Legislature(1995 - 1996)
05/01/1995 03:08 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 53 - OMNIBUS INSURANCE REFORM Number 610 CHAIRMAN KOTT stated that SB 53 was introduced by the Senate Judiciary Committee. Having no one present from that committee, he asked Marianne Burke to give the committee an overview. MARIANNE BURKE, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified that CSSB 53(JUD) was a successor bill to SB 362 and HB (indisc.--end of tape) TAPE 95-54, SIDE B Number 000 MS. BURKE continued that these were not passed. SB 53 includes language to address new areas of insurance regulation, it adopts new accreditation standards added by the National Association of Insurance Commissioners (NAIC) and makes needed corrections to the insurance statutes. These changes will bring statutes up to date with the insurance market and allow the division to maintain its NAIC accreditation, granted in December of 1992. A zero fiscal note was submitted. MS. BURKE explained that the changes to the bill made between legislative sessions were minor. These include language cleanup to include the 1992 change in license classes from agent and broker to producer, and general agent to managing general agent. It contains the revision of language pertaining to the standard valuation law. The cleanup language replaces a reference to the Federal Savings and Loan Insurance Corporation, which no longer exists, with the Federal Deposit Insurance Corporation. It adds to acts considered fraudulent insurance acts. The additions include: Falsely altering an insurance document; knowingly possessing a forged insurance document; knowingly issuing a forged insurance document; and establishes penalties for these acts. Number 147 MS. BURKE stated that the bill clarifies that a reciprocal insurer, insuring municipalities or nonprofit utilities or providing marine insurance, do not have to participate in the assigned risk plan for motor risk coverage. It includes the division's actuary and assistant actuary as exempt employees. The bill includes 22 sections related to the NAIC accreditation, such as: Regulation of risk retention groups and purchasing groups as allowed by federal law; modifying the examination hearing provision to allow for closing it to the public under certain circumstances; requiring insurer financial statement filing to the NAIC on electronic media; requiring disclosure by an insurer of material transactions of purchase, disposal of assets or reinsurance; (Indisc). reinsurance; risk based capital provisions; reserve calculations; actuarial opinions; and holding company reporting requirements. It allows the Director to file civil actions for damages caused by violations of statutes by managing general agents, reinsurance and mediary brokers, and reinsurance and mediary managers. It also cleans up the definition of "member insurer" of the Life and Disability Guarantee Association. MS. BURKE continued that some other key provisions include: Authority to respond to catastrophic situations; the ability to suspend the certificate of authority of an insurer for non-renewal; providing for voluntary relinquishment of an Alaska Certificate of Authority by an insurer domiciled in another state; authority to refund or grant credits for overpayment of premium taxes by an insurer due to an error or misinterpretation; provides requirements for licensing of U.S. branches of alien, non U.S. domiciled insurers, to allow these insurers to use Alaska as a base of operation for business written within the United States. It provides authority to require continuing education for licensed insurance (indisc.--coughing); it requires the insurance premium fiduciary accounts of resident insurance licensees to be located in Alaska; it provides that a single fiduciary bond can cover multiple producer office locations; it adds incorporated insurers to the definition of a group to reflect the recent changes at Lloyd's of London; it clarifies when rate changes may be made to outstanding policies; it provides that false statements made in regard to a claim may result in prosecution under Alaska law; it allows the director to specify the format and content of rate and policy form filings made to the Division; it clarifies health insurance coverage for new born and adoptive children; it provides for re- domestication of insurers domiciled in Alaska and moving to another state or, requesting to move their domicile from another state to Alaska; it provides for the voluntary surrender of an Alaska Certificate of Authority by a domestic insurer; it provides the authority to request quarterly financial statements from all entities regulated by the Division; it allows insurers to pay claims by electronic wire transfer; it provides authority to the director to specify requirements for the