Legislature(2019 - 2020)BARNES 124

04/22/2019 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 102 RENTAL VEHICLE BY PRIVATE OWNER TELECONFERENCED
Moved HB 102 Out of Committee
+ SB 29 EXTEND BOARD OF MARINE PILOTS TELECONFERENCED
Heard & Held
+ SB 36 EXTEND BOARD OF NURSING TELECONFERENCED
Heard & Held
*+ HB 78 INSURER & GROUP INSURANCE DISCLOSURE TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
           HB 78-INSURER & GROUP INSURANCE DISCLOSURE                                                                       
                                                                                                                                
3:49:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  announced that the  final order of  business would                                                               
be HOUSE BILL NO. 78, "An  Act relating to insurance; relating to                                                               
an insurer's  corporate annual disclosure; relating  to insurance                                                               
company holding systems; and providing for an effective date."                                                                  
                                                                                                                                
3:50:04 PM                                                                                                                    
                                                                                                                                
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce, Community & Economic Development,  introduced HB 78 and                                                               
related  its  history.    The  bill  will  make  changes  to  the                                                               
insurance code that  conform to changes in model  laws adopted by                                                               
the National  Association of  Insurance Commissioners  (NAIC) and                                                               
will assist the  state in maintaining its  accredited status with                                                               
the NAIC and  improve uniformity nationwide in  the regulation of                                                               
insurance.   She noted  that HB 78  has two  components regarding                                                               
corporate governance and holding companies.                                                                                     
                                                                                                                                
3:52:22 PM                                                                                                                    
                                                                                                                                
MS.  WING-HEIER began  the sectional  analysis  [included in  the                                                               
committee packet] of HB 78.   She addressed section 1, which adds                                                               
new sections  to AS  21.09 and requests  an annual  disclosure of                                                               
corporate  governance from  insurance  companies  to ensure  that                                                               
their policies and procedures comply with statute.                                                                              
                                                                                                                                
3:52:58 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked what corporate governance is.                                                                             
                                                                                                                                
MS. WING-HEIER stated that, in this case, it establishes that                                                                   
the board knows the actions of upper management and is cognizant                                                                
of what is taking place in that entity.                                                                                         
                                                                                                                                
3:54:06 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER turned attention to section 1 and detailed the                                                                   
annual disclosure requirement.  She read the following from the                                                                 
sectional analysis [original punctuation provided]:                                                                             
                                                                                                                                
     AS 21.09.332. Disclosure requirement                                                                                       
                                                                                                                                
          • Subsection (a)  requires  insurers  (the  term                                                                      
          "insurer"   and   "insurers"  includes   insurance                                                                    
          groups) to  submit to  the director  by June  1 of                                                                    
          each calendar  year a corporate  governance annual                                                                    
          disclosure, and, if the insurer  is a member of an                                                                    
          insurer group, to the lead  state regulator of the                                                                    
          insurance group.                                                                                                      
                                                                                                                                
          • Subsection (b) requires the  disclosure to  be                                                                      
          signed   by  the   CEO   or  corporate   secretary                                                                    
          indicating   the  insurer   has  implemented   the                                                                    
          corporate governance practices  required under the                                                                    
          disclosure provisions and  that the disclosure has                                                                    
          been provided to the  insurer's board of directors                                                                    
          or to the appropriate committee of the board.                                                                         
                                                                                                                                
          • Subsection (c) provides the director may require                                                                    
          an insurer  to submit a disclosure  if the insurer                                                                    
          is  not already  required to  do so  under (a)  of                                                                    
          this section.                                                                                                         
                                                                                                                                
          • Subsection (d) details the levels of corporate                                                                      
          governance at  which the  insurer may  provide the                                                                    
          information regarding its disclosure.                                                                                 
                                                                                                                                
          • Subsection (e) encourages the insurer  to make                                                                      
          its  disclosure  at  a level  based  on  specified                                                                    
          criteria.  If the  insurer  utilizes the  criteria                                                                    
          the entity  must so indicate  to the  director and                                                                    
          must  also explain  any subsequent  change in  the                                                                    
          level of reporting.                                                                                                   
                                                                                                                                
          • Subsection (f) provides that disclosures are to                                                                     
          be reviewed  and any requests for  information are                                                                    
          to be  made through  the lead state  in accordance                                                                    
          with  the  most  recent  NAIC  Financial  Analysis                                                                    
          Handbook.                                                                                                             
                                                                                                                                
          • Subsection (g) allows an insurer  to reference                                                                      
          other   documents   provided   to   the   director                                                                    
          containing information required  in the disclosure                                                                    
          without  having to  duplicate  the information  in                                                                    
          the  disclosure provided  the disclosure  provides                                                                    
          for  a cross-reference  of the  document in  which                                                                    
          the information is included.                                                                                          
                                                                                                                                
MS.  WING-HEIER  continued  by  saying  that  AS  21.09.334  will                                                               
authorize  the  director  to adopt  regulations  and  orders;  AS                                                               
21.09.336 will set  out the contents of  the corporate governance                                                               
annual   disclosure;   and   AS  21.09.338   will   provide   for                                                               
confidentiality.                                                                                                                
                                                                                                                                
