SENATE BILL REPORT

                                   SHB 2719

        AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE,

                               FEBRUARY 28, 1992

Brief Description:  Permitting certain transactions by insurance agent‑brokers.

SPONSORS: House Committee on Financial Institutions & Insurance (originally sponsored by Representatives R. Meyers, Paris and Anderson)

HOUSE COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE

SENATE COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE

Majority Report:  Do pass. 

      Signed by Senators von Reichbauer, Chairman; Erwin, Vice Chairman; McCaslin, Moore, Pelz, Rasmussen, Sellar, and Vognild.

Staff:  Tom Fender (786‑7414)

Hearing Dates: February 27, 1992; February 28, 1992

BACKGROUND:

Current Washington law distinguishes between insurance agents and insurance brokers.  An agent is one who works on behalf of an insurance company and a broker is one who works on behalf of the insurance customer.  Individuals may function as both agents and brokers, provided they respect the agency principal relationship involved.

Generally, insurance carriers appoint agents to offer the line of insurance products they have available.  Agents under these circumstances provide these products to their customers and are paid a commission by the insurance carrier for such services.  Brokers, on the other hand, work directly for the insurance customer and "shop" for a product that fits their customers' needs. 

Considering the mix of insurance products required by both businesses and individuals alike, an agent may therefor function interchangeably as both an agent and broker.  State law, however, prohibits an agent from being both an agent and broker to the same insurer.

A problem arises in that certain specialized insurance products are only made available to brokers.  This appears to bar an insurance agent for that carrier from making that product available to one of his or her customers.

SUMMARY:

Agents shall be allowed to act as brokers when an insurance transaction is one wherein the insurance product is offered only to brokers.  The agent must disclose these facts to the applicant.

Appropriation:  none

Revenue:  none

Fiscal Note:  none requested

TESTIMONY FOR:

This bill will allow the placement of specialty products by agent/brokers.  The public will be convenienced and protection against conflict of interest is provided.

TESTIMONY AGAINST:  None

TESTIFIED:  Steve Wehry, Insurance Brokers (pro)