Legislature(2017 - 2018)BARNES 124

03/20/2017 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 79 OMNIBUS WORKERS' COMPENSATION TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HJR 14 FCC: INCREASE RURAL HEALTH CARE BUDGET TELECONFERENCED
Moved HJR 14 Out of Committee
-- Public Testimony --
+ HB 157 LIFE & HEALTH INSURANCE GUARANTY ASSN. TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 119 AIDEA:DIVIDEND TO STATE;INCOME;VALUATION TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
         HB 157-LIFE & HEALTH INSURANCE GUARANTY ASSN.                                                                      
                                                                                                                                
3:30:05 PM                                                                                                                    
                                                                                                                                
CHAIR  KITO announced  that the  next order of  business would  be                                                              
HOUSE  BILL  NO. 157,"An  Act  relating  to  the Alaska  Life  and                                                              
Health  Insurance  Guaranty  Association;  and  providing  for  an                                                              
effective date."                                                                                                                
                                                                                                                                
3:30:27 PM                                                                                                                    
                                                                                                                                
BIANCA CARPENETTI,  Staff, Representative  Sam Kito,  Alaska State                                                              
Legislature,  advised that HB  157 is a  House Labor  and Commerce                                                              
Standing  Committee   bill  by   request  of  the   Department  of                                                              
Commerce, Community  & Economic Development (DCCED).   On 1/20/17,                                                              
the  department  presented  the   concept  of  the  bill  for  the                                                              
committee  and  the  committee   authorized  the  chair  to  draft                                                              
legislation  on  behalf of  the  committee addressing  the  issues                                                              
raised  by the  department.   The legislation  updates the  Alaska                                                              
Life  and  Health  Insurance  Guaranty Act  and  conforms  to  the                                                              
National  Association   of  Insurance  Commissioners,   Life,  and                                                              
Health  Insurance Guaranty  Association  Model Act.   It  includes                                                              
the definition  of an  insured member of  the association  and the                                                              
Hospital  and Medicare  Service Corporations,  which are  entities                                                              
of active insurance  companies.  These changes update  the Act and                                                              
improve uniformity  nationwide in  the administration of  Life and                                                              
Health Guaranty  Associations.   The bill  has a zero-fiscal  note                                                              
from the Division of Insurance, she said.                                                                                       
                                                                                                                                
3:32:02 PM                                                                                                                    
                                                                                                                                
LORI  WING-HEIR, Director,  Division of  Insurance, Department  of                                                              
Commerce, Community  & Economic Development (DCCED),  advised that                                                              
HB 157  is an amendment  to the Alaska  Life and Health  Insurance                                                              
Guaranty Association.   The sectional  analysis summary  is mainly                                                              
conformance   to    the   National   Association    of   Insurance                                                              
Commissioners  Model  Law  (NAIC),  and Alaska  statutes  with  16                                                              
typographical errors within the statutes.                                                                                       
                                                                                                                                
3:32:55 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIR began paraphrasing the sectional analysis.                                                                        
                                                                                                                                
3:33:08 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:33 p.m. to 3:34 p.m.                                                                       
                                                                                                                                
3:34:49 PM                                                                                                                    
                                                                                                                                
MS.  WING-HEIR  paraphrased  the  sectional  analysis  as  follows                                                              
[original punctuation provided]:                                                                                                
                                                                                                                                
     Sec. 1  AS 21.79.020(a) is  amended to clarify  that the                                                                   
     chapter  applies to  a nonresident who  is not  eligible                                                                   
     for  coverage  by  a  guaranty  association  in  another                                                                   
     state  due  to  the  fact   that  the  insurer  was  not                                                                   
     licensed   at  the  time   specified  in  the   guaranty                                                                   
     association law of that state.                                                                                             
                                                                                                                                