electronic data; and, it otherwise makes corrections and clarifies statutory provisions. MS. BURKE said the bill also incorporates amendments suggested by the division. A new section was added giving the director discretion to accept an insurers examination report from a nonaccredited state, and it gives the director clear authority to require extra examination supervision if a state was performing substandard examination. She said revisions were made to the section pertaining to risk retention groups to avoid conflicts with federal law. Section 35, dealing with continuing education requirements for insurance licensees, was amended to include language agreed to by the division and the Alaska Independent Agents and Brokers Association. The fraudulent insurance acts provision was modified to reflect recommendations by the DOL. Language was added to various health insurance contracts statutes to make them applicable to health maintenance organizations. The section of (indisc.) independent counsel, conflicts of interest counsel was deleted. This provision was not authored by the division, and legal counsel advised them that it was neither necessary or consistent with the Alaska Supreme Court decision Chi of Alaska, Incorporated versus Employers Reinsurance. The bill was also amended by the Senate Judiciary Committee to remove the Consumer Credit provisions. Senator Taylor agreed to sponsor a separate piece of legislation on consumer credit which would incorporate some of the amendments suggested during the Senate Judiciary Committee hearing process. That bill is currently being drafted. MS. BURKE continued that minor wording changes were made in Section 15, changing the reference to a Canadian or British chartered accountant, to make the reference more global. Section 32 was amended to include the wording, "or the aggregate of a series of related transactions", to close a potential holding company reporting loop hole. In Section 82 there was a typo correction, changing the word "and" to "or". Number 191 REPRESENTATIVE ELTON referred to the Chi (indisc.) reference and said the back-up material says page 63. He asked what section was it in? MS. BURKE responded the section had been removed. Number 207 REPRESENTATIVE KUBINA asked Chairman Kott what his intentions for the bill were. Number 209 CHAIRMAN KOTT commented that it was his intent, as always, to have a good understanding of the bill before taking action. Number 232 REPRESENTATIVE MASEK asked if there were other committee referrals. Number 233 CHAIRMAN KOTT answered no. Number 237 REPRESENTATIVE ROKEBERG observed this was a very complex bill that needed to be closely looked at. Number 242 REPRESENTATIVE ELTON had a concern about slowing things down on what is purported to be technical changes. He referred to when accreditation comes up and asked what happens if this gets stalled this session. Number 250 MS. BURKE said many of the 22 items listed must be in place by January 1, 1996. Number 254 REPRESENTATIVE ELTON stated he had asked the question because he was in the Department of Commerce at the time the program became accredited. It eased the ability of a state to work with other states on cross jurisdictional matters. It meant that a lot of duplicative things did not need to be done because the program was nationally accredited. He pointed out if this was not done prior to accreditation, it would complicate matters not only for the division but also for insurers who want to do business in the state. REPRESENTATIVE BRIAN PORTER joined the meeting at 4:13 p.m. Number 268 CHAIRMAN KOTT asked Ms. Ward if the provisions were not implemented, was it her interpretation they would lose accreditation or was it that they "may" lose accreditation. MS. BURKE responded "may." CHAIRMAN KOTT stated that it should be on the record that there is no guarantee we would lose accreditation. Number 280 REPRESENTATIVE KUBINA stated he had never looked at a bill like this on the insurance industry. If they were to have a subcommittee on the bill, he would volunteer to be on it. He said he wouldn't feel comfortable at this time to pass the bill out of committee. Number 287 MS. BURKE pointed out SB 53 had also been referred to the House Judiciary Committee; however, there is a memorandum with all members agreeing to waive it from committee. Number 291 REPRESENTATIVE PORTER noted that this was the same bill that had made it through the system last year; however, for some reason it wasn't passed. There is no one who doesn't like the bill. Number 301 CHAIRMAN KOTT said he did not want to send the bill to subcommittee but would hold the bill over to Wednesday's calendar. He asked committee members to look at any important sections and contact the Division of Insurance if they had questions.
| Document Name | Date/Time | Subjects |
|---|