Senate Bill 6309 amends the State’s options for assessing the financial responsibility of certain service contract providers in the State of Washington and is effective June 9, 2016. Current law requires that a provider be “solvent”, and the Washington Office of the Insurance Commissioner has historically applied a subjective standard to measuring solvency by requiring at least two years of audited financial statements evidencing a profitable service contract operation.
This legislation willd reduce the State’s requirement from two to one year’s worth of financial statements. Further, it would allow such financial statements to be certified by company officers, in lieu of being independently audited by a CPA, for those providers who insure their program(s) under a contractual liability policy. The bill would also allow an applicant to rely upon the net worth of its parent if the parent company guarantees the obligations of the applicant.
The bill willd also now allow Vehicle Protection Product (VPP) Warrantors to also provide financial statements that are certified by officers of the Warrantor rather than requiring the financial statements to be independent audited by a CPA. Current law already requires that all VPP Warrantors insure their programs under a CLP.
And lastly, unlike its companion, this bill did NOT establish an exemption for CLP rates if the insured service contract provider is domiciled in state other than Washington. Such an exemption was provided for in the House version of this legislation but that did not carry over to the Senate version which was ultimately enacted.