OH. 95.]SESSION LAWS, 1963.

to the same extent as if such services or records werebeing performed or maintained by the bank on itsown premises.

New section. SEC. 3. There is added to chapter 30.52 RCW anew section to read as follows:

Banks, trust Where a bank presents for payment an itemcompanies--Presentmnt- danuon or payable at another bank either (1)Predrawneupdeemed atproper place. through a clearing house, or (2) at a place where

such other bank has requested such bank to makepresentment of such item for payment, the present-ment of such item shall be deemed to have beenmade at a proper place.

Passed the Senate February 27, 1963.Passed the House March 12, 1963.Approved by the Governor March 26, 1963.

CHAPTER 195.ES. B. 202.]

INSURANCE.

AN ACT relating to insurance; amending section .03.07, chapter79, Laws of 1947 as last amended by section 2, chapter 190,Laws of 1949 and ROW 48.03.070; section .04.01, chapter 79,Laws of 1947 and ROW 48.04.010; section .09.10, chapter 79,Laws of 1947 and ROW 48.09.100; section .09.27, chapter 79,Laws of 1947 and ROW 48.09.270; section .10.07, chapter 79,Laws of 1947 and ROW 48.10.070; section .12.01, chapter 79,Laws of 1947 and ROW 48.12.010; section .12.02, chapter 79,Laws of 1947 and ROW 48.12.020; section .12.15, chapter 79,Laws of 1947 as last amended by section 3, chapter 194,Laws of 1961 and ROW 48.12.150; section .15.15, chapter 79,Laws of 1947 as last amended by section 8, chapter 303,Laws of 1955 and ROW 48.15.150; section .17.11, chapter79, Laws of 1947 as last amended by section 10, chapter303, Laws of 1955 and ROW 48.17.110; section .23.35, chap-ter 79, Laws of 1947 as last amended by section 7, chapter194, Laws of 1961 and ROW 48.23.350; section .24.06, chapter79, Laws of 1947 as last amended by section 20, chapter 303,Laws of 1955 and ROW 48.24.060; section .32.17, chapter 79,Laws of 1947 and ROW 48.36.170; section .32.41, chapter 79,Laws of 1947 as amended by section 32, chapter 190, Laws

[ 918 ]

CH. 195.]

SESSION LAWS, 1963.[O.1.

of 1949 and ROW 48.36.410; adding four new sections tochapter 79, Laws of 1947 and to chapter 48.05 ROW; fivenew sections to chapter 79, Laws of 1947 and to chapter48.07 RCW ; two new sections to chapter 79, Laws of 1947and to chapter 48.14 ROW; a new section to chapter 79,Laws of 1947 and to chapter 48.20 ROW; a new section tochapter 79, Laws of 1947 and to chapter 48.36 ROW; andrepealing section .11.01, chapter 79, Laws of 1947 and ROW48.11.010; section .11.11, chapter 79, Laws of 1947 asamended by section 6, chapter 193, Laws of 1957 and ROW48.11.110; section .11.12, chapter 79, Laws of 1947 and ROW48.11.120; section .11.17, chapter 79, Laws of 1947 and ROW48.11.170; section .11.18, chapter 79, Laws of 1947 and ROW48.11.180; and section .17.57, chapter 79, Laws of 1947 andROW 48.17.570.

Be it enacted by the Legislature of the State ofWashington:

SECTION 1. Section .03.07, chapter 79, Laws Of RCW 48.03.070

1947 as last amended by section 2, chapter 190, Lawsof 1949 and RCW 48.03.070 are each amended to readas follows:

(1) The commissioner may take depositions, Insurance

mysubpoena witnesses or documentary evidence, wtessre-su

poenasadminister oaths, and examine under oath any indi- Depositions--

vidual relative to the affairs of any person being Ots

examined, or relative to the subject of any hearingor investigation.

(2) The subpoena shall be effective if servedwithin the state of Washington and shall be servedin the same manner as if issued from a court ofrecord.

(3) Witness fees and mileage, if claimed, shallbe allowed the same as for testimony in a court ofrecord. Witness fees, mileage, and the actual ex-pense necessarily incurred in securing attendanceof witnesses and their testimony shall be itemized,and shall be paid by the person as to whom the exam-ination is being made, or by the person if otherthan the commissioner, at whose request the hear-ing is held.

[919]

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

(4) If an individual f ails to obey the subpoena,or obeys the subpoena but refuses to testify whenrequired concerning any matter under examinationor investigation or the subject of the hearing, thecommissioner shall file his written report thereofand proof of service of his subpoena, in any courtof competent jurisdiction in the county where theexamination, hearing, or investigation is being con-ducted. Thereupon the court shall forthwith causethe individual to be brought before it and shall pun-ish him as if the failure or refusal related to a sub-poena from or testimony in that court.

RCW 48.04.010 SEC. 2. Section .04.01, chapter 79, Laws of 1947amened. and RCW 48.04.010 are each amended to read as

follows:Insurance (1) The commissioner may hold a hearing forbefore.g any purpose within the scope of this code as he may

deem necessary. He shall hold a hearing(a) if required by any provision of this code, or(b) upon written demand for a hearing made

by any person aggrieved by any act, threatened act,or failure of the commissioner to act, if such failureis deemed an act under any provision of this code,or by any report, promulgation, or order of the com-missioner other than an order on a hearing of whichsuch person was given actual notice or at whichsuch person appeared as a party, or order pursuantto the order on such hearing.

(2) Any such demand for a hearing shall specifyin what respects such person is so aggrieved and thegrounds to be relied upon as basis for the relief tobe demanded at the hearing.

(3) Unless a person aggrieved by an order ofthe commissioner made pursuant to RCW 48.02.070demands a hearing thereon within ninety days afterreceiving notice of such order, the right to such hear-ing shall conclusively be deemed to have beenwaived.

[920 II

CH. 195.]

SESSION LAWS, 1963.[C.15

(4) The commissioner shall hold such hearingdemanded within thirty days after his receipt of thedemand, unless postponed by mutual consent.

SEC. 3. Section .09.10, chapter 79, Laws of 1947 ROW 48.09. 100amended.

and RCW 48.09.100 are each amended to read asfollows:

A domestic mutual insurer on the cash premiumplan shall at all times have and maintain surplusfunds, representing the excess of its assets over itsliabilities, in amount not less than the aggregate of

(1) the amount of any surplus funds depositedby it with the commissioner to qualify for its originalcertificate of authority, and

(2) the amount of any additional surplus re-quired of it pursuant to RCW 48.09.090 for authorityto transact additional kinds of insurance.

Mutualinsurers.minimumsurplus.

SEC. 4. Section .09.27, chapter 79, Laws of 1947 ROW 48.09.270amended.

and RCW 48.09.270 are each amended to read asfollows:

(1) A domestic mutual insurer on the cash pre-mium plan, after it has established a surplus not lessin amount than the minimum capital funds requiredof a domestic stock insurer to transact like kinds ofinsurance, and for so long as it maintains such sur-plus, may extinguish the contingent liability of itsmembers to assessment and omit provisions imposingcontingent liability in all policies currently issued.

(2) Any deposit made with the commissioneras a prerequisite to the insurer's certificate of author-ity may be included as part of the surplus requiredin this section.

(3) When the surplus has been so establishedand the commissioner has so ascertained, he shallissue to the insurer, at its request, his certificateauthorizing the extinguishment of the contingentliability of its members and the issuance of policiesfree therefrom.

Nonassessablepolicies.

[ 921 ]

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

(4) While it maintains surplus funds in amountnot less than the minimum capital required of adomestic stock insurer authorized to transact likekinds of insurance, and subject to the requirementsof section 9 of this 1963 amendatory act as to specialsurplus, a foreign or alien mutual insurer on thecash premium plan may, if consistent with its charterand the laws of its domicile, issue nonassessable poli-cies covering subjects located, resident, or to be per-formed in this state.

RCW 48.10.070 SEC. 5. Section .10.07, chapter 79, Laws of 1947amended.

and RCW 48.10.070 are each amended to read asfollows:

(1) A domestic reciprocal insurer hereafterformed, if it has otherwise complied with the provi-sions of this code, may be authorized to transactinsurance if it deposits and maintains on depositwith the commissioner surplus funds as follows:

(a) To transact property insurance, surplus fundsof not less than one hundred thousand dollars.

