H-2000              _______________________________________________


                                          SUBSTITUTE HOUSE BILL NO. 2088



                                                                            C 228 L 89



State of Washington                               51st Legislature                              1989 Regular Session


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



Read first time 2/24/89.



AN ACT Relating to acceptance of fees by persons in a domestic insurer's holding company system; and amending RCW 48.07.130.




        Sec. 1.  Section .07.13, chapter 79, Laws of 1947 as amended by section 5, chapter 339, Laws of 1981 and RCW 48.07.130 are each amended to read as follows:

          (1) No person having any authority in the investment or disposition of the funds of a domestic insurer and no officer or director of an insurer shall accept, except for the insurer, or be the beneficiary of any fee, brokerage, gift, commission, or other emolument because of any sale of insurance or of any investment, loan, deposit, purchase, sale, payment, or exchange made by or for the insurer, or be pecuniarily interested therein in any capacity; except, that such a person may procure a loan from the insurer direct upon approval by two-thirds of its directors and upon the pledge of securities eligible for the investment of the insurer's funds under this code.

          (2) This section does not prohibit a life insurer from making a policy loan to such person on a life insurance contract issued by it and in accordance with the terms thereof.

          (3) The commissioner may((, by regulations from time to time, define and)) permit additional exceptions to the prohibition contained in subsection (1) of this section ((solely)) to enable payment of reasonable compensation to a director who is not otherwise an officer or employee of the insurer, or to a corporation or firm in which the director is interested, for necessary services performed or sales or purchases made to or for the insurer in the ordinary course of the insurer's business and in the usual private professional or business capacity of such director or such corporation or firm.

          In addition, the commissioner may permit exceptions to the prohibitions contained in subsection (1) of this section where the payment of a fee, brokerage, gift, commission, or other emolument is fully disclosed to the insurer's officers and directors and is reasonable in relation to the service performed.

                                                                                                                           Passed the House March 9, 1989.


                                                                                                                                         Speaker of the House.


                                                                                                                             Passed the Senate April 5, 1989.


                                                                                                                                       President of the Senate.