     Sec.  2 AS  21.79.020(b)  is amended  to  have AS  21.79                                                                   
     apply to  a subscriber's contract  issued by  a hospital                                                                   
     or  medical  service  corporation  authorized  under  AS                                                                   
     21.87.  The amendment  also defines  the terms  "annuity                                                                   
     policy  or contract"  and  "certificate  under a  direct                                                                   
     group life  health, annuity,  or supplemental policy  or                                                                   
     contract".                                                                                                                 
                                                                                                                                
3:35:09 PM                                                                                                                    
                                                                                                                                
MS.  WING-HEIR  advised  that  the  hospital  or  medical  service                                                              
corporation  in   Alaska  is  Premera  Blue  Cross,   and  as  was                                                              
discussed  in January,  it  is the  intent  of  the department  to                                                              
bring Premera  in to make  an assessment in  the event of  a large                                                              
insolvency.  The  second portion of Sec. 2,  creates consistencies                                                              
to a draft modeling in NAIC-Model.                                                                                              
                                                                                                                                
MS. WING-HEIR  advised  that Sec.  3 lists exclusions  to  what is                                                              
not  covered  in this  particular  Guaranty  Association,  because                                                              
there is wording  in Alaska statutes  to make sure to  not pick up                                                              
federal preemptions,  or structured settlements or  annuities that                                                              
have been sold to a third-party.                                                                                                
                                                                                                                                
MS.  WING-HEIR   continued  paraphrasing   as  follows   [original                                                              
punctuation provided]:                                                                                                          
                                                                                                                                
     Sec.  3 AS  21.79.020(c)  is amended  to  make AS  21.79                                                                   
     inapplicable to:                                                                                                           
                                                                                                                                
          1. a policy or contract providing a hospital,                                                                         
     medical,  prescription   drug,  or  other   health  care                                                                   
     benefit in accordance  with 42 U.S.C. 1395w-21  - 1395w-                                                                   
     154   or  federal   regulations   adopted  under   those                                                                   
     sections;   (Medicare  Choice   Program  and   Voluntary                                                                   
     Prescription Drug Benefit Program)                                                                                         
                                                                                                                                
          2. a person who acquires rights to receive                                                                            
     payments  through  a  structured   settlement  factoring                                                                   
     transaction as defined in 26 U.S.C. 5891(c)(3)(A),                                                                         
     regardless  of whether the  transaction occurred  before                                                                   
     or after such section became effective.                                                                                    
          3. structured settlement annuity benefits to                                                                          
     which a payee  or beneficiary has transferred  the payee                                                                   
     or  beneficiary's  rights  in  a  structured  settlement                                                                   
     factoring   transaction   as   defined  in   26   U.S.C.                                                                   
     5891(c)(3)(A),  regardless  of whether  the  transaction                                                                   
     occurred  before   or  after  26  U.S.C.   5891(c)(3)(A)                                                                   
     became effective.                                                                                                          
                                                                                                                                
               • Subsection (c) is also amended to add                                                                          
     clarifying   language  consistent   with  the   National                                                                   
     Association of  Insurance Commissioners (NAIC)  Life and                                                                   
     Health  Insurance Guaranty  Association  Model Act  (MDL                                                                   
     520) (NAIC Model).                                                                                                         
                                                                                                                                
          Sec. 4 AS 21.79.020(d) Non-substantive changes                                                                        
     are made for  either consistency with the  NAIC Model or                                                                   
     drafting conventions.                                                                                                      
                                                                                                                                
          Sec. 5 AS 21.79.020(e) Non-substantive changes                                                                        
     made are for  either consistency with the  NAIC Model or                                                                   
     drafting  conventions,  and  a  citation  correction  is                                                                   
     made in paragraph (9).                                                                                                     
                                                                                                                                
          Sec. 6 AS 21.79.025(a)                                                                                                
                                                                                                                                
               • AS 21.79.025(a)(2)(B)(ii) is amended to                                                                        
     clarify  that the  benefits  for which  the  association                                                                   
     may  become liable  may not  exceed  $300,000 for  long-                                                                   
     term care insurance as defined under AS 21.53.200.                                                                         
                                                                                                                                
