2018-02-09                     Senate Journal                      Page 1969
SB 181                                                                                                                        
SENATE BILL NO. 181 BY THE SENATE RULES COMMITTEE                                                                               
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           
                                                                                                                                
              "An Act relating to examination of premium finance                                                               
          companies."                                                                                                           
                                                                                                                                
was read the first time and referred to the Labor and Commerce and                                                              
State Affairs Committees.                                                                                                       
                                                                                                                                
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, zero, Department of Commerce, Community                                                                     
  and Economic Development                                                                                                      
                                                                                                                                
Governor's transmittal letter dated February 8:                                                                                 
                                                                                                                                
Dear President Kelly:                                                                                                           
                                                                                                                                
Under the authority of Article III, Section 18 of the Alaska                                                                    
Constitution, I am transmitting a bill relating to the examination of                                                           
premium financing companies.                                                                                                    
                                                                                                                                
This bill makes a change to the banks and financial institutions code                                                           
relating to the examination of financial institutions (AS 06.01).                                                               
                                                                                                                                
The bill amends section AS 06.01.015 by exempting premium finance                                                               
companies from the required examination, at least every 18 months, of                                                           
financial institutions licensed under the banks and financial institutions                                                      
code. Premium finance companies are licensed and regulated under                                                                
AS 06.40 and are defined under AS 06.40.190(4) as "a person engaged                                                             
in the business of entering into premium finance agreements with                                                                
borrowers or of acquiring premium finance agreements from insurance                                                             
agents, brokers or other premium finance companies." A premium                                                                  
finance agreement is defined in AS 06.40.190(3) as an agreement                                                                 
where the borrower agrees to pay a premium finance company for an                                                               
amount advanced by the premium finance company to an insurer, or                                                                
agent, or broker, in payment of premiums on an insurance policy.                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                

2018-02-09                     Senate Journal                      Page 1970
Historically, premium finance companies are located outside of                                                                  
Alaska; the Division of Banking and Securities staff have found no                                                              
substantive problems with violations of Alaska law by these                                                                     
companies. Additionally, premium finance companies primarily fund                                                               
commercial insurance premiums, not premiums for individual                                                                      
consumers.                                                                                                                      
                                                                                                                                
Under this bill, premium finance companies would no longer be                                                                   
subject to the mandatory examination requirement of AS 06.01.015,                                                               
but would still be subject to examination as needed under                                                                       
AS 06.40.100. This would reduce the regulatory burden on both the                                                               
companies and division of banking and securities staff and resources                                                            
to focus on higher risk areas.                                                                                                  
                                                                                                                                
I urge your prompt and favorable action on this measure.                                                                        
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Bill Walker                                                                                                                     
Governor