HOUSE BILL REPORT

SHB 1378

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

Establishing procedures for transfer of domicile by insurance companies.

House Committe on Financial Institutions & Insurance

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (14)

      Signed by Representatives Lux, Chair; Zellinsky, Vice Chair; Anderson, Betrozoff, Chandler, Crane, Day, Dellwo, Dorn, Ferguson, P. King, Nutley, Silver and Winsley.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE FEBRUARY 12, 1988

BACKGROUND:

To qualify for authority to transact business in Washington, insurance companies must have one million dollars in paid-in capital or basic surplus and must have one million dollars in additional surplus. Property and casualty insurance companies must have one and a half million dollars in paid-in capital or basic surplus and one and a half million dollars in additional surplus.

No provisions of the insurance code explicitly outline the procedures for the transfer of an insurance company from another state to Washington state or from Washington state to a different state.

Brokers who obtain insurance from insurance companies that are not admitted to do business in Washington (surplus line brokers) cannot obtain insurance from a company with less capital and surplus than that required for multiple line insurance companies admitted to do business in Washington.

SUMMARY:

The capital and surplus requirements for insurance companies authorized to do business in Washington are doubled.

Upon thirty days written notice to the Insurance Commissioner, the Commissioner may approve the transfer of an insurance company to or from Washington if the transfer is consistent with law and no reasonable objection to the transfer exists.

Licenses, forms, rates, and other corporate authorizations remain in effect upon transfer of an insurance company.

Fiscal Note:      Not Requested.

Effective Date:Sections 1 and 3 take effect July 1, 1988. Section 2 takes effect immediately.

House Committee ‑ Testified For:    Basil Badley, American Insurance Association and Scott Jarvis, Insurance Commissioner's Office.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Provisions governing the transfer of insurance companies will encourage insurers to transfer to Washington State.  The capital and surplus requirements need to be increased to reflect changed economic conditions and inflation.

House Committee - Testimony Against:      None Presented.