(b) To transact vehicle insurance, surplus fundsof not less than two hundred thousand dollars.

(2) A domestic reciprocal insurer may be author-ized to transact other kinds of insurance in additionto that for which it was originally authorized, if ithas otherwise complied with the provisions of thiscode therefor and possesses and maintains surplusfunds equal to the paid-in capital stock requiredunder section 7 of this 1963 amendatory act of astock insurer transacting like kinds of insurance,and the special surplus, if any, required under sec-tion 9 of this 1963 amendatory act as to such a stockinsurer. The insurer need not deposit such addi-tional surplus funds with the commissioner: Pro-vided, That a domestic reciprocal insurer which un-der prior laws held authority to transact insurancein this state may continue to be so authorized solong as it otherwise qualifies therefor and maintains

r 922 1

Mutualinsurers.Nonassessablepolicies.

Reciprocal in-surers. Surplusfunds re-quired.

Proviso.

CH. 195.]

SESSION LAWS, 1963.[C.15

surplus funds in amount not less than as requiredunder laws of this state in force at the time suchauthority to transact insurance in this state wasgranted.

(3) A domestic reciprocal insurer heretoforeformed shall maintain on deposit with the commis-sioner surplus funds of not less than the sum of onehundred thousand dollars, and shall have additionalsurplus in the amount of any additional surplusfunds required by this code for authority to transactkinds of insurance transacted by it in addition tothat authorized by its original certificate of author-ity. Such additional surplus funds need not be depos-ited with the commissioner.

SEC. 6. There is added to chapter 79, Laws of New section.

1947 and to chapter 48.05 RCW a new section toread as follows:

An insurer which otherwise qualifies theref ormay be authorized to transact any one kind of com-binations of kinds of insurance as defined in chapter48.11 RCW, except:

(1) A life insurer may grant annuities and maybe authorized to transact in addition only disabilityinsurance; except, that the commissioner may, ifthe insurer otherwise qualifies theref or, continueso to authorize any life insurer which immediatelyprior to the effective date of this 1963 amendatoryact was lawfully authorized to transact in this statea kind or kinds of insurance in addition to life anddisability insurances and annuity business.

(2) A reciprocal insurer shall not transact lifeinsurance.

(3) A title insurer shall be a stock insurer andshall not transact any other kind of insurance. Thisprovision shall not prohibit the ceding of reinsur-ance by a title insurer to insurers other than mutualor reciprocal insurers.

[ 923

Insurers,generally.Tran sactinig of

cobinationsof kinds ofinsuranceauthorized-Exceptions.

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

New section.

Insurers,generally.Capital andsurplusrequirements.

of insurance or basic surplus

Life...................... $200,000Disability................... 200,000Life and disability ............ 300,000Property ................... 200,000Marine & transportation ....... 250,000General casualty ............. 300,000Vehicle..................... 200,000Surety ..................... 300,000Any two of the following kinds

of insurance: Property, ma-rine & transportation, gen-eral casualty, vehicle, surety,disability ................. 350,000

Multiple lines (all insurancesexcept if e and title insur-ance) .................... 450,000

Title (in accordance with theprovisions of chapter 48.29RCW)

Additionalsurplus

$100,000100,000150,000100,000150,000150,000100,000150,000

175,000

250,000

(2) Capital and surplus requirements are basedupon all the kinds of insurance transacted by theinsurer wherever it may operate or propose to op-

[ 924 ]

SEC. 7. There is added to chapter 79, Laws of1947 and to chapter 48.05 RCW a new section to readas follows:

(1) Subject to section 8 and section 9 of this 1963amendatory act to qualify f or authority to transactany one kind of insurance as defined in chapter 48.11RCW or combination of kinds of insurance as shownbelow, a foreign or alien insurer, whether stock,mutual, or a reciprocal, or a domestic stock insurerhereafter formed shall possess and thereafter main-tain unimpaired paid-in capital stock, if a stock in-surer, or unimpaired basic surplus if a foreign mutualinsurer or foreign reciprocal insurer, and shall pos-sess when first so authorized additional funds in sur-plus as follows:

CH. 195.]

SESSION LAWS, 1963.[C.15

erate, whether or not only a portion of such kindsare to be transacted in this state.

(3) An insurer holding a certificate of authorityto transact insurance in this state immediately priorto the effective date of this amendatory act of 1963may continue to be authorized to transact the samekinds of insurance as long as it is otherwise qualifiedfor such authority and thereafter maintains unim-paired the amount of paid-in capital stock, if a stockinsurer, or basic surplus, if a mutual or reciprocalinsurer, and special surplus as required of it underlaws in force immediately prior to such effectivedate.

(4) As to surplus required for qualification totransact one or more kinds of insurance and there-after to be maintained, domestic mutual insurersare governed by chapter 48.09 RCW, and reciprocalinsurers are governed by chapter 48.10 RCW.

SEC. 8. There is added to chapter 79, Laws of1947 and to chapter 48.05 RCW a new section to readas follows:

An insurer authorized to transact general casualtyinsurance shall be authorized to transact disabilityinsurance and fidelity insurance without requiringadditional financial qualifications.

New section.

General cas-ualty insurermay transactdisability andfidelity.

SEC. 9. There is added to chapter 79, Laws Of New section.

1947 and to chapter 48.05 RCW a new section to readas follows:

An insurer shall not be authorized to transactany one of the f ollowing insurances,-vehicle, orgeneral casualty, or marine and transportation, orsurety,-with any additional kind of insurance un-less it maintains at all times special surplus of notless than one hundred thousand dollars in additionto the paid-in capital stock if a stock insurer orbasic surplus if a mutual or reciprocal insurer other-wise required. This section does not apply to com-

[ 925

Special surplusrequirementsfor certaininsurancecombinations.

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

binations transacted by a general casualty insurerpursuant to section 8 of this 1963 amendatory act.

Repeal. SEC. 10. Section .11.01, chapter 79, Laws of 1947,and RCW 48.11.010; section .11.11, chapter 79, Lawsof 1947 as amended by section 6, chapter 193, Lawsof 1957 and RCW 48.11.110; section .11.12, chapter79, Laws of 1947 and RCW 48.11.120; section .11.17,chapter 79, Laws of 1947 and RCW 48.11.170; section.11.18, chapter 79, Laws of 1947 and RCW 48.11.180are each repealed.

RmeWde..0 SEC. 11. Section .12.01, chapter 79, Laws of 1947

and RCW 48.12.010 are each amended to read asfollows:

.,sst In any determination of the financial conditiondefined, of any insurer there shall be allowed as assets only

such assets as belong wholly and exclusively to theinsurer, which are registered, recorded, or held un-der the insurer's name, and which consist of:

(1) Cash in the possession of the insurer or intransit under its control, and the true balance of anydeposit of the insurer in a solvent bank or trustcompany;

(2) Investments, securities, properties, and loansacquired or held in accordance with this code, andin connection therewith the following items:

(a) Interest due or accrued on any bond or evi-dence of indebtedness which is not -in default andwhich is not valued on a basis including accruedinterest.

(b) Declared and unpaid dividends on stocks andshares unless such amount has otherwise beenallowed as an asset.

(c) Interest due or accrued upon a collateral loanin an amount not to exceed one year's interestthereon.

(d) Interest due or accrued on deposits in solventbanks and trust companies, and interest due or ac-

[ 926 ]

CH. 195.]

SESSION LAWS, 1963. H.15

,crued on other assets if such interest is in the judg-ment of the commissioner a collectible asset.

(e) Interest due or accrued on a mortgage loan,in amount not exceeding in any event the amount,if any, of the difference between the unpaid principaland the value of the property less delinquent taxesthereon; but if any interest on the loan is in defaultmore than eighteen months, or if any interest onthe loan is in default and any taxes or any install-ment thereof on the property are and have been dueand unpaid for more than eighteen months, no allow-ance shall be made for any interest on the loan.

(f) Rent due or accrued on real property ifsuch rent is not in arrears for more than threemonths.