               • AS 21.79.025(a)(3) is amended to change                                                                        
     "contract holder"  to "contract owner" to  be consistent                                                                   
     with  the  NAIC  Model, to  clarify  that  the  contract                                                                   
     refers to an  unallocated annuity contract issued  to or                                                                   
     in conjunction  with a government  lottery if  the owner                                                                   
     is a  resident, and to  clarify that the association  is                                                                   
     not liable  to cover  more than  $5 million in  benefits                                                                   
     regardless  of  the  number of  policies  and  contracts                                                                   
     held by the owner.                                                                                                         
                                                                                                                                
               • AS 21.79.025(a)(4) is amended to increase                                                                      
     the coverage  limit for net cash surrender  and net cash                                                                   
     withdrawal   values  of  annuities   from  $100,000   to                                                                   
     $250,000    for   individuals    participating   in    a                                                                   
     governmental   retirement   benefit  plans   established                                                                   
     under 26 U.S.C.  401, 26 U.S.C. 403(b) or  26 U.S.C. 457                                                                   
     and covered by an unallocated annuity contract                                                                             
                                                                                                                                
               • AS 21.79.025(a)(5) is amended to increase                                                                      
     the coverage  limit for net cash surrender  and net cash                                                                   
     withdrawal  values, if  any, from  $100,000 to  $250,000                                                                   
     to each  payee of  a structured  settlement annuity,  or                                                                   
     beneficiary of  the payee if  the payee is  deceased, in                                                                   
     the aggregate.                                                                                                             
                                                                                                                                
          Sec. 7 AS 21.79.025(d)(2) is amended to correct a                                                                     
     typographical error.                                                                                                       
                                                                                                                                
          Sec. 8 AS 21.79.060(a)(2) is amended to allow the                                                                     
     association  to provide loans  to assure payment  of the                                                                   
     contractual  obligations of  the impaired insurer  until                                                                   
     those   obligations   are  guaranteed,   reinsured,   or                                                                   
     assumed.                                                                                                                   
                                                                                                                                
          Sec. 9 AS 21.79.060(d) AS 21.79.060(d)(1) is                                                                          
     amended  to better  track  the NAIC  Model  organization                                                                   
     and  language by  combining  existing paragraphs  1 -  3                                                                   
     under   AS  21.79.060(d).   Tracking  NAIC  models   and                                                                   
     language  promotes national  uniformity and  state-based                                                                   
     regulation,  and  ease  of  interpretation,  compliance,                                                                   
     administration, enforcement, and amendment.                                                                                
                                                                                                                                
               • AS 21.79.060(d)(1), consistent with the                                                                        
     addition  of   loans  under  AS  21.79.060(a)(2)   under                                                                   
     Section  8 of the  bill above,  is amended to  authorize                                                                   
     the   association   to  utilize   loans   necessary   to                                                                   
     discharge the association's duties under AS 21.79.060.                                                                     
                                                                                                                                
               • AS 21.79.060(d)(2) is amended to better                                                                        
     track  the  NAIC  Model  organization  and  language  by                                                                   
     placing   existing  subsections  (e)   -  (j)   in  this                                                                   
     paragraph.                                                                                                                 
                                                                                                                                
          Sec. 10 AS 21.79.060(l) is amended to require the                                                                     
     association  to  provide  a  report  to  the  liquidator                                                                   
     regarding  the premium collected  by the association  if                                                                   
     requested by the liquidator of an insolvent insurer.                                                                       
                                                                                                                                
          Sec. 11 AS 21.79.060(n) is amended to authorize                                                                       
     the  association   to  impose  a  permanent   policy  or                                                                   
     contract   lien  under  a   guarantee,  assumption,   or                                                                   
     reinsurance  agreement if  the policy  or contract  lien                                                                   
     is approved  by a court  and the association  finds that                                                                   
     the amount that  may be assessed under AS  21.79 is less                                                                   
     than  the  amount  needed  to  assure  full  and  prompt                                                                   
     performance  of  the  association's   duties  under  the                                                                   
     chapter.                                                                                                                   
                                                                                                                                
