(after discharge of the functions of the Association with respect to prior insurer insolvencies not covered by such other plan, together with related expenses) to the insurers which are then writing in the District policies of the kinds of insurance covered by such account, and which had made payments into such account, prorata upon the basis of the aggregate of such payments made by the respective insurers to such account during the period of five (5) years next preceding the date of such order. Upon completion of such distribution with respect to all of the accounts specified in section 105, this title shall be deemed to have expired. SEC. 119. The Commissioner is authorized to delegate any of the functions vested in him by this title. TITLE II—AMENDMENT OF THE LIFE INSURANCE ACT OF THE DIS TRICT OF COLUMBIA TO INCREASE CAPITAL REQUIREMENTS OF LIFE INSURANCE COMPANIES SEC. 201. Section 8, chapter III of the Life Insurance Act (48 Stat. 1145) as amended (D.C. Code, sec. 35-508(a)), is amended by striking out the figure "$200,000" in the first sentence thereof and inserting in lieu thereof the figure "$1,000,000". SEC. 202. (a) Subsection (10) (b)(ii) of section 35 of chapter III of the Life Insurance Act of the District of Columbia (48 Stat. 1145) as amended (D.C. Code, sec. 35-535 (10) (b)(ii)), is amended by striking out the figure "$300,000" and inserting in lieu thereof the figure "$1,500,000". (b) Subsection (15) (ii) of section 35 of chapter III of such Act, as amended (D.C. Code, sec. 35–535 (15) (ii)), is amended by striking out the figure "$300,000" and inserting in lieu thereof the figure "$1,500,000". SEC. 203. This title shall take effect thirty days after its enactment. TITLE III-AMENDMENT OF THE LIFE INSURANCE ACT OF THE DISTRICT OF COLUMBIA TO INCREASE GROUP TERM LIFE INSURANCE AMOUNT LIMITATIONS SEC. 301. Sections 10(1) (d), 10(3) (d), 10(4) (d), 10(6) (d), and 10(9) (d) of chapter V of the Life Insurance Act 48 Stat. 1145, as amended D.C. Code, secs. 35-710(1) (d), (3)(d), (4)(d), (6)(d), and (9) (d)), are amended (1) by striking out the figure "$20,000" and inserting in lieu thereof the figure "$25,000"; (2) by striking out the figure "$40,000" and inserting in lieu thereof the figure "$75,000"; and (3) by striking out the figure "150" and inserting in lieu thereof the figure "300". TITLE IV-AMENDMENT OF THE FIRE AND CASUALITY ACT REGULATING THE BUSINESS OF FIRE, MARINE, AND CASUALTY INSURANCE IN THE DISTRICT OF COLUMBIA SEC. 401. Sections 13 and 14 of chapter II of the Fire and Casualty Act (54 Stat. 1070) as amended (D.C. Code, secs. 35-1316 and 35-1317), are amended to read as follows: "SEC. 13. MINIMUM CAPITAL AND SURPLUS REQUIREMENT. Every stock company authorized to do business in the District shall have and shall at all times maintain a paid-up capital stock of not less than $300,000, and a surplus of not less than $300,000. Every domestic mutual company and every domestic reciprocal company shall have and shall at all times maintain a surplus of not less than $300,000, and every foreign or alien mutual company and every foreign or alien reciprocal company shall have and shall at all times maintain a surplus of not less than $400,000. "SEC. 14. CORPORATIONS HERETOFORE FORMED. No company shall be exempt from the provisions of this subsection by reason of its having been incorporated in the District or elsewhere prior to the effective date of this subsection, except that, in the case of companies authorized in the District on the date of approval of this subsection, and continuously thereafter without any increase of authority, the minimum capital and surplus required of a stock company, and the minimum surplus required of a mutual or reciprocal company, or of a Lloyd's organization by the District heretofore applicable shall not be increased by this subsection, and provided also that in the case of such continuously authorized companies the provisions of section 24 relating to the names of companies, and the provisions of section 25 relating to the amount of surplus necessary to the issuance of policies having no provision for contingent liability, shall not be applicable." SEC. 402. Section 25 of chapter II of the Fire and Casualty Act (54 Stat. 1070; D.C. Code, sec. 35-1329) is amended by striking out the figure "$300,000" and inserting in lieu thereof the figure "$600,000”. TITLE V-AMENDMENT OF AMOUNT OF CONTRACT WITH THE GOVERNMENT OF THE DISTRICT OF COLUMBIA FOR WHICH A SURETY BOND IS REQUIRED SEC. 501. The Act approved June 28, 1906 (34 Stat. 546), as amended (D.C. Code, sec. 1-805), is amended by striking out the figure "$2,000" wherever it appears therein and inserting in lieu thereof the figure "$10,000". Mr. WATT. S. 2208 would close certain gaps that now exist in the regulation of insurance in the District. Most importantly, title I of the bill would establish a fund to protect District residents in the event their insurance company becomes insolvent. The provisions of title