SENATE BILL REPORT

HB 1296

As Reported By Senate Committee On:

Labor, Commerce & Financial Institutions, March 26, 2001

Title:  An act relating to restricting the investment of insurers in depository institutions or any company which controls a depository institution.

Brief Description:  Restricting the investment of insurers in depository institutions or any company which controls a depository institution.

Sponsors:  By Representatives Hatfield, Benson and McIntire; by request of Insurance Commissioner.

Brief History:

Committee Activity:  Labor, Commerce & Financial Institutions:  3/19/01, 3/26/01 [DP].

SENATE COMMITTEE ON LABOR, COMMERCE & FINANCIAL INSTITUTIONS

Majority Report:  Do pass.

Signed by Senators Prentice, Chair; Gardner, Vice Chair; Franklin, Hochstatter, Honeyford, Patterson, Rasmussen, Regala and Winsley.

Staff:  Elizabeth Mitchell (786‑7430)

Background:  The 1999 Gramm-Leach-Bliley Act provides that depository institutions and insurers can join together in holding companies.  The act also provides that insurers may not invest more than 5 percent of their assets in the voting securities of a depository institution.

Current Washington law limits an insurer from investing more than 4 percent of its assets in one institution without consent from the Insurance Commissioner.

Summary of Bill:  Insurers are prohibited from investing more than 5 percent of their assets in the voting securities of a depository institution without consent from the Insurance Commissioner.

Appropriation:  None.

Fiscal Note:  Available.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  This bill brings the state into conformity with a provision of the Gramm‑Leach‑Bliley Act.  The 5 percent limit is an attempt to ensure that insurers diversify their investments.

Testimony Against:  None.

Testified:  Bill Daley, Office of the Insurance Commissioner (pro).