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INSURANCE PROPOSALS FOR THE DISTRICT OF COLUMBIA

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THURSDAY, APRIL 5, 1973

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON BUSINESS, COMMERCE AND TAXATION
OF THE COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D.C. The subcommittee met, pursuant to notice, at 2 p.m. in room 1310, Longworth House Office Building, the Honorable W.S. (Bill) Stuckey Chairman of the Subcommittee, presiding.

Present: Representatives Stuckey (Presiding), Mann, and Gude,

Also present: Robert B. Washington Jr., Chief Counsel, John Hogan, Minority Counsel.

Mr. STUCKEY. The subcommittee will come to order.

This afternoon we are supposed to start off with H.R. 2524 and H.R. 5659.

Mr. STUCKEY. Congressman Gude is not here yet, but I do know the insurance bill witnesses are present. So if there are no objections

go
ahead with the insurance bill first. All of

you

that are here to testify on the insurance bill, I think it will probably be convenient-we are not too crowded today—for all of you to come up at one time to the table.

I would like to say that the bill we have before us is identical to H.R. 13595 which the committee and the House passed last year in the 92d Congress, and I would like to apologize to those of you that are present for having to impose upon you to come back again. We did pass the bill last year; unfortunately we did not have the chance to get the bill to the floor in the rush for adjournment.

Also, I think it might be in order at this time if we summarize the statements, because I am sure you are familiar with the issues, and I have listened to them all last year. Unless you have a lot of time to kill, we will summarize.

Mr. Lombard, it is good to see you again and have you back before Mr. LOMBARD. Thank you very much, sir.

[The bills, H.R. 4083 and H.R. 5687, and the memorandum in re H.R: 4083 and H.R. 5687, follow:]

us.

93D CONGRESS

1st SESSION

H. R. 4083

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 7, 1973 Mr. STUCKEY introduced the following bill; which was referred to the Com

mittee on the District of Columbia

A BILL

To improve the laws relating to the regulation of insurance in

the District of Columbia, and for other purposes.

1

Be it enacted by the Senate and House of Representa

2 tives of the United States of America in Congress assembled,

3 That this Act may be cited as the “District of Columbia

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SEC. 101. This title shall be known and may be cited as

9 the “District of Columbia Insurance Guaranty Association

10 Act".

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SEC. 102. The purpose of this title is to provide a

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1 mechanism for the payment of covered claims under certain

2 insurance policies to avoid excessive delay in payment and 3 , to avoid financial loss to claimants or policyholders because

4 of the insolvency of an insurer, to assist in the detection and

5 prevention of insurer insolvencies, and to provide an associa6 tion to assess the cost of such protection among insurers. 7 Sec. 103. This title shall apply to all kinds of direct in8 surance, except life, title, disability, and mortgage guaranty

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(1) The term "Commissioner" means the Commissioner

12 of the District of Columbia or his designated agent.

13

(2) The term "covered claim” means an unpaid claim, 14 including one for unearned premiums, which arises out of and 15 is within the coverage and not in excess of the applicable 16 limits of an insurance policy to which this title applies issued 17 by an insurer, if such insurer becomes an insolvent insurer

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after the effective date of this title and (a) the claimant or

19 insured is a resident of the District of Columbia at the time

20 of the insured event; or (b) the property from which the 21 claim arises is permanently located in the District of Colum

22

bia. Such term shall not include any amount due any

23 reinsurer, insurer, insurance pool, or underwriting asso24 ciation, as subrogation recoveries or otherwise.

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(3) The term "insolvent insurer” means (a) an in

3

1 surer authorized to transact insurance in the District of Co

2 lumbia, either at the time the policy was issued or when the 3 insured event occurred, who has been determined to be

4 insolvent by a court of competent jurisdiction. 5

(4) The term "member insurer” means any person who 6 (a) writes any kind of insurance to which this title applies, 7

including the exchange of reciprocal or interinsurance con8 tracts, and (b) is licensed to transact insurance in the

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(5) The term “net direct written premiums” means

11 direct gross premiums written in the District on insurance

12 policies to which this title applies, less return premiums 13 thereon and dividends paid or credited to policyholders on

14 such direct business. Such term does not include premiums

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on contracts between insurers or reinsurers.

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(6) The term “person” includes individuals, corpora

17 tions, associations, exchanges, and partnerships. 18

SEC. 105. There is created a nonprofit unincorporated 19 legal entity to be known as the District of Columbia Insur20 ance Guaranty Association (hereafter in this title referred to 21

as the "Association"). All member insurers shall be and

22 remain members of the Association as a condition of their

23 authority to transact insurance in the District of Columbia.

24. The Association shall perform its functions under a plan of

25 operation established and approved by the Commissioner and

4

1 shall exercise its powers through a Board of Directors (here

2 after in this title referred to as the “Board”). For purposes

3 of administration and assessment, the Association shall be

4 divided into three separate accounts: (a) the workmen's 5 compensation insurance account; (b) the automobile insur

6

ance account; and (c) the account for all other insurance to

7 which this title applies.

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SEC. 106. (a) The Board shall consist of not less than

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five nor more than nine persons serving terms as estab

10 lished in the plan of operation. The members of the Board

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shall be selected by member insurers subject to the ap

12

proval of the Commissioner. Vacancies on the Board shall

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be filled for the remaining period of the term in the same

14 manner as initial appointments. If no members are selected 15 within sixty days after the effective date of this title, the

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Commissioner may appoint the initial members of the

17 Board.

18 (b) In approving selections to the Board, the Com19 missioner shall consider among other things whether all 20 member insurers are fairly represented. 21

(c) Members of the Board may be reimbursed from the 22 assets of the Association for expenses incurred by them as 23 members of the Board.

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Sec. 107. (a) The Association shall

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(1) be obligated to the extent of the covered claims

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