Legislature(1999 - 2000)

01/24/2000 03:19 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HB 190-VIATICAL SETTLEMENTS                                                                                                   
                                                                                                                                
Number 0122                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  announced the first order of  business would be                                                              
HOUSE  BILL  NO. 190,  "An  Act relating  to  viatical  settlement                                                              
contracts."    He  indicated  there   would  be  a  Department  of                                                              
Community and  Economic Development  overview following  the bill.                                                              
He said before  the committee was a proposed  committee substitute                                                              
(CS) for HB 190, Version K.                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  made  a  motion  to adopt  Version  K  [1-                                                              
LS0576\K,  Bannister/Ford, 1/24/00].   There  being no  objection,                                                              
Version K was adopted as a working draft.                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG  explained the  changes reflected in  Version K.                                                              
He referred to page  1, line 11 through page 2,  line 1, beginning                                                              
with "The authority  of the director".  He said it  is the "bright                                                              
line" language that  sets forth what the Division  of Insurance is                                                              
to accomplish.   The next  changes are on  page 5, lines  4-5, and                                                              
page 6, lines  12-13, which exclude "with a catastrophic  or life-                                                              
threatening chronic  illness or condition" in the  definition of a                                                              
viator.  He explained:                                                                                                          
                                                                                                                                
     Rather than  getting into  the complete bifurcation  and                                                                   
     separation  of the  ...  life settlement  contracts  and                                                                   
     viatical settlement  contracts, we're going  to combine,                                                                   
     for the  purposes of statute  -- I think the  brevity in                                                                   
     keeping   these  as  short   as  possible  while   still                                                                   
     protecting  consumers is our goal here.                                                                                    
                                                                                                                                
CHAIRMAN ROKEBERG noted that the  final change is on page 5, lines                                                              
6-10, which  adds a  new subsection to  include the "bright  line"                                                              
language for the Division of Banking,  Securities and Corporations                                                              
(DBSC).                                                                                                                         
                                                                                                                                
Number 0434                                                                                                                     
                                                                                                                                
REPRESENTATIVE   MURKOWSKI   asked    what   the   definition   of                                                              
"viaticating" is.                                                                                                               
                                                                                                                                
VINCE  USERA, Senior  Securities  Examiner,  Division of  Banking,                                                              
Securities and Corporations, Department  of Community and Economic                                                              
Development (DCED),  came forward.   He answered that the  root is                                                              
"to viaticate".   He does not have  an exact definition.   He said                                                              
it is defined in the regulations,  but not precisely in the gerund                                                              
form.   He  indicated  viaticating  is the  process  of making  an                                                              
investment in  the life insurance  of an individual for  less than                                                              
the  stated  face value  of  the  policy; the  insured  individual                                                              
receives  that amount  in  exchange for  the  full death  benefits                                                              
under the policy.                                                                                                               
                                                                                                                                
Number 0585                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG added  that viaticating is the taking  of a life                                                              
insurance  policy  and  turning  it  into  a  viatical  settlement                                                              
contract.                                                                                                                       
                                                                                                                                
REPRESENTATIVE BRICE asked if it  takes place between a terminally                                                              
ill  individual and  the broker,  or  between the  broker and  the                                                              
final puchaser of the product.                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG said that is why there are two "bright lines".                                                                
                                                                                                                                
MR. USERA said viatication takes  place between the insured or the                                                              
owner of the policy and the viatical settlement provider.                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG stated that there  is an amendment to Version K.                                                              
[Amendment 3].  The amendment was as follows:                                                                                   
                                                                                                                                
     Page 2, line 6, following "broker"                                                                                       
          delete "subject to a risk" and insert "relative to                                                                
     a subject"                                                                                                               
                                                                                                                                
He indicated  the bill does  not read  well with the  inclusion of                                                              
"subject to risk" and, therefore, it should be deleted.                                                                         
                                                                                                                                
Number 0738                                                                                                                     
                                                                                                                                
KATY CAMPBELL,  Actuary L/H, Division of Insurance,  Department of                                                              
Community and Economic  Development, came forward to  speak on the                                                              
amendment to Version K.  She explained  the substitute language in                                                              
the amendment  is consistent  with what  is used throughout  their                                                              
statute.  This is so that only individuals  in Alaska are covered.                                                              
                                                                                                                                
REPRESENTATIVE MURKOWSKI stated that it is a fine amendment.                                                                    
                                                                                                                                
Number 0824                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  made a motion to adopt Amendment  3.  There                                                              
being no objection, Amendment 3 was adopted.                                                                                    
                                                                                                                                
BOB  LOHR,   Director,  Division   of  Insurance,  Department   of                                                              
Community and  Economic Development, testified  via teleconference                                                              
from Anchorage.   He said a revised zero fiscal  note was prepared                                                              
at the request of the chairman.  He stated:                                                                                     
                                                                                                                                
     The  analysis  is  that  Section   2  of  the  committee                                                                   
     substitute  -  and  this  is the  language  from  the  I                                                                   
     version - ... Section 2 of the  committee substitute for                                                                   
     House  Bill 190,  at page 2,  line 30  through 31,  adds                                                                   
     "fee authority sufficient to  cover the division's costs                                                                   
     of   regulating    settlement   contracts,    providers,                                                                   
     representatives, and brokers.                                                                                              
                                                                                                                                
MR.  LOHR  noted  that  17 brokers  and  11  providers  have  been                                                              
identified  nationally.    The  number  that would  choose  to  be                                                              
licensed in Alaska  is unknown; however, the fees  would be set to                                                              
cover the division's actual costs of regulation under the bill.                                                                 
                                                                                                                                
Number 0967                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  asked if Mr.  Lohr believes the  fees collected                                                              
will offset any costs the division may incur.                                                                                   
                                                                                                                                
MR. LOHR responded yes.                                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG indicated the committee's  fiscal note, combined                                                              
with the fiscal  note from the DBSC,  would be adopted  in lieu of                                                              
receipt of that from the Division of Insurance.                                                                                 
                                                                                                                                
Number 1047                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  made  a  motion  to  move  CSHB  190(L&C),                                                              
Version K [1-LS0576\K,  Bannister/Ford, 1/24/00], as  amended, out                                                              
of the committee with individual  recommendations and the attached                                                              
zero fiscal  note.   There being no  objection, CSHB  190(L&C) was                                                              
moved out of the House Labor and Commerce Standing Committee.                                                                   

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