SENATE BILL REPORT

SHB 1378

BYHouse Committee on Financial Institutions & Insurance (originally sponsored by Representatives Zellinsky, Winsley and P. King) 

Establishing procedures for transfer of domicile by insurance companies.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 22, 1988

Senate Staff:Benson Porter (786-7470)

AS OF FEBRUARY 22, 1988

BACKGROUND:

To qualify for authority to transact business in Washington, insurance companies offering life, disability, property, marine and transportation, vehicle or surety insurance must have $1 million in paid-in capital or basic surplus and must have one million dollars in additional surplus. Insurance companies offering other insurance lines or certain multiple lines may be required to have as much as $1.5 million in paid-in capital or basic surplus, and $1.5 million in additional surplus.

The insurance code does not explicitly outline the procedures for the transfer of an insurance company from another state to Washington state or from Washington state to a different state.

Surplus line brokers who obtain insurance from insurance companies that are not admitted to do business in Washington cannot obtain insurance from a company with less capital and surplus than that required for multiple line insurance companies admitted to do business in Washington.  Where brokers are insured by alien insurers, the insurance commissioner must have on file certain evidence that such insurer has a trust deposit of not less than one-half of a multiple line insurance company's capital and surplus requirements with a bank or trust company in the United States and that this trust deposit is held for the protection of United States policyholders.

SUMMARY:

The capital and surplus requirements for insurance companies authorized to do business in Washington are doubled.

Upon thirty days written notice to the Insurance Commissioner, the commissioner may approve the transfer of an insurance company to or from Washington if the transfer is consistent with law and no reasonable objection to the transfer exists.

Licenses, forms, rates, and other corporate authorizations remain in effect upon transfer of an insurance company.

Brokers must insure with an insurer having capital and surplus or combined capital funds at least one-half of which must be additional surplus.  An alien insurer's trust deposit must be one-quarter of the capital and surplus requirements for multiple line insurers.

Appropriation:    one

Revenue:    none

Fiscal Note:      none Requested

Effective Date:Sections 1 and 3 take effect July 1, 1988. Section 2 takes effect immediately.