(3) Premium notes, policy loans, and other pol-icy assets and liens on policies of life insurance, inamount not exceeding the legal reserve and otherpolicy liabilities carried on each individual policy;

(4) The net amount of uncollected and deferredpremiums in the case of a life insurer which carriesthe full annual mean tabular reserve liability;

(5) Premiums in the course of collection, otherthan for life insurance, not more than ninety dayspast due, less commissions payable thereon. Theforegoing limitation shall not apply to premiumspayable directly or indirectly by the United Statesgovernment or any of its instrumentalities;

(6) Installment premiums other than life insur-ance premiums, in accordance with regulations pre-scribed by the commissioner consistent with practiceformulated or adopted by the National Associationof Insurance Commissioners;

(7) Notes and like written obligations not pastdue, taken for premiums other than life insurancepremiums, on policies permitted to be issued on suchbasis, to the extent of the unearned premium re-

r 927 1

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

Assets serves carried thereon and unless otherwise requireddefined, by regulation prescribed by the commissioner;

(8) The full amount of reinsurance recoverableby a ceding insurer from a solvent reinsurer not dis-qualified to take such reinsurance under this code;or, in the case of reinsurers disqualified under thiscode, so much of reinsurance recoverable from suchreinsurer as does not exceed the liabilities carriedby the ceding insurer for amounts withheld undera reinsurance treaty with such reinsurer as securityfor the payment of obligations thereunder if suchfunds are held subject to withdrawal by, and underthe control of, the ceding insurer;

(9) Amounts receivable by an assuming insurerrepresenting funds withheld by a solvent ceding in-surer under a reinsurance treaty;

(10) Deposits or equities recoverable from un-derwriting associations, syndicates and reinsurancefunds, or from any suspended banking institution,to the extent deemed by the commissioner availablefor the payment of losses and claims and at valuesto be determined by him;

(11) Electronic and mechanical machines consti-tuting a data processing and accounting system if thecost of such system is at least twenty-five thousanddollars, which cost shall be amortized in full overa period not to exceed ten calendar years; and

(12) Other assets, not inconsistent with the f ore-going provisions, deemed by the commissioner avail-able for the payment of losses and claims, at values tobe determined by him.

RCW 48.12.020 SEC. 12. Section .12.02, chapter 79, Laws of 1947amended.

and RCW 48.12.020 are each amended to read asfollows:

Nonallowable In addition to assets impliedly excluded underassets. RCW 48.12.010, the following expressly shall not be

allowed as assets in any determination of the finan-cial condition of an insurer:

[ 928

CH. 195.]

SESSION LAWS, 1963.[C.15

(1) Goodwill, trade names, agency plants andother like intangible assets.

(2) Prepaid or deferred charges for expenses andcommissions paid by the insurer.

(3) Advances to officers (other than policy loansor loans made pursuant to RCW 48.07.130), whethersecured or not, and advances to employees, agentsand other persons on personal security only.

(4) Stock of such insurer, owned by it, or anyequity therein or loans secured thereby, or any pro-portionate interest in such stock through the owner-ship by such insurer of an interest in another firm,corporation or business unit.

(5) Furniture, furnishings, fixtures, safes, equip-ment, vehicles, library, stationary, literature, andsupplies; except, electronic and mechanical machinesauthorized by subsection (11) of section 11 of this1963 amendatory act, or such personal property asthe insurer is permitted to hold pursuant to para-graph (e) of subsection (2) of RCW 48.13.160, orwhich is acquired through foreclosure of chattelmortgages acquired pursuant to RCW 48.13.150, orwhich is reasonably necessary for the maintenanceand operation of real estate lawfully acquired andheld by the insurer other than real estate used byit f or home office, branch office, and similar purposes.

(6) The amount, if any, by which the aggregatebook value of investments as carried in the ledgerassets of the insurer exceeds the aggregate valuethereof as determined under this code.

SEC. 13. Section .12.15, chapter 79, Laws of 1947, RcW 4.12.150

as last amended by section 3, chapter 194, Laws of aedd

1961, and RCW 48.12.150 are each amended to readas follows:

(1) This section shall be known as the standard Standard valu-

valuation law. insurance.

(2) Annual valuation: The commissioner shallannually value, or cause to be valued, the reserve

[ 9291

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

Standard valu-aLtion law-Lifeinsurance.

liabilities (hereinafter called reserves) for all out-standing life insurance policies and annuity and pureendowment contracts of every life insurer doingbusiness in this state, except that in the case of analien insurer such valuation shall be limited to itsinsurance transactions in the United States, andmay certify the amount of any such reserves, speci-fying the mortality table or tables, rate or rates ofinterest and methods (net level premium method orothers) used in the calculation of such reserves. Incalculating such reserves, the commissioner may usegroup methods and approximate averages for frac-tions of a year or otherwise. He may accept, in hisdiscretion, the insurer's calculation of such reserves.In lieu of the valuation of the reserves herein re-quired of any foreign or alien insurer, he may acceptany valuation made, or caused to be made, by theinsurance supervisory official of any state or otherjurisdiction when such valuation complies with theminimum standard herein provided and if the offi-cial of such state or jurisdiction accepts as sufficientand valid for all legal purposes the certificate ofvaluation of the commissioner when such certificatestates the valuation to have been made in a speci-fied manner according to which the aggregate re-serves would be at least as large as if they had beencomputed in the manner prescribed by the law ofthat state or jurisdiction.

(3) Minimum valuation standard:(a) The minimum standard for the valuation of

all such policies and contracts issued prior to theoperative date of RCW 48.23.350 shall be as follows:

For policies issued prior to the operative date nostandard of valuation for ordinary policies, whetheron the net level premium, preliminary term, orselect and ultimate reserve basis, shall be less thanthat determined upon such basis according to theAmerican Experience Table of Mortality with three

[ 930 ]

CH. 195.]

SESSION LAWS, 1963. C.15

and one-half percent interest; except, that when thepreliminary term basis is used it shall not exceedone year. The commissioner may vary the standardof valuation in particular cases of invalid lives andother extra hazards, provided, that the interest rateused is not greater than three and one-half percent.

The legal minimum standard for the valuationof annuities issued on or after January 1, 1912, andprior to the operative date of RCW 48.23.350, shallbe McClintock's Table of Mortality Among Annui-tants, with interest at three and one-half percentper annum, but annuities deferred ten or more yearsand written in connection with life or term insurancemay be valued on the same mortality table fromwhich the consideration or premiums were com-puted, with interest not higher than three and one-half percent per annum.

The legal minimum standard for the valuationof industrial policies issued on or after the first dayof January, 1912, and prior to the operative date ofRCW 48.23.350, shall be the American ExperienceTable of Mortality with interest at three and one-half percent per annum; except, that any life insurermay voluntarily value such industrial policies ac-cording to the Standard Industrial Mortality Tableor the Substandard Industrial Mortality Table.

The legal minimum standard for the valuation ofgroup life insurance policies under which premiumrates are not guaranteed for a period in excess offive years shall be, at the option of the life insurerissuing such policies, either the American Men Ulti-mate Table of Mortality, the Commissioners 1941Standard Ordinary Mortality Table, or any othertable approved by the commissioner, with interestat three and one-half percent per annum.

(b) The minimum standard for the valuation ofall such policies and contracts issued on or after theoperative date of RCW 48.23.350 shall be the Coin-

II 93'1

[CH. 195.

OH. 95.]SESSION LAWS, 1963.

Standard valu -ation law-Lifeinsurance.

missioners Reserve Valuation Method defined in sub-section (4) of this section, three and one-half per-cent interest, and the following tables:

(i) For all ordinary policies of life insuranceissued on the standard basis, excluding any disabil-ity and accidental death benefits in such policies,-the Commissioners 1941 Standard Ordinary Mortal-ity Table for such policies issued prior to the opera-tive date of RCW 48.23.350 (5a), and the Commis-sioners 1958 Standard Ordinary Mortality Table f orsuch policies issued on or after such operative date:provided, that for any category of such policies is-sued on female risks on or after July 1, 1957, modi-fied net premiums and present values, referred to insubsection (4) of this section, may be calculated ac-cording to an age not more than three years youngerthan the actual age of the insured.

