Legislature(1999 - 2000)
03/03/2000 01:20 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 310 - ALASKA INSURANCE GUARANTY ASSOCIATION CHAIRMAN KOTT announced that the final order of business before the committee is HOUSE BILL NO. 310, "An Act relating to the Alaska Insurance Guaranty Association; and amending Rule 24, Alaska Rules of Civil Procedure." Chairman Kott called upon Representative Rokeberg to present the bill. [The bill was sponsored by the House Labor & Commerce Committee by request; that committee is chaired by Representative Rokeberg.] REPRESENTATIVE ROKEBERG, Alaska State Legislature, addressed the committee as the sponsor of HB 310. He said that Mr. George would be available to discuss the legislation. Number 1266 MICHAEL LESSMEIER, Attorney at Law, Lessmeier & Winters, and Lobbyist for State Farm Insurance Company, informed the committee that he was speaking on behalf of State Farm. He noted that CSHB 310(L&C), Version LS1030\H, is before the committee for consideration. He said he believes this legislation is the product of a joint desire to bring the Alaska Insurance Guaranty Association laws into conformity with the model National Association of Insurance Commissioners (NAIC) Act. He noted that Tom Andritsch, Dane Havard and Don Thomas are available via teleconference. He reported that Mr. Thomas actually drafted the changes, which Mr. Lessmeier understood to be approved by the Division of Insurance and the Alaska Insurance Guaranty Association. MR. LESSMEIER explained that the Alaska Insurance Guaranty Association is a nonprofit "creature" of the Alaska statutes. The purpose of the Alaska Insurance Guaranty Association is to step in when an insurance company becomes insolvent and pay the claims that are made. He recalled that someone had likened the Alaska Insurance Guaranty Association to the Federal Deposit Insurance Corporation (FDIC). Mr. Lessmeier requested that Mr. Andritsch be allowed to briefly summarize how [this bill] came to be. Number 1428 TOM ANDRITSCH, Chairman, Alaska Insurance Guaranty Association, testified via teleconference from Port Townsend, Washington. He noted that he had been elected Chairman of the Alaska Insurance Guaranty Association last June. He also noted that he is basically the President of Umialik Insurance Company, an Alaskan domestic property and casualty insurance company; he has held that position since 1986. Prior to that he was with the Providence Washington Insurance Company in Alaska, from 1976 to 1986. MR. ANDRITSCH explained that the process which led to this legislation began in 1991 when the Chairman of the Alaska Insurance Guaranty Association and its attorney at the time, now Supreme Court Justice Bob Eastaugh, recommended changes to the Act to conform to the model Act of the NAIC and the NCIGF [The National Conference of Insurance Guaranty Funds]. The changes were recommended to the then-director of the Division of Insurance, Dave Walsh. Nothing progressed until 1996 when the Guaranty Association chairman advanced the issue again with the then Director of the Division of Insurance, Marianne Burke. MR. ANDRITSCH said the issue was then pursued by the following director of the division, and proposed changes were agreed upon with Ms. Burke and the chairman of the Guaranty Association. Mr. Andritsch informed the committee that he has recently met with the current director of the Division of Insurance, Bob Lohr. Both have agreed upon the language and the changes encompassed in the bill as it stands now. Basically, the intent is to make the statutes conform with other state statutes. Therefore, when Alaska deals with conflicts among other states with regard to insolvency, Alaska would be dealing with the same model Act. Mr. Andritsch offered to answer questions, but he deferred any questions regarding administration of the plan to Mr. Havard and Mr. Thomas. Number 1509 DANE HAVARD, President, Northern Adjusters, Inc.; and Fund Manager for Alaska Insurance Guaranty Association, testified via teleconference from Anchorage, offering to answer any questions with regard to the operations of the Alaska Insurance Guaranty Association. He informed the committee, "We have been the fund administrator for the Alaska Guaranty Association since 1984 and we have actually handled the claims since about 1978." REPRESENTATIVE KERTTULA referred to page 8, Section 9, subsection (b), of the House Labor & Commerce committee substitute (CS). She noted that the language in paragraph (1) is being eliminated, which is language referring to the notification of insolvency. She asked if there is a notice requirement in another part of the bill. MR. HAVARD explained that the language on page 8, lines 27 through page 9, line 3, is being deleted because in general [the notice requirement] is being handled under the liquidation statutes by the receiver of the insolvent carrier. As a practical matter, [the receivers of the insolvent carrier] have all the addresses for the insured and all the interested parties. That information is not kept by the Alaska Insurance Guaranty Association and would have to be obtained by [the receiver of the insolvent carrier] anyway. REPRESENTATIVE KERTTULA said her understanding, then, is that as a practical matter the notice is happening, and no deadlines will pass before the notice is given. MR. HAVARD said, "As far as I know from the liquidation statute." REPRESENTATIVE KERTTULA asked whether there is a chance that there would not be a notice before something happened, or whether that is taken care of through the liquidation statute. MR. HAVARD deferred to the Division of Insurance. Number 1604 BOB LOHR, Director, Division of Insurance, Department of Community & Economic Development, testified via teleconference from Anchorage. He informed the committee that the division supports CSHB 310(L&C). With regard to Representative Kerttula's question, Mr. Lohr explained that the statutory receiver is the director of the Division of Insurance. The receivership statute requires [the division] to give notice to all potential claimants in a timely manner. If that does not occur, the court can tell the division to do it properly. Mr. Lohr said he believes that statute is in the receivership area and is adequate to cover notice. REPRESENTATIVE MURKOWSKI pointed out that a provision allows the director to appoint two individuals as members of the [Board of Governors] in order to represent the public. She understood that there have not been public members in the past. She inquired as to why one would want public members on a board such as this. MR. LOHR said he believes having public members [on the board] is consistent with the NAIC model. He recognized that it is a fairly technical area which represents the interests of the companies that have a mandatory assessment to cover the costs and any distributions for the guaranty fund. However, he believes the nature of this organization supports having representatives of the public. REPRESENTATIVE MURKOWSKI asked whether the Alaska Insurance Guaranty Association is in agreement with this. MR. ANDRITSCH replied yes. REPRESENTATIVE MURKOWSKI clarified, in response to Chairman Kott, that she was referring to Section 6 on page 3. She then recognized that the language is discretionary due to the use of the word "may." Number 1774 REPRESENTATIVE ROKEBERG noted that there was a fairly lengthy discussion in the House Labor & Commerce Standing Committee with regard to barring the timeframe and actions. He recalled that [the discussion] was brought by the Department of Labor & Workforce Development, who upon further review told Representative Rokeberg their objections were misguided. Therefore, he said, the department agreed that it is not a problem. CHAIRMAN KOTT closed the public testimony. Number 1813 REPRESENTATIVE MURKOWSKI made a motion that the committee move CSHB 310(L&C) out of the House Judiciary Standing Committee with individual recommendations and a zero fiscal note. There being no objection, CSHB 310(L&C) was moved from the House Judiciary Standing Committee.
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