CO-CHAIR  LEDOUX questioned  whether  this was  a recent  concept                                                               
from the NAIC.                                                                                                                  
                                                                                                                                
MS. WING-HEIER  said it has been  around for four to  five years,                                                               
adding that all  states are required to adopt this  by January 1,                                                               
2020 to keep accreditation.                                                                                                     
                                                                                                                                
CO-CHAIR LEDOUX inquired as to the  timing of it being brought to                                                               
the committee.  She asked why now instead of last year.                                                                         
                                                                                                                                
MS.  WING-HEIER explained  that  last legislature,  the bill  was                                                               
introduced as a four-part accreditation  bill.  At that time, she                                                               
said, the  committee requested  that sections  three and  four be                                                               
eliminated in  order to pass  sections one and two  because there                                                               
was  already a  considerable amount  of time  spent on  the first                                                               
part of the bill.                                                                                                               
                                                                                                                                
3:57:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FIELDS  asked what the real-world  impact would be                                                               
if HB 78 did not pass.                                                                                                          
                                                                                                                                
MS. WING-HEIER  replied that the  NAIC could  put the state  on a                                                               
probation.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  FIELDS questioned  whether  it could  potentially                                                               
force Alaska-based insurers to domicile elsewhere.                                                                              
                                                                                                                                
MS.  WING-HEIER answered  yes.   She  explained that  one of  the                                                               
purposes of having all states  conform to similar legislation and                                                               
having  accreditation is  that insurance  companies domiciled  in                                                               
Alaska can pay to have the  state do an examination and then they                                                               
would be accredited to transact insurance in other states.                                                                      
                                                                                                                                
3:58:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL sought clarification on accreditation.                                                                            
                                                                                                                                
MS.  WING-HEIER  confirmed  that   Alaska  is  accredited.    She                                                               
explained  that every  5 years  Alaska  submits to  the NAIC  who                                                               
brings outside  consultants to look  at the state's  statutes and                                                               
regulations, as  well as  the Division  of Insurance's  staff and                                                               
credentialing.   She  noted that  the NAIC  ultimately ranks  the                                                               
state as  passing or failing,  adding that in 2017  Alaska passed                                                               
"with flying colors."                                                                                                           
                                                                                                                                
CO-CHAIR  WOOL asked  how the  state's accreditation  affects the                                                               
ability  of  Alaska  insurance   companies  to  conduct  business                                                               
elsewhere.                                                                                                                      
                                                                                                                                
MS. WING-HEIER  conveyed that when  the state is  accredited, the                                                               
state's work is accepted by the  other 49 states and the District                                                               
of   Columbia.     She   pointed  out   that   if  Alaska   loses                                                               
accreditation,  each  state  must show  that  Alaska's  insurance                                                               
companies  are meeting  all the  financial solvency  requirements                                                               
that they have adopted.                                                                                                         
                                                                                                                                
4:01:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked if it is  necessary to adopt the exact same                                                               
language as the NAIC's model, or if there is any leeway.                                                                        
                                                                                                                                
MS. WING-HEIER replied  that accreditation must be  the model law                                                               
or substantially similar.                                                                                                       
                                                                                                                                
4:02:34 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER returned to the  sectional analysis.  She directed                                                               
attention to  AS 21.09.340, which  establishes the  penalties for                                                               
an insurer  that fails to  comply.   She continued to  section 2,                                                               
which amends  AS 21.22.0859(a) to  apply the requirements  of the                                                               
section to  transactions that occurred  the previous  December 31                                                               
rather than  the current year.   The  change is necessary  as the                                                               
director  would  not  have  all   the  information  necessary  to                                                               
calculate the transaction given the  timing of when an insurer is                                                               
required to provide information to the director for review.                                                                     
                                                                                                                                
4:04:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  asked why  the current  year is  less meaningful                                                               
than the past year.                                                                                                             
                                                                                                                                
MS.  WING-HEIER stated  that prior  year shows  the impact  on 12                                                               
months of business as opposed to three or four months.                                                                          
                                                                                                                                
4:05:40 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER directed  attention to section 3,  which amends AS                                                               
21.22.1209(a) to allow  for confidentiality.  Section  4 adds new                                                               
subsections to AS 21.22.120 to  clarify that the director, staff,                                                               
or the NAIC could not release confidential information.                                                                         
                                                                                                                                
CO-CHAIR  LEDOUX  questioned  whether the  information  could  be                                                               
shared if it was subpoenaed.                                                                                                    
                                                                                                                                
MS. WING-HEIER said she understood that to be correct.                                                                          
                                                                                                                                
4:07:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HANNAN inquired  as  to  the current  regulations                                                               
regarding confidential information that was subpoenaed.                                                                         
                                                                                                                                
MS. WING-HEIER replied that the  current statutes already require                                                               
holding the  documents confidentially.   What they  don't clarify                                                               
is  that  the  holding  company  would be  subject  to  the  same                                                               
confidentiality as the companies that are underneath it.                                                                        
                                                                                                                                
4:09:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked  what would happen under current  law, if a                                                               
subpoena was issued for information from a holding company.                                                                     
                                                                                                                                