(ii) For all industrial life insurance policies is-sued on the standard basis, excluding any disabilityand accidental death benefits in such policies,-the1941 Standard Industrial Mortality Table for suchpolicies issued prior to the operative date of RCW48.23.350 (5b), and the Commissioners 1961 Stand-ard Industrial Mortality Table for such policiesissued on or after such operative date.

(iii) For individual annuity and pure endow-ment contracts, excluding any disability and acci-dental death benefits in such policies,-the 1937Standard Annuity Mortality Table or, at the optionof the insurer, the Annuity Mortality Table for 1949,Ultimate, or any modification of either of these tablesapproved by the commissioner.

(iv) For group annuity and pure endowment con-tracts, excluding any disability and accidental deathbenefits in such policies,-the Group Annuity Mor-tality Table for 1951, any modification of such tableapproved by the commissioner, or, at the option ofthe insurer, any of the tables or modifications of

[ 932 ]

CH. 195.1

SESSION LAWS, 1963. C.15

tables specified for individual annuity and pure en-dowment contracts.

(v) For total and permanent disability benefitsin or supplementary to ordinary policies or contracts,-for policies or contracts issued on or after January1, 1966, the tables of Period 2 disablement rates andthe 1930 to 1950 termination rates of the 1952 Dis-ability Study of the Society of Actuaries, with dueregard to the type of benefit; for policies or contractsissued on or after January 1, 1961, and prior to Janu-ary 1, 1966, either such tables or, at the option ofthe insurer, the Class (3) Disability Table (1926);and for policies issued prior to January 1, 1961, theClass (3) Disability Table (1926). Any such tableshall, for active lives, be combined with a mortalitytable permitted for calculating the reserves for lifeinsurance policies.

(vi) For accidental death benefits in or supple-mentary to policies,-for policies issued on or afterJanuary 1, 1966, the 1959 Accidental Death BenefitsTable; for policies issued on or after January 1, 1961,and prior to January 1, 1966, either such table or,at the option of the insurer, the Inter-CompanyDouble Indemnity Mortality Table; and for policiesissued prior to January 1, 1961, the Inter-CompanyDouble Indemnnity Mortality Table. Either tableshall be combined with a mortality table permittedfor calculating the reserves for life insurance policies.

(vii) For group life insurance, life insuranceissued on the substandard basis and other specialbenefits,-such tables as may be approved by thecommissioner.

(4) Commissioners Reserve Valuation Method:Reserves according to the Commissioners ReserveValuation Method, for the life insurance and endow-ment benefits of policies providing for a uniformamount of insurance and requiring the payment ofuniform premiums shall be the excess, if any, of the

[ 933]1

[CH. 195.

CR. 95.]SESSION LAWS, 1963.

Standard valu -peetvle ttedt o autoo uhftra tion law-Life rsn aua h aeo autoo uhftrinsurance, guaranteed benefits provided for by such policies,

over the then present value of any future modifiednet premiums therefor. The modified net permiumsfor any such policy shall be such uniform percentageof the respective contract premiums f or such bene-fits (excluding extra premiums on a substandardpolicy) that the present value, at the date of issueof the policy, of all such modified net premiums shallbe equal to the sum of the then present value ofsuch benefits provided for by the policy and theexcess of (a) over (b) as follows:

(a) A net level annual premium equal to thepresent value, at the date of issue, of such benefitsprovided for after the first policy year, divided bythe present value, at the date of issue, of an annuityof one per annum payable on the first and each sub-sequent anniversary of such policy on which a pre-mimum. falls due; provided, however, that such netlevel annual premium shall not exceed the net levelannual premium on the nineteen-year premiumwhole life plan for insurance of the same amount atan age one year higher than the age at issue of suchpolicy.

(b) A net one-year term premium for such bene-fits provided for in the first policy year.

Reserves according to the Commissioners ReserveValuation Method for (1) life insurance policies pro-viding for a varying amount of insurance or requir-ing the payment of varying premiums, (2) annuityand pure endowment contracts, (3) disability andaccidental death benefits in all polices and contracts,and (4) all other benefits, except life insurance andendowment benefits in life insurance policies, shallbe calculated by a method consistent with the prin-ciples of this paragraph.

(5) Minimum aggregate reserves: In no eventshall an insurer's aggregate reserves for all life in-

[ 934 1

CH. 195.]

SESSION LAWS, 1963.[H.15

surance policies, excluding disability and accidentaldeath benefits, issued on or after the operative dateof RCW 48.23.350, be less than the aggregate reservescalculated in accordance with the method set forthin subsection (4) and the mortality table or tablesand rate or rates of interest used in calculating non-forfeiture benefits for such policies.

(6) Optional reserve bases: Reserves for all poli-cies and contracts issued prior to the operative dateof RCW 48.23.350 may be calculated, at the optionof the insurer, according to any standards which pro-duce greater aggregate reserves for all such policiesand contracts than the minimum reserves requiredby the laws in effect immediately prior to such date.

For any category of policies, contracts or bene-fits specified in subsection (3) of this section, issuedon or after the operative date of ROW 48.23.350,reserves may be calculated, at the option of the in-surer, according to any standard or standards whichproduce greater aggregate reserves for such categorythan those calculated according to the minimumstandard herein provided, but the rate or rates ofinterest used shall not be higher than the corres-ponding rate or rates of interest used in calculatingany nonf orfeiture benefits provided for therein: Pro- Proviso.

vided, That reserves for participating life insurancepolicies ssued on or after the operative date of ROW48.23.350 may, with the consent of the commissioner,be calculated according to a rate of interest lowerthan the rate of interest used in calculating the non-forfeiture benefits in such policies, with the furtherproviso that if such lower rate differs from the rateused in the calculation of the nonforfeiture benefitsby more than one-half percent the insurer issuingsuch policies shall file with the commissioner a planproviding for such equitable increases, if any, inthe cash surrender values and nonforfeiture benefitsin such policies as the commissioner shall approve.

[ 935

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

Staondr la-f Any such insurer which at any time hadadpeinsurance, any standard of valuation producing greater aggre-

gate reserves than those calculated according to theminimum standard herein provided may, with theapproval of the commissioner, adopt any lower stand-ard of valuation, but not lower than the minimumherein provided.

(7) Deficiency reserve: If the gross premiumcharged by any life insurer on any policy or contractis less than the net premium for the policy or con-tract according to the mortality table, rate of inter-est and method used in calculating the reservethereon, there shall be maintained on such policyor contract a deficiency reserve in addition to allother reserves required by law. For each such policyor contract the deficiency reserve shall be the pres-ent value, according to such standard, of an annuityof the difference between such net premium and thepremium charged for such policy or contract, run-ning f or the remainder of the premium-paying period.

New section. SEC. 14. There is added to chapter 79, Laws of1947 and to chapter 48.14 RCW a new section to readas follows:

Taxable direct In determining the amount of direct premiumpreiu instatedeter- taxable in this state, all such premiums written, pro-mining.

cured, or received in this state shall be deemed writ-ten upon risks or property resident, situated, or tobe performed in this state except such premiums asare properly allocated or apportioned and reportedas taxable premiums of any other state or states.

New section. SEC. 15. There is added to chapter 79, Laws of1947 and to chapter 48.14 RCW a new section to readas follows:

Foreign or Any foreign or alien insurer authorized to doalien isurers,continuing business in this state which hereafter either with-liability fortaxes, draws from the state or has its certificate of author-

ity suspended or revoked shall continue to pay pre-mium taxes pursuant to this chapter as to policies

[ 936]1

CH. 195.]

SESSION LAWS, 1963.[C.15

upon risks or property resident, situated, or to beperformed in this state, which policies were issuedduring the time the insurer was authorized in thisstate.

SEC. 16. Section .15.15, chapter 79, Laws of 1947 RCW 48.15.150

as last amended by section 8, chapter 303, Laws of aedd

1955 and RCW 48.15.150 are each amended to readas follows:

(1) An unauthorized insurer shall be sued, upon Surplus lineinsurer, legal

any cause of action arising in this state under any processaginst.

contract issued by it as a surplus line contract, pur-suant to this chapter, in the superior court of thecounty in which the cause of action arose.

