SENATE BILL REPORT

SHB 2515

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

Permitting reciprocal insurance exchanges to engage in real estate transactions.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 20, 1990; February 22, 1990

Majority Report:  Do pass.

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

Senate Staff:Gerard S. Poliquin (786-7403)

                  February 23, 1990

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE,  FEBRUARY 22, 1990

BACKGROUND:

A domestic reciprocal insurer, often referred to as an exchange, is an unincorporated group of persons who join together to insure each other. The group of persons execute a power of attorney agreement authorizing a person or organization to act as the attorney-in-fact to transact the day to day business of the group.

The insurance code authorizes all domestic insurance companies, including domestic reciprocal insurers, to invest in real property.  However, since a reciprocal insurer is an unincorporated group of persons, it is practically impossible for all the members of the group, the policyholders, to enter into a real estate transaction unless the group has authorized the attorney-in-fact to execute real estate transactions on its behalf.  However, even if the group has granted this authority, some title insurers refuse to recognize the authority in the absence of explicit statutory authorization.

SUMMARY:

The insurance code is amended to authorize real estate transactions conducted by and through a reciprocal insurer's attorney-in-fact.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Mike Kapphahn, Farmers Insurance Group