SENATE BILL REPORT

HB 64

BYRepresentatives Lux, Chandler and P. King 

Exempting certain surety bonds from requirements for cancellation or nonrenewal of insurance policies.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):March 24, 1987; February 23, 1988

Majority Report:  Do pass.

      Signed by Senators von Reichbauer, Chairman; West, Vice Chairman; Johnson, Kreidler, McCaslin, Moore, Rasmussen, Sellar, Smitherman.

Senate Staff:Benson Porter (786-7470)

                  February 23, 1988

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, FEBRUARY 23, 1988

BACKGROUND:

The time period required for notice to an insured before surety bonds and property/casualty insurance policies may be cancelled or not renewed was legislatively extended to 45 days in 1986.  Failure of an insurer to comply results in an ineffective cancellation or nonrenewal.

Surety bonds are often a condition precedent to obtaining a business license and are sometimes required by state or federal government agencies to ensure the performance of a contract, or to protect consumers against the cost of a regulated business's nonperformance.  Statutorily required bonds are subject to separate cancellation notice requirements that conflict with the insurance code.

SUMMARY:

Surety bonds governed and required under other statutes are exempt from the cancellation and nonrenewal notice provisions of the insurance code.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: D. Bohlke, Contractors Bonding Ins. Co. (for)