(2) Service of legal process against the insurermay be made in any such action by service upon thecommissioner of duplicate copies of such legal proc-ess either by a person competent to serve a summons,by registered mail or certified mail with returnreceipt requested. At the time of such service theplaintiff shall pay to the commissioner two dollars,taxable as costs in the action. The commissioner shallforthwith mail the documents of process served, ora true copy thereof, to the person designated by theinsurer in the policy for the purpose by prepaid reg-istered mail with return receipt requested. The in-surer shall have forty days from the date of serviceupon the commissioner within which to plead, an-swer, or otherwise defend the action. Upon serviceof process upon the commissioner in accordance withthis provision, the court shall be deemed to havejurisdiction in personam of the insurer.

(3) An unauthorized insurer issuing such policyshall be deemed thereby to have authorized serviceof process against it in the manner and to the effectas provided in this section. Any such policy shallcontain a provision stating the substance of this sec-tion, and designating the person to whom the com-

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[CH. 195.

CH. 95.]SESSION LAWS, 1963.

missioner shall mail process as provided in subsec-tion (2) of this section.

RCW 48.17.110 SEC. 17. Section .17.11, chapter 79, Laws of 1947amended.

as amended by section 23, chapter 190, Laws of 1949as last amended by section 10, chapter 303, Laws of1955 and RCW 48.17.110 are each amended to readas follows:

Insurance (1) Each applicant for license as agent, broker,agents, brok-ers, solicitors solicitor, or adutrshall pirto the issuance ofand adjusters. adutr roofxappicains any such license, personally take and pass to the

satisfaction of the commissioner an examinationgiven by the commissioner as a test of his qualifica-tions and competence; but this requirement shall notapply to:

(a) Applicants for limited licenses, as travel in-surance agents only, under RCW 48.17.190, nor, atthe discretion of the commissioner, to applicants forlicenses as disability insurance agents for the pur-pose of handling limited coverages pertaining tosports and recreation.

(b) Applicants who within the five-year periodnext preceding date of application have been licensedin this state under a license requiring qualificationsimilar to qualifications required by the license ap-plied for and who are deemed by the commissionerto be fully qualified and competent.

(c) Applicants for license as nonresident agentor as nonresident broker who have fulfilled quali-fication requirements in their state of residence andwho are deemed by the commissioner to be fullyqualified and competent.

(d) Applicants for an agent's or solicitor's licensecovering the same kinds of insurance as an agent'sor solicitor's license then held by them.

(e) Applicants for an adjuster's license who fora period of one year next preceding the date of appli-cation have been a full time salaried employee of

[ 938 1

CH. 195.]

SESSION LAWS, 1963.[C.1.

an insurer or of a general agent to adjust, investigate,or report claims arising under insurance contracts.

(2) Applicants for the renewal of licenses inforce on October 1, 1947, or issued thereafter shallnot be required to take an examination except asprovided in subsection (3) of this section.

(3) The commissioner may at any time requireany licensed agent, broker, solicitor, or adjuster totake and successfully pass an examination testinghis competence and qualifications as a condition tothe continuance or renewal of his license, if thelicensee has been guilty of violation of this code,or has so conducted his aff airs under his license asto cause the commissioner reasonably to desire fur-ther evidence of his qualifications.

SEC. 18. Section .17.57, chapter 79, Laws of 1947 Repeal.

and RCW 48.17.570 are each repealed.

SEC. 19. There is added to chapter 79, Laws of New section.

1947 and to chapter 48.20 RCW a new section toread as follows:

(1) Any insurer authorized to issue disability Disability in-sura nce

insurance in this state may join with one or more fagainstamajorfinanca loss

other such insurers to offer to any resident of this from accidentor disease-

state who is sixty-five years of age or over and to the Older persons.

spouse of such resident disability insurance againstmajor financial loss from accident or disease.

(2) The forms of applications, certificates andpolicies of such disability insurance and the applica-ble premium rate shall be filed with and be subjectto the approval of the commissioner as provided inRCW 48.18.100. The commissioner may disapproveany such form of application, certificate or policy orwithdraw any previous approval thereof on anyground set forth in RCW 48.18.110 or if the commis-sioner finds that any such f orm. is not in the publicinterest.

(3) A financial summary concerning any insur-ance written under the authority of this section shall

[ 939 :i

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

be furnished annually to the commissioner in suchform as he may prescribe.

RCW 4.23.350 SEC. 20. Section .23.35, chapter 79, Laws of 1947,amended.

as last amended by section 7, chapter 194, Laws of1961, and RCW 48.23.350 are each amended to readas follows:

Life insurance (1) This section shall be known as the standard-Standardnonforfeiture nonforfeiture law.law.

(2) Nonforfeiture provisions-Life: In the caseof policies issued on or after the operative date ofthis section as defined in subsection (8), no policyof life insurance, except as stated in subsection (7),shall be delivered or issued for delivery in thisstate unless it shall contain in substance the follow-ing provisions, or corresponding provisions which inthe opinion of the commissioner are at least asfavorable to the defaulting or surrendering policy-holder:

(a) That, in the event of default in any premiumpayment, the insurer will grant, upon proper requestnot later than sixty days after the due date of thepremium in default, a paid-up nonforfeiture benefiton a plan stipulated in the policy, effective as ofsuch due date, of such value as may be hereinafterspecified.

(b) That, upon surrender of the policy withinsixty days after the due date of any premium pay-ment in default after premiums have been paid forat least three full years in the case of ordinary insur-ance or five full years in the case of industrial insur-ance, the insurer will pay, in lieu of any paid-upnonforfeiture benefit, a cash surrender value of suchamount as may be hereinafter specified.

(c) That a specified paid-up nonforfeiture benefitshall become effective as specified in the policy un-less the person entitled to make such election electsanother available option not later than sixty daysafter the due date of the premium in default.

[ 940]1

CH. 195.]

SESSION LAWS, 1963.[C.1.

(d) That, if the policy shall have become paid-upby completion of all premium payments or if it iscontinued under any paid-up nonforfeiture benefitswhich become effective on or after the third policyanniversary in the case of ordinary insurance or thefifth policy anniversary in the case of industrial in-surance, the insurer will pay, upon surrender of thepolicy within thirty days after any policy anniver-sary, a cash surrender value of such amount as maybe hereinafter specified.

(e) A statement of the mortality table and inter-est rate used in calculating the cash surrender valuesand the paid-up nonforfeiture benefits available un-der the policy, together with a table showing thecash surrender value, if any, and paid-up nonfor-feiture benefit, if any, available under the policy oneach policy anniversary either during the first twentypolicy years or during the term of the policy, which-ever is shorter, such values and benefits to be cal-culated upon the assumption that there are nodividends or paid-up additions credited to the policyand that there is no indebtedness to the insurer onthe policy.

(f) A statement that the cash surrender valuesand the paid-up nonforfeiture benefits available un-der the policy are not less than the minimum valuesand benefits required by or pursuant to the insurancelaw of this state; an explanation of the manner inwhich the cash surrender values and the paid-upnonforfeiture benefits are altered by the existenceof any paid-up additions credited to the policy orany indebtedness to the insurer on the policy; if adetailed statement of the method of computation ofthe values and benefits shown in the policy is notstated therein, a statement that such method of com-putation has been filed with the insurance super-visory official of the state in which the policy isdelivered; and a statement of the method to be used

[ 941]

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

Life insurance-Standardnonforfeiturelaw.

in calculating the cash surrender value and paid-upnonforfeiture benefit available under the policy onany policy anniversary beyond the last anniversaryfor which such values and benefits are consecutivelyshown in the policy.

Any of the foregoing provisions or portions thereofnot applicable by reason of the plan of insurancemay, to the extent inapplicable, be omitted from thepolicy.

The insurer shall reserve the right to defer thepayment of any cash surrender value for a period ofsix months after demand theref or with surrenderof the policy.