          Sec. 12 AS 21.79.060(o) is amended to use updated                                                                     
     language consistent  with the  NAIC Model and  to change                                                                   
     a  subsection citation  to conform  to amendments  being                                                                   
     made to the section.                                                                                                       
                                                                                                                                
          Sec. 13 AS 21.79.060(p) is amended to change a                                                                        
     subsection  citation  to  conform  to  amendments  being                                                                   
     made to the section.                                                                                                       
                                                                                                                                
          Sec. 14 AS 21.79.060(t) is amended to use updated                                                                     
     language consistent with the NAIC Model.                                                                                   
                                                                                                                                
          Sec. 15 AS 21.79.060(aa) AS 21.79.060 is amended                                                                      
     to add  a new subsection (aa)  to better track  the NAIC                                                                   
     Model  language and organization  by incorporating  into                                                                   
     the   new  section   the  provisions   in  existing   AS                                                                   
     21.79.060(u) - (x).                                                                                                        
                                                                                                                                
          Sec. 16 AS 21.79.070(a) is amended to require                                                                         
     that  any  assessment  of  association  members  by  the                                                                   
     association  board must  be adopted  by a resolution  of                                                                   
     the board.                                                                                                                 
                                                                                                                                
          Sec. 17 AS 21.79.070(c) amended to increase the                                                                       
     amount of a  non- pro rata assessment of  members by the                                                                   
     association  board from $250  per calendar year  to $500                                                                   
     per calendar year.                                                                                                         
                                                                                                                                
          Sec. 18 AS 21.79.080(c) is amended to require the                                                                     
     association  board to  adopt  a plan  of operation  that                                                                   
     includes                                                                                                                   
          (1) procedures for removing a member of the board                                                                     
     for cause,  including procedures  for removing  a member                                                                   
     of  the  board  who  becomes   an  impair  or  insolvent                                                                   
     insurer, and                                                                                                               
          (2) policies and procedures for addressing                                                                            
     conflicts of interest.                                                                                                     
                                                                                                                                
          Sec. 19 AS 21.79.090(c) is amended to                                                                                 
          (1) clarify that only a final action of the board                                                                     
     may  be appealed  to  the director  of  the division  of                                                                   
     insurance, and                                                                                                             
          (2) increase the time by which an appeal may be                                                                       
     taken  from  30 days  to  60  days  after the  date  the                                                                   
     notice of the board's action is mailed.                                                                                    
                                                                                                                                
          Sec. 20 AS 21.79.090(d) is amended to clarify                                                                         
     that the  liquidator, rehabilitator,  or conservator  of                                                                   
     an insolvent  insurer may notify all  interested persons                                                                   
     of the effect of AS 21.79.                                                                                                 
          Sec. 21 AS 21.79.110(b) is amended to remove the                                                                      
     requirement   that   records    of   meetings   of   the                                                                   
     association  may only  be made public  after an  insurer                                                                   
     is no longer impaired or insolvent.                                                                                        
                                                                                                                                
          Sec. 22 AS 21.79.140 is amended to                                                                                    
          (1) clarify that a cause of action may not arise                                                                      
     for an  action or  omission of  the association and  its                                                                   
     agents   and  employees,   members  of   the  Board   of                                                                   
     Governors,  member insurers,  and  agents and  employees                                                                   
     of member  insurers,  and the director  of the  division                                                                   
     of  insurance  and  the  director's  representatives  in                                                                   
     performing their duties under AS 21.79, and                                                                                
          (2) extend the immunity to such entities'                                                                             
     participation  in an organization  of one or  more state                                                                   
     associations   of   similar   purposes   and   to   that                                                                   
     organization and its agents or employees.                                                                                  
                                                                                                                                
