Legislature(2013 - 2014)BELTZ 105 (TSBldg)

04/06/2013 09:00 AM Senate LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 71 AK REGIONAL ECONOMIC ASSISTANCE PROGRAM TELECONFERENCED
Moved CSHB 71(FIN) Out of Committee
-- Public Testimony --
+ HB 175 ELECTRONIC POSTING OF INSURANCE POLICIES TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 168 TRAVEL INSURANCE TELECONFERENCED
Heard & Held
-- Public Testimony --
Bills Previously Heard/Scheduled
                    HB 168-TRAVEL INSURANCE                                                                                 
                                                                                                                                
9:18:25 AM                                                                                                                    
CHAIR DUNLEAVY  announced the  consideration of  HB 168.  "An Act                                                               
amending the  definition of travel  insurance for the  purpose of                                                               
describing  a  person eligible  for  a  travel insurance  limited                                                               
producer  license;  and  authorizing   a  person  selling  travel                                                               
services to transact  the business of travel  insurance on behalf                                                               
of  and under  the direction  of a  person licensed  as a  travel                                                               
insurance limited  producer." He  noted that  this was  the first                                                               
hearing and that CSHB 168(L&C) was before the committee.                                                                        
                                                                                                                                
9:19:05 AM                                                                                                                    
ANNA  LATHAM, Staff,  Representative  Kurt Olson,  sponsor of  HB
168,  stated  that  HB  168  is  based  on  National  Council  of                                                               
Insurance  Legislators (NCOIL)  model legislation  that is  being                                                               
implemented  nationwide.  It has  a  goal  of improving  consumer                                                               
protection and  creating consistency  in travel  insurance sales.                                                               
Section 1  redefines travel insurance  so that the  definition is                                                               
standardized  in   all  50  states.   She  noted   that  Alaska's                                                               
definition was  slightly modified. Section  2 adds a  new section                                                               
defining   travel  insurance,   and  who   may  transact   travel                                                               
insurance. It allows a person  that transacts travel services the                                                               
ability to  sell those products  under the direction of  a person                                                               
holding a travel insurance limited  producer license. It requires                                                               
a travel insurance limited lines  producer to maintain a register                                                               
of all persons selling insurance  on their behalf, and to provide                                                               
a  training  program. The  bill  limits  the information  that  a                                                               
person transacting travel insurance may  and may not provide to a                                                               
customer. It  makes the travel insurance  limited producer liable                                                               
for  the acts  of  a  person selling  travel  insurance on  their                                                               
behalf.                                                                                                                         
                                                                                                                                
MS. LATHAM explained that NCOIL  developed this model legislation                                                               
to streamline  the process  for selling  travel insurance  on the                                                               
Internet or across state lines. The  problem is that there are 41                                                               
different  licensing qualification  codes to  become licensed  to                                                               
sell travel  insurance in all  50 states  and many states  do not                                                               
accept the  same electronic  application. As  a result,  it takes                                                               
about six months to become  licensed. This is burdensome for this                                                               
high turnover industry when insurance  sales account for just two                                                               
percent of travel agents overall revenue.                                                                                       
                                                                                                                                
The NCOIL  model establishes a licensing  framework that reflects                                                               
the  unique  distribution  system  of  travel  insurance  in  the                                                               
industry  and places  the regulatory  burden on  the insurer  who                                                               
develops  and distributes  the  product.  This improves  consumer                                                               
protection by  requiring clear accountability  and notice  to the                                                               
consumer  and  regulator regarding  who  is  responsible for  the                                                               
sale.  To date,  a version  of  this model  legislation has  been                                                               
enacted in  eight states and  is awaiting governor  signatures in                                                               
two  other states.  Legislation is  pending in  16 other  states,                                                               
including Alaska.                                                                                                               
                                                                                                                                
