2001 Legislation
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HOUSE BILL NO. 233 – Insurers/certain/invest real estate

HOUSE BILL NO. 233

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Daily Data Tracking History



H0233...........................................................by BUSINESS
INSURERS - Amends existing law to specify the maximum aggregate amount of
real estate which may be invested by a domestic reciprocal insurer
comprised of and exclusively insuring members who are political
subdivisions of the state.
                                                                        
02/14    House intro - 1st rdg - to printing
02/15    Rpt prt - to Bus
02/28    Rpt out - rec d/p - to 2nd rdg
03/01    2nd rdg - to 3rd rdg
    Rls susp - PASSED - 62-0-8
      AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Boe, Bolz,
      Bruneel, Callister, Campbell, Chase, Collins, Crow, Cuddy, Deal,
      Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20), Gagner,
      Gould, Hadley, Hammond, Harwood, Henbest, Higgins, Hornbeck, Jones,
      Kellogg, Kendell, Kunz, Lake, Langford, Mader, Marley, McKague,
      Meyer, Moss, Moyle, Pearce, Pischner, Pomeroy, Raybould, Ridinger,
      Roberts, Robison, Sali, Schaefer, Sellman, Shepherd, Smith, Smylie,
      Stevenson, Stone, Tilman, Trail, Wheeler, Wood, Young
      NAYS -- None
      Absent and excused -- Bradford, Clark, Jaquet, Loertscher,
      Montgomery, Mortensen, Swan, Mr. Speaker
    Floor Sponsor -- Black
    Title apvd - to Senate
03/02    Senate intro - 1st rdg - to Com/HuRes
03/14    Rpt out - rec d/p - to 2nd rdg
03/15    2nd rdg - to 3rd rdg
03/20    3rd rdg - PASSED - 30-1-4
      AYES -- Andreason, Branch, Boatright, Brandt, Bunderson, Burtenshaw,
      Cameron, Danielson, Darrington, Davis, Deide, Frasure, Geddes,
      Goedde, Hawkins, Ingram, Ipsen, Lee, Lodge, Noh, Richardson, Risch,
      Sandy, Schroeder, Sims, Sorensen, Thorne, Wheeler, Whitworth,
      Williams,
      NAYS -- Stegner
      Absent and excused -- Dunklin, Keough, King-Barrutia, Stennett
    Floor Sponsor -- Ipsen
    Title apvd - to House
03/21    To enrol
03/22    Rpt enrol - Sp signed - Pres signed - to Gov
03/23    Governor signed
         Session Law Chapter 174
         Effective: 07/01/01

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 233
                                                                        
                                   BY BUSINESS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO REAL ESTATE INVESTMENTS; AMENDING SECTION 41-728, IDAHO  CODE,  TO
  3        SPECIFY  THE MAXIMUM AGGREGATE AMOUNT OF REAL ESTATE WHICH MAY BE INVESTED
  4        BY A DOMESTIC RECIPROCAL INSURER COMPRISED  OF  AND  EXCLUSIVELY  INSURING
  5        MEMBERS WHO ARE POLITICAL SUBDIVISIONS OF THE STATE; TO CORRECT CODIFIER'S
  6        ERRORS AND TO MAKE TECHNICAL CORRECTIONS.
                                                                        
  7    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  8        SECTION  1.  That  Section  41-728, Idaho Code, be, and the same is hereby
  9    amended to read as follows:
                                                                        