          Sec. 23 AS 21.79.150 is amended to extend the                                                                         
     time  a proceeding  involving an  insolvent insurer  may                                                                   
     be stayed from  60 days to 180 days after the  date of a                                                                   
     final   order   of   liquidation,   rehabilitation,   or                                                                   
     conservation   in  order   to   allow  the   association                                                                   
     additional time  to exercise a power or  duty authorized                                                                   
     under AS 21.79.                                                                                                            
                                                                                                                                
          Sec. 24 AS 21.79.900(5) amends the term "called"                                                                      
     to                                                                                                                         
          (1) mean a notice has been mailed (formerly                                                                           
     issued)   by   the  association   to   member   insurers                                                                   
     requiring that  an authorized assessment be  paid within                                                                   
     the time set out in the notice, and                                                                                        
                                                                                                                                
     (2)  include  in  the definition  of  "called"  that  an                                                                   
     authorized  assessment  becomes  called when  notice  IS                                                                   
     mailed by the association to member insurers.                                                                              
                                                                                                                                
     Sec.  25 AS  21.79.900(6) amends  the term  "contractual                                                                   
     obligation"  to clarify  that the term  only applies  to                                                                   
     an obligation  under a policy, contract,  or certificate                                                                   
     under  a group  policy or  contract, or  portion of  one                                                                   
     for which  coverage is  provided under AS  21.79.020(a),                                                                   
     (b), (d), and (e).                                                                                                         
                                                                                                                                
     Sec.  26  AS  21.79.900(7)   amends  the  term  "covered                                                                   
     policy" to mean  a policy or contract or a  portion of a                                                                   
     policy  or  contract  for  which  coverage  is  provided                                                                   
     under AS 21.79.020(a), (b), (d) and (e).                                                                                   
                                                                                                                                
     Sec.  27  AS  21.79.900(10)   amends  the  term  "member                                                                   
     insurer"  to  include  a  hospital  or  medical  service                                                                   
     corporation licensed under AS 21.87.                                                                                       
                                                                                                                                
     Sec.  28   AS  21.79.900(13)   amends  the  term   "plan                                                                   
     sponsor" to  clarify that the term applies  to groups of                                                                   
     representatives  of  parties  similar  to  two  or  more                                                                   
     employers or  jointly by one  or more employers  and one                                                                   
     or   more  employee   organizations,   an   association,                                                                   
     committee, or  joint board of trustees who  establish or                                                                   
     maintain the benefit plan.                                                                                                 
                                                                                                                                
     Sec. 29  AS 21.79.900(14) amends  the term "premium"  to                                                                   
     clarify that  assessable premium  may not be  reduced on                                                                   
     account  of  AS  21.79.020(c)(4)  relating  to  interest                                                                   
     limitations and  AS 21.79.025(a)(2) - (5), (b),  and (d)                                                                   
     relating   to   limitations    with   respect   to   one                                                                   
     individual,  one participant,  and  one contract  owner.                                                                   
     The term "premium" does not include                                                                                        
          (1) premiums in excess of $5 million on an                                                                            
     unallocated   annuity  contract   not  issued  under   a                                                                   
     government  retirement  benefit   plan  or  its  trustee                                                                   
     established  under 26 U.S.C.  401, 26 U/S.C.  403(b), or                                                                   
     26 U.S.C. 457; or                                                                                                          
          (2) with respect to multiple nongroup policies of                                                                     
     life insurance  owned by one  owner, whether  the policy                                                                   
     holder  is an  individual, firm,  corporation, or  other                                                                   
     person, and  whether the  persons insured are  officers,                                                                   
     managers,  employees,  or  other  persons,  premiums  in                                                                   
     excess of $5  million with respect to those  policies or                                                                   
     contracts,  regardless  of  the number  of  policies  or                                                                   
     contracts held by the owner.                                                                                               
                                                                                                                                