MS. LATHAM  said the  only difference  between the  original bill                                                               
and the committee substitute (CS) appears  on page 5, line 7. The                                                               
phrase "an  employee of the person  transacting travel insurance"                                                               
was changed  to "a person  transacting travel  insurance" because                                                               
the former lacked clarity.                                                                                                      
                                                                                                                                
9:23:08 AM                                                                                                                    
SENATOR OLSON asked how many people purchase travel insurance.                                                                  
                                                                                                                                
MS. LATHAM said there are  259 resident and non-resident licensed                                                               
producers within  the state, and  she could get  that information                                                               
from them.                                                                                                                      
                                                                                                                                
SENATOR OLSON asked if the trend was up, down, or stable.                                                                       
                                                                                                                                
MS. LATHAM said the trend  is toward on-line sales. She estimated                                                               
that up to 90 percent of policies are purchased that way.                                                                       
                                                                                                                                
SENATOR MICCICHE  commented that  most people don't  realize that                                                               
the option to  purchase insurance is available  whenever a person                                                               
purchases a ticket.                                                                                                             
                                                                                                                                
9:26:18 AM                                                                                                                    
MARTIN   HESTER,   Deputy   Director,  Division   of   Insurance,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED), Juneau, AK, introduced himself.                                                                                        
                                                                                                                                
SENATOR  STEDMAN  asked  if  the   department  had  received  any                                                               
complaints about travel insurance.                                                                                              
                                                                                                                                
MR.  HESTER  replied  he  wasn't  aware  of  any.  He  said  this                                                               
legislation  allows an  employee  to sell  insurance under  their                                                               
employer's  limited   producer  license,  and  the   Division  of                                                               
Insurance  has  no  problems  with  the  language.  It  is  model                                                               
legislation.                                                                                                                    
                                                                                                                                
SENATOR STEDMAN  asked if the model  included recommendations for                                                               
the training  program and how  that comports with  the division's                                                               
regulatory responsibilities.                                                                                                    
                                                                                                                                
9:28:24 AM                                                                                                                    
MR.  HESTER  offered  to  follow up  with  information,  but  his                                                               
understanding  was that  the  legislation does  not  lay out  the                                                               
training  regimen.  It  simply  states  that  the  employer  must                                                               
implement a training program for employees.                                                                                     
                                                                                                                                
SENATOR STEDMAN requested the information.                                                                                      
                                                                                                                                
9:29:50 AM                                                                                                                    
VICE-CHAIR  MICCICHE, acting  as  chair, asked  if  this was  any                                                               
different than purchasing travel insurance  from an employee at a                                                               
rental car counter.                                                                                                             
                                                                                                                                
MR.  HESTER   said  that  scenario   is  similar  to   what  this                                                               
legislation would do. His understanding  was that the employee at                                                               
the  rental car  counter is  acting  under the  authority of  the                                                               
limited producer license that belongs to the rental car company.                                                                
                                                                                                                                
SENATOR OLSON asked the administration's position on the bill.                                                                  
                                                                                                                                
MR.  HESTER  reiterated  that  DCCED  has  no  objection  to  the                                                               
language in HB 168.                                                                                                             
                                                                                                                                
9:31:22 AM                                                                                                                    
VICE-CHAIR MICCICHE  opened public testimony, and  noted it would                                                               
remain open through the next meeting.                                                                                           
                                                                                                                                
9:31:37 AM                                                                                                                    
JOHN FIELDING, Attorney, Steptoe &  Johnson, LLP, stated that his                                                               
firm represents  U. S. Travel  Insurance Association  (USTIA). He                                                               
urged the  committee to support HB  168, describing it as  a step                                                               
forward  for  consumers,  regulators and  industry  players.  The                                                               
legislation is  good for consumers  because it  requires employee                                                               
training and  disclosures to the  consumers, neither of  which is                                                               
currently required.  With regard to the  question about training,                                                               
he  said that  some states  have  asked the  insurers to  provide                                                               
copies of the training materials  to the regulatory department to                                                               
ensure  that the  training is  sufficiently robust.  He suggested                                                               
that Alaska might do that in  the future. The legislation is good                                                               
for  the  regulators  because  it  provides  a  more  streamlined                                                               
process. It is also good for  the industry because it places much                                                               
of the regulatory  burden on the insurers  or intermediaries that                                                               
develop and  distribute the products.  He urged the  committee to                                                               
support HB 168.                                                                                                                 
                                                                                                                                
