HOUSE 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

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (12)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Chandler, Ranking Republican Member; Anderson, Beck, Day, Dorn, Inslee, Nutley, Schmidt, K. Wilson and Winsley.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE FEBRUARY 9, 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.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Mike Kapphahn, Farmers Insurance; and John Woodall, Office of the Insurance Commissioner.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    Reciprocal insurers are granted no new powers.  The change in law recognizes existing authorized practices.

House Committee - Testimony Against:      None.