     Sec. 30 AS  21.79.900(16) amends the term  "resident" to                                                                   
     delete language considered unnecessary under state                                                                         
     drafting conventions.                                                                                                      
                                                                                                                                
     Sec. 31  AS 21.79.900(19) amends the  term "supplemental                                                                   
     contract" to  mean a written agreement entered  into for                                                                   
     the  distribution of  proceeds  under  life, health,  or                                                                   
     annuity policy or contract benefits.                                                                                       
                                                                                                                                
     Sec. 32  AS 21.79.900 is  amended to add new  paragraphs                                                                   
     to  define the  terms "benefit  plan", "election  date",                                                                   
     and  "extra  contractual  claim". The  section  is  also                                                                   
     amended to  define "published  monthly average",  a term                                                                   
     previously defined under AS 21.79.020(f).                                                                                  
                                                                                                                                
          Sec. 33 AS 21.87.340 is amended to add AS 21.79                                                                       
     to  the list  of  statutory  provisions which  apply  to                                                                   
     hospital and medical service corporations.                                                                                 
                                                                                                                                
          Sec. 34 Repeals the following provisions                                                                              
                                                                                                                                
               •   AS   21.79.020(f)    defining   "published                                                                   
     monthly  average"  as  the  term  definition  is  placed                                                                   
     under AS 21.79.900.                                                                                                        
                                                                                                                                
               • AS 21.060(c) is repealed as the provision                                                                      
     no longer is in the NAIC Model.                                                                                            
                                                                                                                                
               • AS 21.79.060(e) - (j) are repealed as                                                                          
     these   provisions    have   been   relocated    to   AS                                                                   
     21.79.060(d).                                                                                                              
                                                                                                                                
               • AS 21.79.060(u) - (x) are repealed as                                                                          
     these    provisions     have    been     relocated    to                                                                   
     AS21.79.060(aa).                                                                                                           
                                                                                                                                
               • AS 21.79.110(e) is repealed as unnecessary                                                                     
     because the  state has adopted  Section 602 of  the NAIC                                                                   
     Insurers   Receivership    Model   Act    (MDL   555)(AS                                                                   
     21.78.325).                                                                                                                
                                                                                                                                
          Sec. 35 Provides for an uncodified new section                                                                        
     outlining  the timing  of when  the  director may  adopt                                                                   
     regulations.                                                                                                               
                                                                                                                                
          Sec. 36 Provides that section 36 of the Act takes                                                                     
     effect immediately under AS 01.10.070(c).                                                                                  
                                                                                                                                
     Sec. 37 Provides  that except as provided  in section 37                                                                   
     of the Act, the Act takes effect July 1, 2017.                                                                             
                                                                                                                                
3:42:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH requested a "two-minute elevator speech as                                                                 
to what this actually does."                                                                                                    
                                                                                                                                
MS. WING-HEIER  responded there  are two Guaranty  Associations in                                                              
Alaska:   property   and   casualty,    which   include   workers'                                                              
compensation,  and life  and  health which  does  life and  health                                                              
annuities.   In the  event an entity  is a  member insurer  in the                                                              
State of Alaska,  and holds a Certificate of  Authority to Conduct                                                              
Business, it  is automatically  a member insurer.   There  is life                                                              
and there  is health (coughing)  within the association  there are                                                              
two categories  of  insurers.  In  the event  the company  becomes                                                              
insolvent  and  cannot  pay  claims   to  its  policyholders,  the                                                              
association steps  in, makes assessments  to its  member insurers,                                                              
and pays  out the  claims.  She  noted that  this has  happened in                                                              
both  the  property   and  casualty,  and  the   life  and  health                                                              
associations.                                                                                                                   
                                                                                                                                