MS.  WING-HEIER stated  that her  attorneys would  argue that  AS                                                               
21.09.06 would extend to that case.                                                                                             
                                                                                                                                
4:10:35 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER  addressed section 5,  which adds new  sections to                                                               
AS  21.22  regarding  group-wide supervision  of  internationally                                                               
active  insurance   groups.    She   noted  that  there   are  no                                                               
international  companies domiciled  in Alaska;  nonetheless, this                                                               
is part of the  model law Alaska must adopt.   Section 6 adds two                                                               
definitions  for an  "internationally  active insurance  company"                                                               
and a "group-wide supervisor" to  AS 21.22.200.  Section 7 allows                                                               
the  director to  adopt regulations  necessary to  implement this                                                               
bill and section 8 provides for an effective date.                                                                              
                                                                                                                                
4:12:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN sought  clarification on the aforementioned                                                               
status report that is submitted every June.                                                                                     
                                                                                                                                
MS. WING-HEIER acknowledged that every  June the division files a                                                               
status report on any bills  that impact accreditation, as well as                                                               
the status on examinations.                                                                                                     
                                                                                                                                
4:13:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL announced that HB 78 was held over.                                                                               

Document Name Date/Time Subjects
SB36 BON Sunset vsn A.PDF HL&C 4/22/2019 3:15:00 PM
SB 36
SB36 Sponsor Statement 1-28-19.pdf HL&C 4/22/2019 3:15:00 PM
SB 36
SB36 Fiscal Note DCCED-DCBPL 2-8-19.PDF HL&C 4/22/2019 3:15:00 PM
SB 36
SB36 Supporting Document BON Roster 3-29-19.pdf HL&C 4/22/2019 3:15:00 PM
HL&C 4/24/2019 3:15:00 PM
SB 36
SB36 Supporting Document DCCED CBPL Responses to SFIN 3-11-19.pdf HL&C 4/22/2019 3:15:00 PM
SB 36
SB36 Supporting Document BON Audit April 2017.pdf HL&C 4/22/2019 3:15:00 PM
SB 36
SB36 Bundled Letters of Support.pdf HL&C 4/22/2019 3:15:00 PM
HL&C 4/24/2019 3:15:00 PM
SB 36
SB36 Supporting Document BON Audit Summary 08-20113-18.pdf HL&C 4/22/2019 3:15:00 PM
SB 36
HB078 ver A 3.8.19.pdf HL&C 4/22/2019 3:15:00 PM
HB 78
HB078 Sponsor Statement 3.4.2019.pdf HL&C 4/22/2019 3:15:00 PM
HB 78
HB078 Sectional Analysis ver A 3.8.19.pdf HL&C 4/22/2019 3:15:00 PM
HB 78
HB078 Fiscal Note DCCED-DOI 3.4.19.pdf HL&C 4/22/2019 3:15:00 PM
HB 78
LT House Labor & Commerce - HB78 - Corp Gov, Holding Co.PDF HL&C 4/22/2019 3:15:00 PM
HB 78
SB 29 Version A.pdf HL&C 4/22/2019 3:15:00 PM
HL&C 4/24/2019 3:15:00 PM
SB 29
SB 29 Sponsor Statement.pdf HL&C 4/22/2019 3:15:00 PM
HL&C 4/24/2019 3:15:00 PM
SB 29
SB 29 Fiscal Note.pdf HL&C 4/22/2019 3:15:00 PM
HL&C 4/24/2019 3:15:00 PM
SB 29
SB 29 Board of Marine Pilots Audit.pdf HL&C 4/22/2019 3:15:00 PM
HL&C 4/24/2019 3:15:00 PM
SB 29
HB 102.Bill Version U.pdf HL&C 4/8/2019 3:15:00 PM
HL&C 4/15/2019 3:15:00 PM
HL&C 4/22/2019 3:15:00 PM
HB 102
2019.HB102.Sponsor Statement.docx HL&C 4/22/2019 3:15:00 PM
HB 102
2019.HB102.Sectional.docx HL&C 4/15/2019 3:15:00 PM
HL&C 4/22/2019 3:15:00 PM
HB 102
HB 102.Fiscal Note DOR.pdf HL&C 4/3/2019 3:15:00 PM
HL&C 4/8/2019 3:15:00 PM
HL&C 4/15/2019 3:15:00 PM
HL&C 4/22/2019 3:15:00 PM
HB 102
HB 102.Fiscal Note DOL.pdf HL&C 4/3/2019 3:15:00 PM
HL&C 4/8/2019 3:15:00 PM
HL&C 4/15/2019 3:15:00 PM
HL&C 4/22/2019 3:15:00 PM
HB 102
HB 102.Backup Letter of Opposition Drift.docx HL&C 4/15/2019 3:15:00 PM
HL&C 4/22/2019 3:15:00 PM
HB 102
HB 102.Backup Opposition Alliance of Automobile Manufacturers.pdf HL&C 4/3/2019 3:15:00 PM
HL&C 4/8/2019 3:15:00 PM
HL&C 4/15/2019 3:15:00 PM
HL&C 4/22/2019 3:15:00 PM
HB 102