Legislature(1999 - 2000)
01/24/2000 03:19 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.