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SENATE BILL NO. 1409

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S1409.......................................by COMMERCE AND HUMAN RESOURCES
NONPROFIT INSURERS - Adds to existing law to provide that the laws
applicable to nonprofit corporations shall apply to domestic nonprofit
insurers and to prohibit nonprofit mutual insurers from transferring
substantially all their assets or from converting to stock corporations or
for-profit corporations.

02/06    Senate intro - 1st rdg - to printing
02/09    Rpt prt - to Com/HuRes

Bill Text

S1409


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998
                                                                        

                                      IN THE SENATE

                                   SENATE BILL NO. 1409

                        BY COMMERCE AND HUMAN RESOURCES COMMITTEE

 1                                        AN ACT
 2    RELATING TO THE REGULATION OF INSURANCE; AMENDING CHAPTER 28, TITLE 41,  IDAHO
 3        CODE,  BY  THE  ADDITION OF A NEW SECTION 41-2854B, IDAHO CODE, TO CLARIFY
 4        THAT NONPROFIT INSURANCE COMPANIES ARE SUBJECT TO LAWS APPLICABLE TO  NON-
 5        PROFIT  CORPORATIONS  GENERALLY, AND TO PROHIBIT NONPROFIT MUTUAL INSURERS
 6        FROM TRANSFERRING SUBSTANTIALLY ALL THEIR ASSETS OR  CONVERTING  TO  STOCK
 7        CORPORATIONS OR FOR-PROFIT COMPANIES.

 8    Be It Enacted by the Legislature of the State of Idaho:

 9        SECTION  1.  That  Chapter  28,  Title 41, Idaho Code, be, and the same is
10    hereby amended by the addition thereto of a  NEW SECTION  ,  to  be
11    known and designated as Section 41-2854B, Idaho Code, and to read as follows:

12        41-2854B.  APPLICATION  OF  LAWS  TO  DOMESTIC NONPROFIT INSURERS. (1) The
13    statutes of this state applicable to nonprofit  corporations  shall  apply  to
14    domestic  nonprofit insurers, except where in conflict with the express provi-
15    sions of this code and the reasonable implications of such provisions.
16        (2)  Notwithstanding any other provision of law to the contrary, a  domes-
17    tic nonprofit mutual insurance company may not:
18        (a)  Sell,  lease,  transfer  or  dispose  of all or substantially all its
19        property, assets or business;
20        (b)  Merge or consolidate with  a  stock  corporation  or  any  for-profit
21        entity;
22        (c)  Demutualize or be converted to a for-profit mutual or stock company;
23        (d)  Form a mutual insurance holding company.

Statement of Purpose / Fiscal Impact

    





                              STATEMENT OF PURPOSE
    
                                    RS 07542
    
    This legislation creates a new section of Idaho's insurance law dealing 
    with in-state non-profit insurance companies. Due to the public support of 
    non-profit insurers through the non-profit status, the proposed legislation 
    prevents conversion to ' for-profit" status. While it is not believed that 
    any current non-profit insurer intends such action, the Attorney General 
    believes that such action would be inappropriate and in violation of the 
    charitable trust doctrine.
    
                                   FISCAL NOTE
    
    There would be no impact on the general funds of the state or upon 
    local government.CONTACT: Freeman Duncan, Legislative Liaison 
    Attorney General's Office Phone:(208) 
    334-4151
    
    STATEMENT OF PURPOSE/FISCAL NOTE
    
    Bill No S1409