(3) Cash surrender value-Life: Any cash sur-render value available under the policy in the eventof default in a premium payment due on any policyanniversary, whether or not required by subsection(2) of this section, shall be an amount not less thanthe excess, if any, of the present value, on such anni-versary, of the future guaranteed benefits whichwould have been provided for by the policy includingany existing paid-up additions, if there had beenno default, over the sum of (a) the then presentvalue of the adjusted premiums as defined in sub-sections (5), (5a) and (5b) of this section correspond-ing to premiums which would have fallen due onand after such anniversary, and (b) the amount ofany indebtedness to the insurer on account of orsecured by the policy. Any cash surrender valueavailable within thirty days after any policy anni-versary under any policy paid-up by completion ofall premium payments or any policy continued underany paid-up nonf orfeiture benefits whether or notrequired by such subsection (2), shall be an amountnot less than the present value, on such anniversary,of the future guaranteed benefits provided for by thepolicy including any existing paid-up additions, de-

[ 942 ]

CH. 195.]

SESSION LAWS, 1963.[C.9.

creased by any indebtedness to the insurer on ac-count of or secured by the policy.

(4) Paid-up nonforfeiture benefit-Life: Anypaid-up non-forfeiture benefit available under thepolicy in the event of default in a premium paymentdue on any policy anniversary shall be such thatits present value as of such anniversary shall be atleast equal to the cash surrender value then providedfor by the policy or, if none is provided for, thatcash surrender value which would have been re-quired by this section in the absence of the conditionthat premiums shall have been paid for at least aspecified period.

(5) The adjusted premium-Life: Except asprovided in the third paragraph of this subsection,the adjusted premiums for any policy shall be cal-culated on an annual basis and shall be such uniformpercentage of the respective premiums specified inthe policy for each policy year, excluding extra pre-miums on a substandard policy, that the presentvalue, at the date of issue of the policy, of all suchadjusted premiums shall be equal to the sum of (a)the then present value of the future guaranteed bene-fits provided for by the policy; (b) two percent ofthe amount of insurance, if the insurance be uniformin amount, or of the equivalent uniform amount, ashereinafter defined, if the amount of insurance varieswith duration of the policy; (c) forty percent of theadjusted premium for the first policy year; (d)twenty-five percent of either the adjusted premiumfor the first policy year or the adjusted premium fora whole life policy of the same uniform or equivalentuniform amount with uniform premiums for thewhole of life issued at the same age for the sameamount of insurance, whichever is less: Provided, Poio

That in applying the percentages specified in (c) and(d) above, no adjusted premium shall be deemed toexceed four percent of the amount of insurance or

[ 9431

[CH. 195.

Cli. 95.]SESSION LAWS, 1963.

Life insurance-Standardnonforfeiturelaw.

uniform amount equivalent thereto. Whenever theplan or term of a policy has been changed, either byrequest of the insured or automatically in accordancewith the provisions of the policy, the date of incep-tion of the changed policy for the purposes of deter-mining a nonforfeiture benefit or cash surrendervalue shall be the date as of which the age of theinsured is determined for the purpose of the changedpolicy.

In the case of a policy providing an amount ofinsurance varying with duration of the policy, theequivalent uniform amount thereof for the purposeof this subsection shall be deemed to be the uniformamount of insurance provided by an otherwise sim-ilar policy, containing the same endowment benefitor benefits, if any, issued at the same age and forthe same term, the amount of which does not varywith duration and the benefits under which havethe same present value at the date of issue as thebenefits under the policy, provided, however, thatin the case of a policy, providing a varying amountof insurance issued on the life of a child under ageten, the equivalent uniform amount may be com-puted as though the amount of insurance providedby the policy prior to the attainment of age tenwere the amount provided by such policy at ageten.

The adjusted premiums for any policy providingterm insurance benefits by rider or supplementalpolicy provision shall be equal to (i) the adjustedpremiums for an otherwise similar policy issued atthe same age without such term insurance benfits,increased, during the period for which premiums forsuch term insurance benefits are payable, by (ii)the adjusted premiums for such term insurance, theforegoing items (i) and (ii) being calculated sepa-rately and as specified in the first two paragraphs ofthis subsection except that, for the purposes of (b),

[ 944 ]

CH. 195.]

SESSION LAWS, 1963.[C.1.

(c) and (d) of the first such paragraph, the amountof insurance or equivalent uniform amount of insur-ance used in the calculation of the adjusted premi-ums referred to in (ii) shall be equal to the excessof the corresponding amount determined for theentire policy over the amount used in the calcula-tion of the adjusted premiums in (i).

Except as otherwise provided in subsections (5a)and (5b) of this section, all adjusted premiums andpresent values referred to in this section shall forall policies of ordinary insurance be calculated onthe basis of the Commissioners 1941 Standard Ordi-nary Mortality Table: Provided, That for any cate- Proviso.

gory of ordinary insurance issued on female riskson or after July 1, 1957, adjusted premiums and pres-ent values may be calculated according to an age notmore than three years younger than the actual ageof the insured, and such calculations for all policiesof industrial insurance shall be made on the basisof the 1941 Standard Industrial Mortality Table. Allcalculations shall be made on the basis of the rateof interest, not exceeding three and one-half per-cent per annum, specified in the policy for calculat-ing cash surrender values and paid-up nonforfeiturebenefits: Provided, That in calculating the present Proviso.

value of any paid-up term insurance with accom-panying pure endowment, if any, offered as a non-forfeiture benefit, the rates of mortality assumedmay be not more than one hundred and thirty per-cent of the rates of mortality according to suchapplicable table: Provided further, That for insur- Proviso.

ance issued on a substandard basis, the calculationof any such adjusted premiums and present valuesmay be based on such other table of mortality as maybe specified by the insurer and approved by thecommissioner.

(5a) In the case of ordinary policies issued onor after the operative date of this subsection (5a) as

[ 945]1

[CH. 195.

Cii. 95.]SESSION LAWS, 1963.

Life insurance-Standardnonforfeiturelaw.

Proviso.

Proviso.

defined herein, all adjusted premiums and presentvalues referred to in this section shall be calculatedon the basis of the Commissioners 1958 StandardOrdinary Mortality Table and the rate of interest,not exceeding three and one-half percent per annum,specified in the policy for calculating cash surrendervalues and paid-up nonf orfeiture benefits, providedthat for any category of ordinary insurance issuedon female' risks, adjusted premiums and presentvalues may be calculated according to an age notmore than three years younger than the actual ageof the insured. Provided, however, that in calculat-ing the present value of any paid-up term insurancewith accompanying pure endowment, if any, offeredas a nonforfeiture benefit, the rates of mortalityassumed may be not more than those shown in theCommissioners 1958 Extended Term Insurance Table.Provided, further, that for insurance issued on asubstandard basis, the calculation of any such ad-justed premiums and present values may be basedon such other table of mortality as may be specifiedby the insurer and approved by the commissioner.

On or after June 11, 1959, any insurer may filewith the commissioner a written notice of its elec-tion to comply with the provisions of this subsection,either as to designated ordinary policies or as to allordinary policies issued by it, after a specified datebefore January 1, 1966. After the filing of such notice,then upon such specified date (which shall be theoperative date of this subsection as to such policiesfor such insurer), this subsection shall become oper-ative with respect to such policies thereafter issuedby such insurer. If an insurer makes no such elec-tion, or so elects to have this subsection apply as tocertain of its ordinary policies only, the operativedate of this subsection as to all of the ordinary poli-cies issued by such insurer (other than those policiesas to which the insurer has elected an earlier opera-

[I 946 ]

Cii. 195.]

SESSION LAWS, 1963. C.1.

tive date as hereinabove provided) shall be January1,-1966.

(5b) In the case of industrial policies issued onor after the operative date of this subsection (5b)as defined herein, all adjusted premiums and presentvalues referred to in this section shall be calculatedon the basis of the Commissioners 1961 StandardIndustrial Mortality Table and the rate of interest,not exceeding three and one-half percent per annum,specified in the policy for calculating cash surrendervalues and paid-up nonforfeiture benefits: Provided, Proviso.

That in calculating the present value of any paid-upterm insurance with accompanying pure endowment,if any, offered as a nonforfeiture benefit, the ratesof mortality assumed may be not more than thoseshown in the Commissioners 1961 Industrial Ex-tended Term Insurance Table: Provided further, Proviso.

That for insurance issued on a substandard basis,the calculation of any such adjusted premiums andpresent values may be based on such other table ofmortality as may be specified by the insurer andapproved by the commissioner.

