Legislature(2011 - 2012)BELTZ 105 (TSBldg)
04/14/2011 02:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB164 | |
| SB74 | |
| SB119 | |
| HB188 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 74 | TELECONFERENCED | |
| + | SB 119 | TELECONFERENCED | |
| += | HB 164 | TELECONFERENCED | |
| += | HB 188 | TELECONFERENCED | |
HB 164-INSURANCE: HEALTH CARE & OTHER
2:04:17 PM
CHAIR EGAN announced HB 164 to be up for consideration [CSHB
164(FIN) was before the committee].
REPRESENTATIVE OLSON, sponsor of HB 164, came forward to answer
questions.
SENATOR GIESSEL asked if section 79 was removed.
2:05:24 PM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), said the
CS did not delete section 79, but it does make a change in it.
SENATOR PASKVAN moved to adopt SCS CSHB 164 (L&C), labeled 27-
LS0444\X.
CHAIR EGAN objected for discussion.
2:07:15 PM
SENATOR DAVIS joined the committee.
MS. HALL explained that there was concern about the clarity of
the ability of an individual to purchase an individual health
insurance policy in the individual market. Section (c) was in
the original bill, but (d) is new language that clearly states
their intent that section 79 does not prohibit an individual
from purchasing a health insurance policy in the individual
market. Then (e) references the definition of "individual
market" in AS 21.51.500. It says any time an employer
contributes money, whether directly or indirectly, it becomes a
moot policy in the individual market.
SENATOR PASKVAN asked the reason for the tax increase set forth
in section 48.
MS. HALL replied that it is not a tax increase, but rather a
combination of taxes and fees that are charged separately at 2.7
percent plus a 1 percent filing fee. They have been combined for
simplification purposes.
SENATOR PASKVAN remarked that current statute says 3 percent on
gross premiums and now we're at 3.7 percent.
MS. HALL responded she would have to look at the statute. It is
not their intent to increase the taxes.
2:09:32 PM
MS. HALL pointed out that the 2.7 percent is mentioned in
several places; one is under "unauthorized independently
procured." She said the intent was to bring this in line with
the premium tax the department charges for admitted insurance so
it's the same, which would be the 2.7 percent plus surplus lines
that gets an additional 1 percent filing fee. It is actually a
reduction from 3 percent plus 1 percent.
SENATOR PASKVAN asked what would be the justification of the
reduction of taxes. He was trying to figure out how they get to
where they are now.
MS. HALL replied their intent was to bring premium taxes in line
with what the admitted insurance market is taxed, not to tax
them at a higher rate.
SENATOR PASKVAN asked where the 1 percent is in AS 21.33.061 (c)
and secondly, in trying to combine them, are they repealing the
1 percent that is elsewhere in the statute?
MS. HALL answered no; it is not their intent to repeal that; it
is their intent to combine them. The filing fee is in section AS
21.34.190 that states "The fee for filing this statement is an
amount equal to 1 percent on gross premium charged less...."
SENATOR PASKVAN asked what is being done to section 190, if
anything.
MS. HALL replied that section 57 amends section 190 and that 1
percent fee is on taxes in Chapter 34, which is surplus lines
and she didn't think the fee was previously charged in Chapter
33, which is unauthorized insurance and independently procured
insurance. The same filing fee was added to those two lines and
they were combined, so there probably is seven-tenths of a
percent increase on unauthorized and independently procured
insurance.
2:14:03 PM
SENATOR MENARD asked Representative Olson to explain one thing
that is of utmost importance in dealing with surplus lines,
since the bill is so long and no one on the committee had been
in the insurance industry before.
REPRESENTATIVE OLSON replied that clean up language mostly in
the first 22 pages of the bill is the most important. He always
thought the tax was 2.7 percent plus the 1 percent filing fee.
MS. HALL added that there are two pieces to the surplus lines
section; one is they need to bring state statutes in compliance
with changes in federal law, because it specifically preempts
state law. She thought the federal government would enforce
those changes if the state doesn't make them and that businesses
need to operate knowing that. When she talked about the home
state becoming the primary regulator of the transactions, her
one thing is to bring statutes into conformance with those
federal laws.
SENATOR MENARD asked if that was her number one thing in the
whole bill or was it the surplus lines.
MS. HALL replied that it is probably her number one thing in the
bill. She didn't want Alaska to be preempted and have the
potential for someone else to try to regulate how business is
done in the state.
CHAIR EGAN said they received a lot of confused testimony on
section 79 and asked if she feels all the concerns were
satisfied with the amendments.
2:18:16 PM
MS. HALL answered that the concerns are not totally satisfied,
although at first she thought they were. She explained that
section 79 does two things that are good and those would be lost
if it was deleted. She, however, said she would prefer to delete
it. One of the concerns is that it provides coverage for a new
group of people that don't currently get coverage. One group is
the part-time seasonal people who are not eligible for the group
coverage and this provision would allow them to purchase
individual policies with employer funds; she would hate to lose
that.
She would also like to save the protections in the small group
law and she said stripping out section 79 won't make the
situation any different than it is today.
SENATOR MENARD asked if she would entertain an interest in
sunseting just section 79 to maybe 2014 and let it play out for
a couple of years.
MS. HALL replied that she would be fine with that.
SENATOR PASKVAN said he understood that section 79 is intended
to be consumer friendly.
MS. HALL responded that it is her intent that it is to be
consumer friendly. It provides coverage for a group that today
cannot purchase coverage through an employer plan and it
protects people in group plans who have health conditions and
who would be unable to purchase individual policies in the
individual market place.
SENATOR PASKVAN said specifically as to that later category if
it provides them with a method of retaining insurance that they
would otherwise lose.
MS. HALL responded that they would be underwritten for their
health conditions and likely to be refused coverage any place
other than the high risk pool.
CHAIR EGAN said one thing concerns him and that is if section 79
is repealed that there would still be issues in current law and
he is not comfortable moving it forward now. He would like to
work on it until the start of session next year.
MS. HALL replied that was okay with her.
2:22:36 PM
At ease from 2:22 PM to 2:23 PM.
2:23:27 PM
SENATOR PASKVAN moved conceptual Amendment 1 to put a one-year
sunset on section 79.
MS. HALL responded that was fine with her.
There were no objections and conceptual Amendment 1 was adopted.
2:24:35 PM
SENATOR PASKVAN moved to report SCS CSHB 164(L&C), version 27-
LS0444\X, as amended from committee with individual
recommendations and attached fiscal note. There were no
objections and it was so ordered.
2:24:52 PM
At ease from 2:24 PM to 2:26 PM.
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