AN ACT Relating to financial institutions; adding a new chapter to Title 48 RCW; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) For the purpose of this chapter the following definitions shall apply:

(a) "Financial institution" means any bank, bank holding company, savings and loan association, savings and loan association holding company, savings and loan association service corporation, public utility, company operating under the mortgage brokerage laws of this state, or any subsidiary, affiliate, or foundation of any of the foregoing. This definition shall not, however, include any financial institution which has been granted an exemption by the board of governors of the federal reserve system pursuant to section 4(d) of the federal bank holding company act of 1956, as amended, or any financial institution which neither owns more than ten percent of the capital stock nor exercises effective control of a bank, savings and loan association, or entity licensed under the mortgage brokerage laws of this state, which is licensed or authorized to transact business in this state.

(b) "Insurance agency activities" means the procurement of applications, solicitation, negotiation, selling, effectuating, or servicing of any policy or contract of insurance.

(c) "Financial institution agency" means any person, firm, partnership or corporate entity which is engaged in insurance agency activities, as herein defined, and is associated with, owned, controlled, employed, or retained by a financial institution as herein defined.

(2) No insurance agent or solicitor licensed by the insurance commissioner under the laws of this state, who is associated with, under contract with, retained by, or owned or controlled to any degree directly, or indirectly, or who is employed by a financial institution shall engage in insurance agency activities as an employee, officer, director, agent, or associate of a financial institution agency.

(3) The insurance commissioner shall not grant, renew, continue, or permit to exist any license as such agent or solicitor as to any applicant therefor or licensee thereunder if the commissioner finds that the license has been or is being or will probably be used by the applicant or licensee for any purpose prohibited by this section.

(4) Notwithstanding any provision of this section, the insurance commissioner shall permit the continued operation under the same ownership and control of all financial institution agencies which were in existence and engaged in insurance agency activities as of the effective date of this act. To make possible such continuation, the insurance commissioner may license agents and solicitors who are otherwise qualified, as successors to those agents and solicitors who are exempt from the provisions of this section, and their successors, for so long as the specified financial institution agency continues to function as it was constituted on the effective date of this act: PROVIDED, HOWEVER, That no agent or solicitor so licensed under this section shall be permitted to be employed, or controlled to any degree, directly or indirectly, by any financial institution agency except the particular agency for which the agent or solicitor was so licensed as a successor for the purpose of this section.

(5) This section shall not prevent an agent or solicitor from serving as an officer or director of a financial institution: PROVIDED, That the agent or solicitor conducts any insurance activities free of ownership or control of the financial institution: PROVIDED FURTHER, That the financial institution does not participate directly or indirectly in the earnings from the agent's or solicitor's insurance activities.

(6) This section shall not apply to agents or solicitors who were engaged as of the effective date of this act, in activities prohibited by this section and who have been continuously so engaged since that date, but only with respect to the specific type of license held and the financial institution with which the agent or solicitor was associated on that date.

NEW SECTION. Sec. 2. The insurance commissioner is authorized to promulgate regulations in order to effectuate the purposes of this chapter.

NEW SECTION. Sec. 3. Sections 1 and 2 of this act constitute a new chapter in Title 48 RCW.

NEW SECTION. Sec. 4. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 5. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.