HB 1359

This bill merges the banking and insurance departments to create a new department of financial services and sets up a commission to review the statutory changes necessary to accomplish the merger.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

I. The general court finds that recent federal initiatives such as the Gramm-Leach-Bliley Act of 1999 (GLBA) and market forces are causing the banking, insurance, and securities industries to merge into a unified financial services industry. This chapter would begin to modify New Hampshire's regulatory structure to reflect that trend.

II. In order to provide unified oversight of the financial market, the general court enacts this chapter creating a department of financial services. By enacting this chapter, the general court intends to foster closer communication among officials responsible for the regulation of financial instruments and institutions and to strengthen the role of state government in encouraging a sound state economy.

2 Department of Financial Services Established. On July 1, 2003, the banking department and the insurance department shall be abolished and a department of financial services shall be established. The powers, duties, functions, responsibilities, programs, operations, and funding of the banking and insurance departments shall be transferred to the department of financial services and exercised and performed by the commissioner.

3 Commissioner and Assistant Commissioner. The governor, with the consent of the council, shall appoint the first commissioner of the department of financial services. The governor, with the consent of the council, shall also appoint an assistant commissioner of the department of financial services. The commissioner and assistant commissioner shall be unclassified employees and shall be paid at the same salary specified in RSA 94:1-a, I in effect on June 30, 2003. Subsequent commissioners shall be appointed in accordance with the provisions of RSA 21-G:8.

4 Division Directors. The commissioner shall nominate a director, division of insurance, and a director, division of banks, for appointment by the governor, with the consent of the council. Division directors shall serve at the pleasure of the commissioner. The directors of the division shall be qualified by reason of professional competencey, education, and experience.

5 Employees. All employees of the banking department and the insurance department shall be transferred to the department of financial services to the extent the commissioner of the department of financial services deems necessary to continue to carry out the functions of the former banking and insurance departments and shall, insofar as practicable and necessary, continue to perform the duties they heretofore performed, at the same rate of pay.

6 Commission Established. A commission is hereby established to examine the current insurance and banking laws and recommend all necessary legislation to allow the merger of the banking department and insurance department to take place under the provisions of sections 1-5 of this act.

(a) Three members of the house of representatives, appointed by the speaker of the house from the commerce committee.

(b) Three members of the senate, appointed by the president of the senate from the banks and insurance committees.

(d) Two members of the insurance department, appointed by the insurance commissioner.

II. Members of the commission shall receive mileage at the legislative rate when attending to the duties of the commission.

8 Duties. The commission shall examine state law and make legislative recommendations necessary to accomplish the merger of the insurance and banking departments, and shall study the personnel structure of both departments to determine which positions are necessary to carry out the duties of the new department of financial services. The commission shall propose any legislation on or before January 1, 2003.

9 Chairperson; Quorum. The members of the commission shall elect a chairperson from among the legislative members. The first meeting of the commission shall be called by the first-named house member. The first meeting of the commission shall be held within 45 days of the effective date of this section.

10 Report. The commission shall report its findings and any recommendations for proposed legislation to the speaker of the house of representatives, the senate president, the house clerk, the senate clerk, the governor, and the state library on or before January 1, 2003.

The Insurance Department states that the restructuring of the Department into a Division of the Department of Financial Services, should be revenue neutral. The cost for the Office of the Commissioner of Insurance will be transferred to the Office of the Commissioner of Financial Services. Cost savings will be offset by an allocation to the Division of Insurance for its share of the overhead of the Commissioner's Office. It is assumed that all present Department positions will continue to function within the scope of the newly established Division of Insurance. The initial fiscal impact should be revenue/expenditure neutral, whereas savings and/or reduced expenditures due to the consolidation and/or elimination will be offset by reduced revenue.

The Banking Department states it is unable to determine the fiscal impact of this bill at this time. The Department assumes that some duplicative positions at the Banking and Insurance Departments might be eliminated if the departments were merged. However, because of the differing funding mechanisms of the two departments, it is not possible to predict how these mechanisms will be altered by the commission responsible for making legislative recommendations. The Department states it is a self-supporting agency, and unlike the Insurance Department, it does not contribute to nor draw funds from the state general fund.