SACRAMENTO, CA , June 8, 2017 - The California Senate Insurance, Banking and Financial Institutions Committee unanimously approved AB 1460 this week, a bill that would modernize location requirements for insurance broker-agent trust accounts.
The bill, supported by InsurBanc and IIABCal, would repeal a 50-year-old requirement that broker-agents maintain trust accounts in a bank that is physically located in California. As approved 10-0 by the Senate committee, the bill would permit broker-agents to maintain their required fiduciary account in any state or federally chartered bank or financial institution.
If enacted, AB 1460 would permit California to join 47 other states that already permit trust accounts to be maintained in approved financial institutions located in other states. To be eligible, an out-of-state bank or other institution would need to be federally chartered, insured by the Federal Deposit Insurance Corporation, and willing to use the California court system to resolve any disputes.
The bill is authored by Assemblyman Matthew Dabaneh (D-Encino), who also serves as chairman of the Assembly Banking and Finance Committee. His committee, and the full Assembly, both gave unanimous approval to the bill.
The Senate Rules Committee will now determine whether the measure must be referred to other committees in the Senate before going to the full Senate for consideration. No public opposition has yet been voiced, and even the California Department of Insurance has thanked the sponsors for their cooperative response to technical amendments CDI requested.
InsurBanc, a division of Connecticut Community Bank, N.A.®, is headquartered in Farmington, Conn., and was developed by IIABA and W.R. Berkley Corporation. InsurBanc specifically serves the banking needs of independent insurance agents and brokers and operates in all 50 states.