04/12/2005 01:30 PM Senate LABOR & COMMERCE

                        SB 108-INSURANCE                                                                                    
                                                                                                                                
CHAIR CON BUNDE announced SB 108 to be up for consideration.                                                                    
                                                                                                                                
SENATOR SEEKINS moved to adopt CSSB 108(L&C), version \F.                                                                       
                                                                                                                                
CHAIR BUNDE objected  for discussion purposes and  asked Ms. Hall                                                               
to explain new language                                                                                                         
                                                                                                                                
LINDA HALL,  Director, Division of Insurance,  explained that new                                                               
section  22 on  page  13  adds language  that  deals with  owner-                                                               
controlled   insurance   programs   and   contractor   controlled                                                               
insurance programs. Today  most of this concept is  in already in                                                               
the Worker's Compensation manual, but it's not part of statute.                                                                 
                                                                                                                                
Owner-controlled Insurance Programs (OCIP)  have been standard in                                                               
industry for some time as a way  to put all of the costs together                                                               
- to  provide the safety programs  for the project and  have that                                                               
reflected in the  rate. For large construction  projects it means                                                               
either the owner of the project  or a general contractor will buy                                                               
the   casual  insurance   -  the   general  liability,   workers'                                                               
compensation  for the  entire  project. The  oil  pipeline is  an                                                               
example of that kind of  process. Subcontractors who work on that                                                               
type  of program  have to  take out  of their  own insurance  and                                                               
therefore they don't  have as much of a payroll  with which to be                                                               
able to negotiate as good a deal for themselves.                                                                                
                                                                                                                                
Most of  the subs support  this for large  construction projects,                                                               
which have a cap of $50  million. This concept has expanded since                                                               
1995 into  general maintenance and  projects and  operations, but                                                               
she sees a  detrimental potential affect on  the marketplace. "As                                                               
we contract  further the amount  of premium that's  available for                                                               
insurance companies, I think that  has an overall negative affect                                                               
on our marketplace in general."                                                                                                 
                                                                                                                                
2:09:01 PM                                                                                                                    
MS.  HALL  said this  particular  section  was sponsored  by  the                                                               
independent  insurance  agents  who   worked  directly  with  the                                                               
consumer who are concerned about  markets. The subs are concerned                                                               
about their own  insurance program. If they have  to put $300,000                                                               
worth of payroll  someplace else, then their  own programs suffer                                                               
on an on-going basis - as opposed to a one-time project.                                                                        
                                                                                                                                
2:10:57 PM                                                                                                                    
CHAIR BUNDE asked if the $15 million is a floor or a cap.                                                                       
                                                                                                                                
MS. HALL answered a floor.                                                                                                      
                                                                                                                                
CHAIR BUNDE  added that  sections 28  and 29  remain in  the bill                                                               
after study, although they are acknowledged to be controversial.                                                                
                                                                                                                                
2:12:31 PM At ease 2:12:58 PM                                                                                               
                                                                                                                                
CHAIR BUNDE  said he  would hold  the bill  until Thursday  for a                                                               
potential amendment.