HOUSE BILL REPORT

SB 5037

BYSenators von Reichbauer, Moore, Johnson, Stratton, Smitherman and West

Changing the composition of the board of directors of incorporated domestic insurers.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (12)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Chandler, Ranking Republican Member; Anderson, Baugher, Beck, Day, Dorn, Inslee, Nutley, K. Wilson and Winsley.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE APRIL 4, 1989

BACKGROUND:

State law, RCW 48.07.050, requires that at least 3/4 of the directors of a stock insurance company licensed to do business in Washington State be United States citizens.  Recently the governments of Canada and the United States approved the free trade agreement affecting commerce between the two countries. 

Chapter 14, articles 1401 and 1402 of the free trade agreement apply to federal and state laws pertaining to services, including insurance.  These articles require that state or federal laws accord citizens of Canada treatment no less favorable than the most favorable treatment accorded United States citizens.  The same provisions apply to the laws of Canada and its provinces.

The treatment of a Canadian citizen may be different only if it is no greater than necessary for prudential, fiduciary, health and safety, or consumer protection reasons.

Article 1405(1) of the free trade agreement provides that the parties to the agreement must endeavor to extend the obligations of Chapter 14 by implementing the modification or elimination of existing laws which are inconsistent with the relevant provisions of article 1402.

It has been suggested that the citizenship requirements of RCW 48.07.050 are contrary to articles 1401 and 1402 of the free trade agreement.

SUMMARY:

The requirement that 3/4 of the directors of a stock insurance company licensed to do business in Washington State be United States citizens is changed so that 3/4 of the directors must be United States or Canadian citizens.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Foster Cronyn, N. W. Life Insurers.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    These changes are necessary to meet the anti-discrimination provisions of the U.S./Canadian Free Trade Agreement.

House Committee - Testimony Against:      None Presented.