 10        41-728.  REAL ESTATE. (1) An insurer may acquire, invest  in,  own,  main-
 11    tain,  alter,  furnish,  improve,  manage, lease and convey the following real
 12    estate only:
 13        (a)  Land and buildings used for home office purposes, together with  such
 14        other  real  estate as is required for its accommodation in the convenient
 15        transaction of its business.
 16        (b)  Real estate acquired in satisfaction in full or in part of or through
 17        foreclosure of or judgment obtained upon, loans, mortgages, liens or other
 18        evidences of indebtedness previously owing to the insurer in  the  regular
 19        course of its business.
 20        (c)  Real estate acquired in part payment of the consideration in the sale
 21        of other real estate owned by the insurer.
 22        (d)  Real estate acquired by gift or devise.
 23        (e)  Real  estate  acquired  through  a  lawful merger or consolidation of
 24        another insurer and not required for its accommodation as provided in sub-
 25        division paragraph (a) above of this subsection.
 26        (f)  Real estate for the production of income, under lease, or being  con-
 27        structed under a definite agreement providing for lease, to solvent insti-
 28        tutions  for  commercial  or  industrial purposes, other than for agricul-
 29        tural, horticultural, ranch, mining, mineral,  oil,  recreational,  amuse-
 30        ment, club, motel, or hotel purposes.
 31        (2)  The aggregate amount so invested by the insurer shall not exceed:
 32        (a)  If  for  home  office  and its other purposes pursuant to subdivision
 33        paragraph (a) above of this subsection, ten per cent percent (10%) of  the
 34        insurer's assets, subject to the right of the director to approve an addi-
 35        tional amount after hearing and for good cause shown.
 36        (b)  If for income purposes pursuant to subdivision paragraph (f) above of
 37        this subsection, five per cent percent (5%) of the insurer's assets.
 38        (c)  In all categories and for all purposes, not to exceed twenty per cent
 39        percent (20%) of the insurer's assets.
 40        (d)  Notwithstanding  the provisions of paragraphs (a) through (c) of this
 41        subsection, the aggregate amount invested by a domestic reciprocal insurer
 42        which is comprised of and exclusively insures members  who  are  political
 43        subdivisions  of  the  state,  as defined in section 6-902 2., Idaho Code,
                                                                        
                                           2
                                                                        
  1        shall not exceed:
  2             (i)   Twenty-five percent (25%) from July 1, 2001, to June 30, 2003;
  3             (ii)  Twenty percent (20%) from July 1, 2003, to June 30, 2004; and
  4             (iii) Fifteen percent (15%) on July 1, 2004, and each  year  thereaf-
  5             ter.
  6        (3)  An  insurer may lease to others part of real property otherwise occu-
  7    pied by it for home office and other purposes under subsection (1)(a) above of
  8    this section, but the value of the entire property must be  included  for  the
  9    purposes  of the limitation upon aggregate real estate investments provided in
 10    subsection (2)(a) above of this section.

Statement of Purpose / Fiscal Impact


                       STATEMENT OF PURPOSE

                            RS 11001
                                
                                
The Idaho Counties Risk Management Program (ICRMP) is an
association of local governmental entities organized under a
joint powers agreement in accordance with Idaho law. Its purpose
is to pooi resources in order for these entities to self insure
against risk, and obtain reinsurance and excess insurance
coverage. It consists of 520 entities including 39 counties, 163
cities, 59 highway districts and numerous other entities
including fire, school, and water and sewer districts, hospitals
and a junior college. Under Idaho law, ICRMP is regulated by the
Department of Insurance as if it were a reciprocal insurance
company.

Because ICRMP consists entirely of local government entities, it
is restricted by state law to certain types of investments. These
investments (primarily bonds) are very low yield in comparison to
the types of investments most insurance companies may engage in.
As a result, investment of assets in real estate has been seen to
be a reasonable investment option.

This bill is designed to afford ICRMP (and other public entities
that may decide to form similar joint powers associations to self
insure) the flexibility to use real estate as an investment
option for up to fifteen percent (15%) of its total assets. As of
this time ICRMP s real estate holdings are over 15% of its
assets. This bill affords ICRMP a three-year time period to come
into compliance with the 15% level. Because ICRMP is the only
public entity reciprocal insurer in Idaho, this bill will have no
effect whatever on any other foreign or domestic insurer that
does business in this state.

                                 
                         FISCAL IMPACT
                                
This bill has no impact on the general fund.


        
         CONTACT: Michael J. Kane
         Idaho Counties Risk Management Program
         (208) 342 4545

STATEMENT OF PURPOSE/FISCAL NOTE                            H 23