I are based on a model law developed by the National Association of Insurance Commissioners which has been adopted in some form in all but seven States. Title I creates a District of Columbia insurance guaranty association which would have the same rights, duties, and obligations in regard to adjusting and settling claims that an individual company would have had if it had not become insolvent. The association would provide a means for prompt payment of outstanding claims to individuals in the event of a company insolvency. The association's insolvency fund would be financed through assessments levied on all the licensed insurers in the District. The District of Columbia association, under the provisions of S. 2208, would be terminated in the event legislation is enacted creating a national guaranty fund with comparable protection for the insured. We feel this legislation is a necessary safeguard to assure that District residents have the same protection against financial loss as residents of other States. As an additional protection against the possibility of company insolvency, titles II and IV of S. 2208 increase the amount of capital and surplus requirements of life insurance companies and fire and casualty companies operating in the District. Since submission of this legislation, we have again reviewed capital and surplus requirements in other States and have found they have increased substantially. I would recommend, therefore, that S. 2208 be modified to bring the bill in line with other jurisdictions and I have attached to my statement the technical amendments to accomplish such a result. I have also attached charts showing the comparison between the District's present and proposed requirements and those in other States. Title III of S. 2208 would increase the amount of coverage available under group term life policies. Again, the change brings the District into line with other States. In an insurance-related matter, title V would increase to $10,000 the amount of a contract for which a contractor with the District government is required to obtain a surety bond. The present law requires that the contractor obtain bonds in all contracts with the District over $2,000. Surety bonds are a device to protect the party for whom the work is being done, in this case the District government, but from the time of the original statute in 1906 the law has always allowed for a minimum under which no bond is required. In order to maintain the degree of flexibility envisioned in the original statute and to compensate for the effects of inflation, we are proposing an increase to $10,000. This more realistic figure will also allow the District greater latitude in dealing with small contractors for whom bonding is sometimes difficult to obtain. Thank you. (The attachments follow:) Page 8, lines 3 and 4: Insert the words "(b) The Association may:" between lines 3 and 4. Title II Page 19, line 25: Change the period to a comma at the end of Page 20, lines 4 and 5 and line 9: Change the word "figure" Title III Page 20, line 26: Insert the following new section after line 26. "Sec. 302. Section 10 of Chapter V of the Life Insurance Act as amended (D.C. Code, sec. 35-710), is further amended by adding subsection (10) to read as follows: Subject to the terms of the policy relating to assignment of incidents of ownership thereunder, a person whose life is insured under a policy of group life insurance may assign any or all incidents of ownership granted him under such policy or under any provision of this chapter, including but not limited to any right to designate a beneficiary or beneficiaries, to have issued to him an individual policy arising from conversion as provided in the group policy or as provided in this chapter, and to pay premiums. This subsection shall be construed as declaring the law prior to its enactment and not modifying it." Title V Page 22, line 19: After the word "approved" insert the words Page 22, line 20: Change the word "is" to "are". S. 2208 Explanation of Technical Amendments Title I The amendment corrects a technical omission in the bill. Title II The amendment is necessary to increase requirements for mutual companies as well as for stock life insurance companies. The original transmittal increased the requirement for stock companies only because that was the area of the greatest need; however, further study indicates a general trend in the States to treat stock and mutual companies the same in this respect. The amendment will clarify the grandfather clause to make it clear it includes the mutual companies. Title III The addition of a new subsection is recommended in order to give statutory basis for the assignment of incidents of ownership of life insurance policies. Although this is a Common practice, the Internal Revenue Service has indicated that there must be a statutory basis for the practice. Title V The revision is needed in order to correct a drafting oversight in the original transmittal. |