Washington State
House of Representatives
Office of Program Research
BILL
ANALYSIS

Financial Institutions & Insurance Committee

HB 1033

Brief Description: Regulating insurable interests and employer-owned life insurance.

Sponsors: Representatives Kirby, Roach, Morrell and Simpson; by request of Insurance Commissioner.

Brief Summary of Bill
  • Requires written consent of an employee before an employer may insure the life of the employee for the benefit of the employer.

  • Requires the disclosure of certain information to the employee whose life is insured within thirty days of purchase of the policy by the employer.

Hearing Date: 1/20/05

Staff: Jon Hedegard (786-7127).

Background:

Regulatory authority of the Insurance Commissioner
The Office of the Insurance Commissioner (OIC) regulates insurance transactions in the State of Washington. This includes life insurance policies that are issued or delivered in Washington. Insurance rates and insurance forms are filed with the OIC. The OIC ensures that the rates and forms comply with the Insurance Code.

Insurance Contracts and Insurable Interests
A person may enter into an insurance contract in order to insure the life of another the benefits are payable to the insured person (or their personal representative) or if the person procuring the contract has an "insurable interest" in the person insured.

Insurable Interests
The insurable interest may be based in:

Traditionally, many businesses have purchased coverage on key personnel. This protects the business against the loss of a key person, such as an owner, partner, or CEO. Over the last several years, some companies and entities have extended their coverage of employees beyond high ranking staff. The lives of lower level, non-salaried employees have been insured for the benefit of the company or entity. This coverage has often been purchased without the knowledge or consent of the insured employee.

Summary of Bill:

   

Appropriation: None.

Fiscal Note: Not requested.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.