HOUSE BILL REPORT

EHB 432

BYRepresentatives Chandler, Lux, Ballard, McMullen, Winsley and Zellinsky

Regulating fraternal benefit societies.

House Committe on Financial Institutions & Insurance

Majority Report:     Do pass.  (13)

     Signed by Representatives Lux, Chair; Zellinsky, Vice Chair; Betrozoff, Chandler, Crane, Day, Dellwo, Ferguson, P. King, Meyers, Nutley, Silver and Winsley.

Minority Report:     Do not pass.  (1)

     Signed by Representative Niemi.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE MARCH 9, 1987

BACKGROUND:

Fraternal benefit societies are regulated under the insurance code. Fraternal benefit societies are distinguished from other fraternal organizations by the fact that benefit societies are licensed insurers under supervision of the insurance commissioner.  Fraternal benefit societies may only insure members of the society.  These societies typically provide life insurance benefits but may provide other insurance benefits, such as disability benefits.  For example, the Knights of Columbus is a fraternal benefit society.

SUMMARY:

The insurance code provisions governing fraternal benefit societies are revised.  Most of the existing code provisions are retained in a more modern and clarified form.  These provisions govern the creation and operation of a fraternal benefit society.  The insurance aspects of the societies have been updated to grant societies more flexibility in structuring operations, to grant more modern insuring powers, and to require greater financial resources before providing insurance.  In addition, societies must comply with the Unfair Practices provisions of the Insurance Code.  Finally, no society may be granted tax exemptions if the society denies full membership to any person because the the person's race or sex.

EFFECT OF SENATE AMENDMENT(S):  The provision that denies tax exempt status to societies which discriminate on the basis of sex is deleted.

Fiscal Note:    Not Requested.

House Committee ‑ Testified For:     Rick Slunaker, National Fraternal Congress of America; and David J. Larson, Lutheran Brotherhood.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     This proposed revision is the result of a three year effort by the Law Committee of the National Fraternal Congress and is a model act being introduced in many states.  Seven states have already adopted the model act and several other states are currently considering its adoption.  The insurance commissioner's office has worked throughout the past year to perfect this model act and believes that the act is a vast improvement over the existing code provisions.

House Committee - Testimony Against: None Presented.

VOTE ON FINAL PASSAGE:

     Yeas 93; Nays 4; Excused 1

Voting Nay:     Representatives Barnes, Baugher, Gallagher and Nealey

Excused:   Representative Day