingly, we recommend that insurers start updating their adverse notification form letters and communications to include the required language in advance of August 1, 2020 in order to comply with the new rule.