SENATE BILL REPORT

SHB 2088

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

Permitting persons in an insurer's holding company system to accept commissions.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):March 21, 1989; March 23, 1989

Majority Report:  Do pass.

      Signed by Senators von Reichbauer, Chairman; Johnson, Vice Chairman; McMullen, Moore, Rasmussen, Smitherman.

Senate Staff:Benson Porter (786-7470)

                  March 23, 1989

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, MARCH 23, 1989

BACKGROUND:

The insurance code prohibits persons having any authority over the investment of a domestic insurance company's funds from accepting any fee, brokerage, or commission for the handling of those funds.  Some insurance companies are part of a holding company that owns the insurer and other subsidiary companies that may provide banking or investment services.  The prohibition may preclude an employee or officer of a company owned by a holding company that also owns an insurance company from collecting a fee for investment services provided to the insurance company.

SUMMARY:

A person in an insurance company's holding company system may accept a reasonable fee, brokerage, or commission for investment advisory, banking, or brokerage services provided for or on behalf of an insurer owned by the holding company as permitted by the Insurance Commissioner.

The commissioner may approve the payment of fees, commissions, or other compensation to persons having authority over insurance company funds where the compensation is fully disclosed to the insurance company's officers and directors and is reasonable in relation to the service performed.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Basil Badley, Northwest National Life Insurance Company (pro)