After the effective date of this amuendatory actof 1963, any insurer may file with the commissionera written notice of its election to comply with theprovisions of this subsection after a specified datebefore January 1, 1968. After the filing of suchnotice, then upon such specified date (which shallbe the operative date of this subsection for such in-surer), this subsection shall become operative withrespect to the industrial policies thereafter issued bysuch insurer. If an insurer makes no such election,the operative date of this subsection for such insurershall be January 1, 1968.

(6) Calculation of values-Life: Any cash sur-render value and any paid-up nonforfeiture benefit,available under the policy in the event of default ina premium payment due at any time other than on

[ 947 :i

[CH. 195.

CH. 95.)SESSION LAWS, 1963.

Life insurance-Standardnonforfeiturelaw.

the policy anniversary, shall be calculated with al-lowance for the lapse of time and the payment offractional premiums beyond the last preceding pol-icy anniversary. All values referred to in subsec-tions (3), (4), (5), (5a) and (5b) of this sectionmay be calculated upon the assumption that anydeath benefit is payable at the end of the policyyear of death. The net value of any paid-up addi-tions, other than paid-up term additions, shall benot less than the dividends used to provide such addi-tions. Notwithstanding the provisions of subsection(3) of this section, additional benefits payable (a)in the event of death or dismemberment by accidentor accidental means, (b) in the event of total andpermanent disability, (c) as reversionary annuity ordeferred reversionary annuity benefits, (d) as terminsurance benefits provided by a rider or supple-mental policy provision to which, if issued as aseparate policy, this section would not apply, (e) asterm insurance on the life of a child or on the livesof children provided in a policy on the life of a par-ent of the child, if such term insurance expiresbef ore the child's age is twenty-six, is uniform inamount after the child's age is one, and has not be-come paid-up by reason of the death of a parent ofthe child, and (f) as other policy benefits additionalto life insurance and endowment benefits, and pre-miums for all such additional benefits, shall be dis-regarded in ascertaining cash surrender values andnonforfeiture benefits required by this section, andno such additional benefits shall be required to beincluded in any paid-up nonforfeiture benefits.

(7) Exceptions: This section shall not apply toany reinsurance, group insurance, pure endowment,annuity or reversionary annuity contract, nor toany term policy of uniform amount, or renewalthereof, of fifteen years or less expiring before agesixty-six, for which uniform premiums are payable

[ 948 ]

CH. 195.]

SESSION LAWS, 1963. C.15

during the entire term of the policy, nor to any termpolicy of decreasing amount on which each adjustedpremium, calculated as specified in subsections (5),(5a) and (5b) of this section, is less than the ad-justed premium so calculated, on such fifteen yearterm policy issued at the same age and for the sameinitial amount of insurance, nor to any policy whichshall be delivered outside this state through an agentor other representative of the insurer issuing thepolicy.

(8) Operative date: After the effective date ofthis section, any insurer may file with the commis-sioner a written notice of its election to comply withthe provisions of this section after a specified datebefore July 1, 1948. After the filing of such notice,then upon such specified date (which shall be theoperative date for such insurer), this section shallbecome operative with respect to the policies there-after issued by such insurer. If an insurer makes nosuch election, the operative date of this section forsuch insurer shall be July 1, 1948.

SEC. 21. Section .24.06, chapter 79, Laws of 1947 RCW 48.24.060

as last amended by section 20, chapter 303, Laws of1955 and RCW 48.24.060 are each amended to readas follows:

The lives of a group of public employees may be Group lifeinsurance-

insured under a policy issued to the departmental Puli

head or to a trustee, or issued to an association of associations.

public employees formed for purposes other thanobtaining insurance and having, when the policy isplaced in force, a membership in the classes eligiblefor insurance of not less than seventy-five percentof the number of employees eligible for membershipin such classes, which department head or trusteeor association shall be deemed the policyholder, toinsure such employees for the benefit of personsother than the policyholder or any of its officials,subject to the following requirements:

[ 949]

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

Group life(1 heproseiilfoinuacudrteinsurance- ()Teproseiil o nuac ne hemployee policy shall be all of the employees of the department

asscitios.or members of the association, or all of any class orclasses thereof determined by conditions pertainingto their employment, or to membership in the associ-ation, or both.

(2) The premium f or the policy shall be paidby the policyholder, in whole or in part either fromsalary deductions authorized by, or charges collectedfrom, the insured employees or members specificallyfor the insurance, or from the association's own f unds,or from both. Any such deductions from salary maybe paid by the employer to the association or directlyto the insurer. No policy may be placed in forceunless and until at least seventy-five percent of thethen eligible employees or association members, ex-cluding any as to whom evidence of individual in-surability is not satisfactory to the insurer, haveelected to be covered and have authorized theiremployer to make any required deductions fromsalary.

(3) The rate of charges to the insured employeesor members specifically for the insurance, and thedues of the association if they include the cost ofinsurance, shall be determined according to eachattained age or in not less than four reasonablyspaced attained age groups. In no event shall therate of such dues or charges be level for all membersregardless of attained age.

(4) The policy must cover at least twenty-fivepersons at date of issue.

(5) The amounts of insurance under the policymust be based upon some plan precluding individualselection either by the employees or members or bythe association. Such amounts shall in no event ex-ceed five thousand dollars of lif e insurance in thecase of any employee or member, and the amount oflife insurance shall not exceed one thousand five

[950]1

CH. 195.]

SESSION LAWS, 1963. C.1.

hundred dollars in the case of retired employees ormembers and persons over age sixty-five.

As used herein, "public employees" means em-ployees of the United States government, or of anystate, or of any political subdivision or instrumental-ity of any of them.

SEC. 22. Section .32.17, chapter 79, Laws of 1947 Rcw 4.36.170amended.

and RCW 48.36.170 are each amended to read asfollows:

Every society, whether domestic or foreign, now Fraternal

transacting business in this state shall, within thirty coas-atone

days after this chapter takes effect, and every such f0o eces

society hereafter applying for admission, shall beforebeing licensed, appoint in writing the commissionerand his successors in office to be its true and lawfulattorney, upon whom all legal process in any actionor proceeding against it shall be served, and in suchwriting shall agree that any lawful process againstit which is served upon such attorney shall be ofthe same legal force and validity as if served uponthe society and that the authority shall continue inforce so long as any liability remains outstanding inthis state.

Copies of such appointment, certified by saidcommissioner, shall be deemed suffcient evidencethereof, and shall be admitted in evidence with thesame force and effect as the original thereof mightbe admitted. Service shall only be made upon suchattorney, must be made in duplicate upon the com-missioner, in his absence upon the person in chargeof his office, and shall be deemed sufficient serviceupon such society. The copies of legal process shallbe served upon the commissioner either by a personcompetent to serve a summons, by registered mail orcertified mail with return receipt requested. At thetime of service the plaintiff shall pay to the commis-sioner two dollars, taxable as costs in the action:Provided, That no such service shall be valid or Proviso-

[ 951 ]

[CH. 195.

CH. 95.]SESSION LAWS, 1963.

binding against any such society when it is requiredthereunder to file its answer, pleading or defense inless than forty days from the date of mailing thecopy of such service to such society. When legalprocess against any such society is served upon saidcommissioner, he shall forthwith forward by regis-tered mail, one of the duplicate copies prepaid anddirected to its secretary or corresponding officer.Legal process shall not be served upon any suchsociety except in the manner provided herein.

RCW 48.36.410 SEC. 23. Section .32.41, chapter 79, Laws of 1947amended.

as amended by section 32, chapter 190, Laws of 1949and RCW 48.36.410 are each amended to read asf ollows:

mutu1 ~al (1) A domestic mutual property insurer whichinsuers. is affiliated with and is comprised exclusively of

members of a specified fraternal society, which so-ciety conducts its business and secures its member-ship on the lodge system, having ritualistic work andceremonies, is herein designated as a fraternal mu-tual insurer.

(2) Only fraternal mutual property insurerswhich were authorized insurers immediately prior toOctober 1, 1947, may hereafter be so authorized.

