Legislature(2007 - 2008)BELTZ 211
04/05/2008 11:00 AM Senate LABOR & COMMERCE
Audio | Topic |
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Start | |
SB280 | |
HB331 | |
HB297 | |
HJR24 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+= | HB 297 | TELECONFERENCED | |
+= | HJR 24 | TELECONFERENCED | |
+= | HB 331 | TELECONFERENCED | |
+= | SB 280 | TELECONFERENCED | |
HJR 24 am - OPPOSING FEDERAL INSURANCE REGULATION 11:23:53 AM CHAIR ELLIS announced HJR 24 am to be up for consideration. KAREN LIDSTER, staff to Representative Coghill, sponsor of HJR 24, said HJR 24 am opposes a federal regulatory insurance system. It opposes attempts by Congress to divide the insurance regulation between the states and the federal government. The "optional federal charter" has been introduced in both chambers of the U.S. Congress. To avoid such a move by Congress to enact federal regulation of insurance, the legislature passed HB 439 unanimously on May 2006. This bill added Alaska to the Interstate Insurance Product Regulation Compact. This commission comprised of 30 states, serves as a single point of filing for specified insurance products and establishes uniform national standards for those products. HJR 24 am affirms Alaska's opposition to the federal government attempting to supersede state regulation of insurance. MS. LIDSTER said that Representative Gruenberg added a floor amendment stating a further resolve that the Alaska State Legislature opposes any attempt to weaken the current state regulation of insurance. SENATOR STEVENS asked for an explanation of the McCarran- Ferguson Act. He didn't really know why it was in the resolution. MS. LIDSTER responded that she would let the director of the Division of Insurance address that. 11:26:58 AM CHAIR ELLIS asked if they are talking about who has the authority to regulate, a turf issue, or was the sponsor trying to get at national policy toward health insurance on consumer issues. MS. LIDSTER replied that initially the resolution was trying to let the federal government know that opening up an optional federal charter would split insurance regulation between state or federal regulation and the states want to retain that authority. 11:29:13 AM LINDA HALL, Director, Division of Insurance, Department of Commerce, Community & Economic Development, said she supported HJR 24 am. She stated that insurance regulation is a turf war; national life insurance companies have questioned why they would go through 50 different jurisdictions. So, there have been some attempts at having a dual regulation in which companies doing business nationally could elect to be regulated under a federal regulator and companies that are regional or in-state would choose to be regulated by the state. In her mind, that would indicate an increasing encroachment by the federal regulator into the business that has been the state's sole obligation or authority so far. 11:30:58 AM She explained that Congress passed the McCarran-Ferguson Act in 1945; it gave regulatory jurisdiction over the "business of insurance" to the states and preempted the states from coming under any federal laws including federal anti-trust laws without specifically saying these apply to insurance. This has occurred a couple of times post-McCarran-Ferguson. For instance, the Employee Retirement and Income Security Act of 1974 (ERISA) is an exception to the preemption that specifically gave that authority back to the federal government. MS. HALL said in addition to the bills that have been introduced in both bodies of Congress, on Monday the Treasury Department issued a report that is very over-reaching and changes how all financial institutions are regulated. It is called "The Blueprint for Modernized Financial Regulatory Structure." It deals with changing how banks, thrifts and insurance are regulated and proposes a federal regulator. It has drawn a lot of comments. She said she wanted to leave them with two things today. One comes from the National Conference of Insurance Legislators (NCOIL) that strongly opposes this resolution in two ways. She read from a press release that said Representative Kennedy indicated: The report draws state insurance regulation which is constantly developing and responding to its healthy competitive markets into the fray along with less regulated and less accountable financial services sectors, such as banks, thrifts and securities that are presently managed by the federal government.... She said people are concerned about oversight and she heard an insurance company trade association speak to CNN on Monday after this report was released about regulation at a federal level and it would not be the same as the regulation the state has today. The two primary areas of regulations she deals with are financial oversight solvency regulation and consumer protection. MS. HALL said she wanted to make consumer protection real. Her department has a consumer services section and it gets 400-600 official consumer complaints a year plus lots of phone calls where they provide assistance in other ways. She explained when a complaint is closed she does a confidential survey. Someone took the time to write a three-page letter expressing gratitude for her quick and effective response to an issue for which they initially received $20,000 and other regular payments. She didn't think a federal regulator would ever provide that level of assistance. SENATOR STEVENS said he was concerned because it says the legislature opposes anything that would establish a federal insurance regulator, but it also says "or otherwise alter the McCarran-Ferguson Act." He needed to know what was in the McCarran-Ferguson Act. 11:37:25 AM MS. HALL answered she was not an expert. SENATOR STEVENS was concerned about the broadness of that statement. CHAIR ELLIS asked for clarification of what is encompassed in that act saying the committee wanted assurance that HJR 24 is just about insurance regulation. 11:38:49 AM JOHN GRUMMETT, President, Alaska Independent Agents and Brokers, supported HJR 24. He said he is also Vice President of Shattuck and Grummett in Juneau. He supported Ms. Hall's statements about this being an issue of consumer protection and a level of responsiveness to them. He said they are against federal regulation for a variety of reasons. State Farm Insurance opposes it, as well, as indicated in a letter in their packets. MR. GRUMMETT said there are things agents and brokers want to improve, but they don't need a federal regulatory system to do that. They have to do with surplus lines, reinsurance reform and agent and company licensing reform. He said from the property casualty angle introducing federal regulation as an option would result in agents and brokers having to become experts in two different regulatory environments and it would be more confusing for the consumer to try to distinguish between the two. Small insurance companies would be at a competitive disadvantage. 11:41:34 AM Further he said the premium tax in Alaska is third or fourth in the country, and the general fund contribution last year was $46 million; that would go away. The feds say it would be optional and they wouldn't want a premium tax, but the national companies wouldn't want to be regulated by the feds and still keep paying taxes to the state. CHAIR ELLIS thanked everyone for the remarks and said he would hold the bill for further work. There being no further business to come before the committee, he adjourned the meeting at 11:43:38 AM.
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