9:35:34 AM                                                                                                                    
SENATOR OLSON asked about the penalties for noncompliance.                                                                      
                                                                                                                                
MR.  FIELDING  said  the  current   authority  of  the  insurance                                                               
department remains intact.                                                                                                      
                                                                                                                                
SENATOR OLSON questioned  the need for the  legislation since Mr.                                                               
Hester said there  have been no complaints. He  commented that it                                                               
appeared to add to bureaucracy.                                                                                                 
                                                                                                                                
MR. FIELDING  said this lessens  the bureaucracy.  It streamlines                                                               
the process by  focusing on the insurers  and intermediaries that                                                               
put the product together and provide  it. It's a process his firm                                                               
has worked through  with other stakeholders as it  was debated by                                                               
NCOIL and  other states.  They all thought  it would  be helpful,                                                               
less burdensome, and more effective.                                                                                            
                                                                                                                                
SENATOR OLSON asked where training would be held.                                                                               
                                                                                                                                
MR. FIELDING said  there is a requirement for  a training program                                                               
to be  in place, but it  doesn't dictate the type  of training or                                                               
location. The training could take place on-line.                                                                                
                                                                                                                                
SENATOR   OLSON  maintained   that  it   was  another   level  of                                                               
bureaucracy and quite possibly unnecessary  since there have been                                                               
no complaints.                                                                                                                  
                                                                                                                                
9:39:23 AM                                                                                                                    
VICE-CHAIR MICCICHE noted that Paul  Brown with AIG was available                                                               
for questions. Finding no further  questions or public testimony,                                                               
he stated that he would hold HB 168 in committee.                                                                               

Document Name Date/Time Subjects
HB175 ver P .pdf SL&C 4/6/2013 9:00:00 AM
HB 175
HB175 Sponsor Statement.pdf SL&C 4/6/2013 9:00:00 AM
HB 175
HB175 Fiscal Note-DCCED-DOI-03-22-13.pdf SL&C 4/6/2013 9:00:00 AM
HB 175
HB175 Supporting Documents-Sample Declaration Page.pdf SL&C 4/6/2013 9:00:00 AM
HB 175
HB175 Supporting Documents-AK PGR Policy Contract.pdf SL&C 4/6/2013 9:00:00 AM
HB 175
HB175 Supporting Documents-Letter NAMIC 3-26-2013.pdf SL&C 4/6/2013 9:00:00 AM
HB 175
HB175 Supporting Documents-Written Testimony of Joshua M Zielaskiewicz.pdf SL&C 4/6/2013 9:00:00 AM
HB 175
CSHB 168v.O.pdf SL&C 4/6/2013 9:00:00 AM
HB 168
HB 168 v.C.pdf SL&C 4/6/2013 9:00:00 AM
HB 168
CSHB 168 Sponsor Statement.pdf SL&C 4/6/2013 9:00:00 AM
HB 168
HB 168-Supporting Document- ASTA Letter.pdf SL&C 4/6/2013 9:00:00 AM
HB 168
HB 168 Sectional Analysis.pdf SL&C 4/6/2013 9:00:00 AM
HB 168
HB 168 Explaination of Changes.pdf SL&C 4/6/2013 9:00:00 AM
HB 168
HB168 Fiscal Note-DCCED.pdf SL&C 4/6/2013 9:00:00 AM
HB 168
USTIA-One-pager presentation.pdf SL&C 4/6/2013 9:00:00 AM
HB 168