3:43:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH   said  he  noticed  some   of  the  benefit                                                              
obligations  went from $100,000  to $250,000,  a two and  one-half                                                              
times multiplier  on a benefit.   This implies, he said,  there is                                                              
an additional  cost  to someone  because if the  benefit is  going                                                              
up, the premium  would go up for  someone.  He asked  what type of                                                              
budget  this operates  under,  how many  insurers  there are,  how                                                              
many are  insured,  and whether  this involves  10 percent  of the                                                              
state's population.                                                                                                             
                                                                                                                                
MS. WING-HEIER  answered that  there are approximately  670-member                                                              
insurers in the  association.  She noted that  assessments are not                                                              
made  unless  there is  an  insolvency  or liquidation  for  which                                                              
claims must be paid.   The limits were raised because  it had been                                                              
$100,000 for  as long as the  association had existed,  and due to                                                              
trending  and the need  for the  policies to  perform, the  limits                                                              
needed  to be  raised, and  the higher  limits are  being paid  in                                                              
other  states.    She  explained   that  on  those  two  or  three                                                              
categories,  the limits  were raised  from  $100,000 to  $250,000.                                                              
She  said that  $300,000 was  inserted in  long-term care  because                                                              
the statute  was unclear,  and the division  wanted to  be certain                                                              
long-term care policies were capped at $300,000.                                                                                
                                                                                                                                
REPRESENTATIVE BIRCH asked what the current operating budget is.                                                                
                                                                                                                                
MS.  WING-HEIER  replied  that   the  association  operates  on  a                                                              
budget,  not the  division.   She  reiterated  that  in the  event                                                              
there is  a need, the association  accesses the member  insurer up                                                              
to 2  percent of the  premiums of that  insurer.  Quite  honestly,                                                              
she  said, the  association  may put  the  responsibility back  on                                                              
policyholders depending  upon who they  are, or they may  just pay                                                              
it directly.                                                                                                                    
                                                                                                                                
3:46:15 PM                                                                                                                    
                                                                                                                                
DONALD THOMAS, Administrator  and Counsel, Alaska  Life and Health                                                              
Insurance   Guaranty  Association,   advised  he   has  been   the                                                              
administrator  and counsel  for Alaska Life  and Health  Insurance                                                              
Guaranty Association since 1996.                                                                                                
                                                                                                                                
3:46:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH noted the  jump in  benefits, and  said that                                                              
since  the state has  no liability,  his primary  interest  is the                                                              
impact  it may  have on  potential  constituents.   He asked  that                                                              
with 670 insurers,  what type of  an annual budget he  has and how                                                              
it is managed and maintained.                                                                                                   
                                                                                                                                
MR.   THOMAS  responded   that   the  administrative   budget   is                                                              
approximately  $160,000, just  to participate  primarily with  the                                                              
national organization.   The budget is funded through  the Class A                                                              
assessments  which have  been capped  at $250,000  since the  1990                                                              
inception of  the Act.    Given the  number of members  under that                                                              
cap, he said he  is currently asking that the  amount be increased                                                              
to  $500,000.   The  Alaska  Life  and Health  Insurance  Guaranty                                                              
Association  tries  to  avoid  extra  expenses  and  it  tries  to                                                              
perform a  Class A assessment every  couple of years,  rather than                                                              
the expense  of every  year.  The  other side  of the  equation is                                                              
that  because  Alaska has  no  domestic  life or  health  insurer,                                                              
every time  a member  insurer is declared  insolvent, there  is an                                                              
insolvency  affecting  Alaska  policyholders,   a  member  insurer                                                              
participates  on  a  multi-state  basis.   The  association  works                                                              
within a taskforce  among the various states to  determine how the                                                              
states  will  collectively  address the  insolvency.    Actuaries'                                                              
determine  the  share  of  that   cost  for  each  state  and  the                                                              
association  receives   a  bill,  the  association   accesses  its                                                              
members up  to statutory limits.   The association does  not carry                                                              
cash on  hand, he  advised, and  it collects  that money  once the                                                              
insolvency had  been declared, under  the statute, it sends  out a                                                              
30-day  notice to  member  insurers to  pay  the association,  and                                                              
that  money is  then sent  to the  proper location  to affect  the                                                              
plans of the  multi-state response to the insolvency.   He related                                                              
that that is  one of the real  reasons HB 157 [should  become law]                                                              
so  Alaska  can  attain  functional  consistency  with  the  other                                                              
states  of which  it  is  always involved.    He advised  that  44                                                              
states  have  already  adopted  the  amendments  to  the  National                                                              
Association  of Insurance  Commissioners  Model  Law (NAIC)  which                                                              
was substantially  amended in 2009.   Alaska is one of  two states                                                              
west of Ohio  that has yet to  adopt these amendments,  which is a                                                              
primary  reason the  Board of  Governors  of the  Alaska Life  and                                                              
Health  Insurance  Guaranty  Association  supports passage  of  HB                                                              
157, he said.                                                                                                                   
                                                                                                                                