(3) Such an insurer shall be subject to the appli-cable provisions of this code governing domesticmutual insurers except only as to the provisions rela-tive to taxes, fees and licenses. The bylaws of suchinsurer shall be as adopted or amended by majorityvote of its members present at a duly held meetingof its members, and a copy thereof shall be filed withthe commissioner. Such an insurer shall pay for itsannual license and filing its annual statement, thesum of ten dollars. Such an insurer shall pay theexpense of examinations of it by the commissioner,upon statement furnished by the commissioner.

(4) Such an insurer may insure corporations,associations, and firms owned by and affiliated with

[I 952

CH. 195.]

SESSION LAWS, 1963. C.1.

such society and operated for the benefit of its mem-bers, and may insure corporations and firms a major-ity of whose shareholders or members are membersof such society.

(5) Such an insurer shall participate in and ac-cept its equitable share of insurance to be issued toapplicants under any assigned risk plan operatingpursuant to RCW 48.22.020, and may participate inand accept its equitable share of insurance to beissued to applicants under any similar plan lawfullyexisting in any state in which the insurer is author-ized to transact insurance, notwithstanding that suchapplicants are not otherwise qualified for such insur-ance under subsection (4), above; except that nosuch applicants who are not qualified by membershipor otherwise for acceptance by the insurer shall beso assigned to the insurer except to make up thedeficiency, if any, between the number of qualifiedapplicants available for assignment and the maxi-mum quota of applicants to be assigned to the in-surer within the current period.

(6) Such an insurer doing business on the assess-ment premium plan:

(a) Shall be exempt also from the provisions ofthis code governing financial qualifications.

(b) Shall not be authorized to transact any kindof insurance other than property insurance, nor haveauthority to accept reinsurance.

(7) Such an insurer doing business on the cashpremium plan:

(a) May be authorized to transact additionalkinds of insurance, other than life or title insurance,subject to the same requirements as to surplus fundsand reserves as apply to domestic mutual insurerson the cash premium plan.

(b) May accept reinsurance only of such kindsof insurance as it is authorized to transact direct andonly from insurers likewise affiliated with and com-

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[CH. 195.

CH. 95.]SESSION LAWS, 1963.

posed solely of the members of the same designatedfraternal society.

New section. SEC. 24. There is added to chapter 79, Laws of1947 and to chapter 48.36 RCW a new section to readas follows:

Insurers- (1) Any person who is authorized by a fraternalAgents. benefit society to act in the solicitation, negotiation

or procurement of a life insurance, disability insur-ance, or annuity contract shall be licensed in accord-ance with and subject to the applicable provisions

Proviso, of chapter 48.17 RCW: Provided, That such personswho are so authorized by a fraternal benefit societyf or a period of one year immediately prior to theeffective date of this 1963 amendatory act shall notbe required to take and pass an examination as re-quired by RCW 48.17.110. This provision shall takeeffect on October 1, 1963.

(2) The following individuals shall not be deemedan agent of a fraternal benefit society within theprovisions of subsection (1) of this section:

(a) any regular salaried officer or employee ofa licensed society who devotes substantially all ofhis services to activities other than the solicitationof fraternal insurance contracts from the public, andwho receives for the solicitation of such contracts nocommission or other compensation directly depend-ent upon the amount of business obtained; or

(b) any agent or representative of a societywho devotes, or intends to devote, less than fiftypercent of his time to the solicitation and procure-

Proviso. ment of insurance contracts for such society: Pro-vided, That any person who in the preceding calen-dar year has solicited and procured life insurancecontracts on behalf of any society in an amount ofinsurance in excess of fifty thousand dollars shallbe conclusively presumed to be devoting, or intend-ing to devote, fifty percent. of his time to the solicita-

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CH. 195.1

SESSION LAWS, 1963.[Ct1.

tion or procurement of insurance contracts f or suchsociety.

SEC. 25. There is added to chapter 79, Laws Of New section.

1947 and to chapter 48.07 RCW a new section to readas follows:

It is desirable for the general welfare and in par- Insurers,

ticular for the welfare of insurance beneficiaries, Continuedpoliyholerswhen nationalpolcyhldesclaimants and others that the business emergency.

of domestic insurers be continued notwithstandingthe event of a national emergency. The purpose ofthis section and the following four sections is tofacilitate the continued operation of domestic in-surers in the event that a national emergency iscaused by an attack on the United States which isso disruptive of normal business and commerce inthis state as to make it impossible or imp racticablefor a domestic insurer to conduct its business inaccord with applicable provisions of law, its bylaws,or its charter. When used in this section and thefollowing four sections the word "insurer" includesa fraternal benefit society.

SEC. 26. There is added to chapter 79, Laws Of New section.

1947 and to chapter 48.07 RCW a new section to readas f ollows:

The board of directors of any domestic insurer -Emer-

may at any time adopt emergency bylaws, subjectto repeal or change by action of those having powerto adopt regular bylaws for such insurer, whichshall be operative during such a national emergencyand which may, notwithstanding any different pro-visions of the regular bylaws, or of the applicablestatutes, or of such insurer's charter, make any pro-vision that may be reasonably necessary for the op-eration of such insurer during the period of suchemergency.

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[CH. 195.

OH. 95.]SESSION LAWS, 1963.

New section.

Insurers,generally-Continuedoperationwhen nationalemergency.Directors.

New section.

-Officers.

SEC. 27. There is added to chapter 79, Laws of1947 and to chapter 48.07 RCW a new section to readas follows:

In the event that the board of directors of adomestic insurer has not adopted emergency bylaws,the following provisions shall become effective uponthe occurrence of such a national emergency as abovedescribed:

(1) Three directors shall constitute a quorum forthe transaction of business at all meetings of theboard.

(2) Any vacancy in the board may be filled by amajority of the remaining directors, though less thana quorum, or by a sole remaining director.

(3) If there are no surviving directors, but atleast three vice-presidents of such insurer survive,the three vice-presidents with the longest term ofservice shall be the directors and shall possess all ofthe powers of the previous board of directors andsuch powers as are granted herein or by subsequentlyenacted legislation. By majority vote, such emergencyboard of directors may elect other directors. If thereare not at least three surviving vice-presidents, thecommissioner or duly designated person exercisingthe powers of the commissioner shall appoint threepersons as directors who shall include any survivingvice-presidents and who shall possess all of thepowers of the previous board of directors and suchpowers as are granted herein or by subsequently en-acted legislation, and these persons by majority votemay elect other directors.

SEC. 28. There is added to chapter 79, Laws of1947 and to chapter 48.07 RCW a new section to readas follows:

At any time the board of directors of a domesticinsurer may, by resolution, provide that in the eventof such a national emergency and in the event ofthe death or incapacity of the president, the secre-

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CH. 195.]

SESSION LAWS, 1963.[Ct16

tary, or the treasurer of such insurer, such officers,or any of them, shall be succeeded in the office bythe person named or described in a succession listadopted by the board of directors. Such list maybe on the basis of named persons or position titles,shall establish the order of priority and may pre-scribe the conditions under which the powers of theoffice shall be exercised.

SEC. 29. There is added to chapter 79, Laws of New section.

1947 and to chapter 48.07 RCW a new section to readas follows:

At any time the board of directors of a domestic -- Prinipal

insurer may, by resolution, provide that in the event of business.

of such a national emergency the principal office andplace of business of such insurer shall be at suchlocation as is named or described in the resolution.Such resolution may provide for alternate locationsand establish an order of preference.

Passed the Senate March 2, 1963.Passed the House March 12, 1963.Approved by the Governor March 26, 1963.

CHAPTER 196.[ Sub. S. B. 228.]1

PUBLIC UTILITY DISTRICTS-POWERS.

AN ACT relating to public utility district water and sewage sys-tems and the acquisition, construction, and dispositionthereof; and amending section 19, chapter 390, Laws of 1955as amended by section 1, chapter 275, Laws of 1959 andRCW 54.16.180.

Be it enacted by the Legislature of the State ofWashington:

SECTION 1. Section 19, chapter 390, Laws of 1955 RCW 54.16.180

as amended by section 1, chapter 275, Laws of 1959 ned.

and RCW 54.16.180 are each amended to read asfollows:

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[CH. 196.