FINAL BILL REPORT

SB 5037

                              C 24 L 89

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

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

Senate Committee on Financial Institutions & Insurance

House Committe on Financial Institutions & Insurance

SYNOPSIS AS ENACTED

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 is changed so that 3/4 of the directors must be United States or Canadian citizens.

VOTES ON FINAL PASSAGE:

     Senate   43    1

     House 97  0

EFFECTIVE:July 23, 1989