3:50:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KNOPP offered  surprise  that  not many  companies                                                              
suffer  insolvency and  that  this bill  is  truly about  consumer                                                              
protection.  He  asked whether the director had  received any type                                                              
of opposition or  comment from Premera Blue Cross,  Blue Shield on                                                              
this legislation.                                                                                                               
                                                                                                                                
MS. WING-HEIER  responded that the  only comment she  received was                                                              
from  National   Blue  Cross,  Blue  Shield  Association   out  of                                                              
Washington,   D.C.,  was   to  remind   her   that  the   National                                                              
Association   of   Insurance  Commissioners   and   the   National                                                              
Coalition   of  Insurance   Legislators  are   working  on   model                                                              
legislation  to address  long-term  care, which  would bring  life                                                              
insurers and health  insurers together to address  long-term care.                                                              
"Currently,  long-term  care  Penn  Treaty  is  a  long-term  care                                                              
insurer  insolvency is  just health  insurers," she  said.   There                                                              
are  two accounts  in the  association, she  reiterated, life  and                                                              
health,  and currently  Penn Treaty  will be  paid out of  health.                                                              
This  model legislation  is addressed  because  long-term care  is                                                              
huge  nationwide, it  would allow  for insolvencies  to call  from                                                              
both sets  of insurers and  not just in  Alaska; it would  have to                                                              
adopt  that legislation  if  it  ever comes  into  fruition.   She                                                              
reiterated that  the National Blue Cross, Blue  Shield Association                                                              
out  of Washington,  D.C.,  reminded her  of  the potential  model                                                              
act,  and that  it hoped  "we would  support it  because there  is                                                              
such a large player  in the medical field here and  it would be --                                                              
(indisc.)  long term  care, not  Penn  Treaty, but  if there  were                                                              
another one  going forward  that they would  be expected to  pay a                                                              
pretty  big part  of  the assessment.   And,  they  would hope  we                                                              
would  support  bringing  in  the  life  insurers  in  that  model                                                              
legislation and into Alaska."                                                                                                   
                                                                                                                                
REPRESENTATIVE KNOPP  surmised there  was no strong  opposition to                                                              
HB 157.                                                                                                                         
                                                                                                                                
3:53:47 PM                                                                                                                    
                                                                                                                                
CHAIR KITO advised that public testimony would be left open.                                                                    
                                                                                                                                

Document Name Date/Time Subjects
HJR014 Supporting Documents Index 3.17.17.pdf HL&C 3/20/2017 3:15:00 PM
HJR 14
HJR014 Supporting Documents-Support Letters 3.17.17.pdf HL&C 3/20/2017 3:15:00 PM
HJR 14
HJR014 Supporting Documents-Universal Service Disbursements 2015 3.20.17.pdf HL&C 3/20/2017 3:15:00 PM
HJR 14
HJR014 Supporting Documents-Universal Services Fact Sheet 3.17.17.pdf HL&C 3/20/2017 3:15:00 PM
HJR 14