HOUSE BILL REPORT
HB 1230
As Reported by House Committee On:
Consumer Protection & Business
Title: An act relating to requiring that experience-rated group disability income insurers include all applicable rating factors and credibility formulas in rate manual filings with the insurance commissioner.
Brief Description: Requiring that experience-rated group disability income insurers include all applicable rating factors and credibility formulas in rate manual filings with the insurance commissioner.
Sponsors: Representative Hackney.
Brief History:
Committee Activity:
Consumer Protection & Business: 1/24/25, 2/5/25 [DP].
Brief Summary of Bill
  • Requires experience-rated group disability income insurers to include detailed experience rating formulas in their insurance filings with the Insurance Commissioner.
HOUSE COMMITTEE ON CONSUMER PROTECTION & BUSINESS
Majority Report: Do pass.Signed by 15 members:Representatives Walen, Chair; McClintock, Ranking Minority Member; Dufault, Assistant Ranking Minority Member; Abbarno, Berry, Corry, Donaghy, Fosse, Kloba, Morgan, Reeves, Ryu, Santos, Steele and Volz.
Staff: Megan Mulvihill (786-7304).
Background:

Disability income insurance provides partial wage replacement in the event the policyholder has a serious illness or injury that prevents them from working.  Employers may provide disability income insurance as a benefit to their employees by taking out a group disability income insurance policy for all eligible employees.  Experience-rating is a method that insurance companies use to calculate premiums for an employer group based on that group's experience, including their claim history, payroll information, and demographics. 

 

Insurers are required to submit rate filings to the Office of the Insurance Commissioner (Commissioner) for approval before use.  Insurers providing disability insurance are required to file their manual of classification, manual of rules and rates, and any modifications.  On March 8, 2023, the Commissioner issued a technical assistance advisory to disability insurers explaining that any disability product rated on the basis of experience of a specific group must file a single case rate filing for each experience-rated group.
Summary of Bill:

Experience-rated group disability income insurers must include in their insurance filings their experience rating formulas, including all rating factors and credibility formulas as part of the rate manual.? The filings must be detailed enough to confirm that a group is fully or partially credible and to allow the Commissioner to replicate the premium rates for the experience-rated group if given the group's experience and demographics.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:

(In support) Disability insurance is protection against income loss in the event of injury or disability that results in not being able to work.? Group disability income insurance is an important employee benefit.? Insurers who can provide a customizable rate because of a credible experience-rating can provide a more favorable rate to employers.? Right now the Insurance Code requires insurers to file separately for each experience-rated group.? This would permit the insurers to submit one rate filing, as long as enough detail is provided to ensure the rates are appropriate.? This allows insurers to be more competitive and is good for employers, while full accountability remains with the Commissioner to ensure compliance.

?

(Opposed) None.
Persons Testifying:

Rory Paine-Donovan, Office of the Insurance Commissioner; Tyler Langford, Office of the Insurance Commissioner; and John Mangan, American Council of Life Insurers.
Persons Signed In To Testify But Not Testifying: None.