Legislature(1995 - 1996)

03/02/1995 01:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 SL&C 3/2/95                                                                   
                SB  53 OMNIBUS INSURANCE REFORM                               
 VICE CHAIRMAN TORGERSON called the Senate Labor and Commerce                  
 Committee meeting to order at 1:40 p.m. and announced SB 53 to be             
 up for consideration.                                                         
 JOAN BROWN, Administrative Officer, Division of Insurance, gave the           
 Committee a brief overview of SB 53.  She said SB 53 was the                  
 successor bill to SB 362 and HB 534 which were introduced at the              
 request of the Division last year, but they both failed to pass.              
 She said SB 53 includes language to address new areas of insurance            
 regulation, adopt new accreditation standards added by the National           
 Association of Insurance Commissioners(NAIC), and make needed                 
 corrections to the insurance statutes.  These changes will bring              
 the statutes up-to-date with the insurance market and allow the               
 division to maintain its NAIC accreditation which was granted in              
 December 1992.  A zero fiscal note has been submitted.  She then              
 reviewed the minor changes to the bill from last years version.               
 They are as follows:                                                          
  Numerous language cleanups to reflect the 1992 change in                     
  license classes from agent and broker to producer and general                
  agent to managing general agent;                                             
  Rivision of language pertaining to the standard valuation law                
  (Sec. 22 - 25).                                                              
  Replacing a reference to the Federal Savings and Loan Ins.                   
      Corp. (which no longer exists) with the Federal Deposit Ins.             
  Clarifying that a reciprocal insurer insuring municipalities                 
  or nonprofit utilities or providing marine insurance does not                
  have to participate in the assigned risk plan for motor                      
  vehicle coverages (Sec. 105). and                                            
  Including the division's actuary and assistant actuary as                    
  exempt employees (Sec. 106).                                                 
 The bill includes 22 sections related to continuance of our NAIC              
 accreditation such as:                                                        
  regulation of risk retention groups and purchasing groups as                 
  allowed by federal law (Sec. 3, 15, 102);                                    
  modifying the examination hearing provision t allow for                      
  closing it to the public under certain circumstances (Sec. 6);               
  requiring insurer financial statement filings to the NAIC on                 
  electronic media (Sec. 11 and 12);                                           
  requiring disclosure by an insurer of material transactions of               
  purchase or disposal of assets or reinsurance (Sec. 15);                     
  credit for reinsurance (Sec. 16 and 17)                                      
  risk based capital provisions (Sec. 15 and 18)                               
  reserve calculations (Sec. 19, 20 and 21)                                    
  actuarial opinions (Sec. 23, 24, and 25)                                     
  holding company reporting requirements (Sec. 30, 31, and 33)                 
  allowing the director to file civil actions for damages caused               
  by violations of statute by Managing General Agents,                         
  Reinsurance Intermediary Brokers, and Reinsurance Intermediary               
  Managers (Sec. 46, 48, and 49); and                                          
  cleanup of the definition of member insurer of the life and                  
  disability guaranty association (Sec. 97).                                   
 Some other key provision included:                                            
  authority to respond to catastrophic situations (Sec. 5)                     
  the ability to suspend the certificate of authority of an                    
  insurer for non-renewal (Sec.9);                                             
  provide for voluntary surrender of an Alaska certificate of                  
  authority by an insurer domiciled in another state (Sec. 10);                
  authority to refund or grant credits for overpayment of                      
  premium tax by an insurer due to error or misinterpretation                  
  (Sec. 13);                                                                   
  provide requirements for licensing of U.S. branches of alien                 
  (non-U.S. domiciled) insurers to allow these insurers to use                 
  Alaska as a base of operations for business written throughout               
  the United States (NAIC model law)(Sec. 15);                                 
  provide authority to require continuing education for licensed               
  insurance producers (agents/brokers)(Sec. 36);                               
  require that the insurance premium fiduciary accounts of                     
  resident insurance licensees be located in Alaska (Sec. 41);                 
  provide that a single fiduciary bond can cover multiple                      
  producer office locations (Sec. 44);                                         
  add incorporated insurers to the definition of a group to                    
  reflect recent changes at Lloyd's of London (Sec. 16 and 50);                
  clarify when rate changes may be made to outstanding policies                
  (Sec. 57-60);                                                                
  provide that false statements made in regard to a claim may                  
  result in prosecution under Alaska law (Sec. 67);                            
  allow the director to specify the format and content of rate                 
  and policy form filings made to the division (Sec. 68-71);                   
  clarify health insurance coverage of newborn and adoptive                    
  children (Sec. 72);                                                          
  provide for updated regulation of consumer credit insurance                  
  (NAIC model law) (Sec. 1, 2, 75-89, and 108);                                
  provide for redomestication of insurers domiciled in Alaska                  
  and moving to another state or requesting to move their                      
  domicile from another state to Alaska (Sec. 90);                             
  provide the authority to request quarterly financial                         
  statements from all entities regulated by the division (Sec.                 
  12, 91, 92, 99, and 100);                                                    
  allow insurers to pay claims by electronic funds transfer                    
  (Sec. 101);                                                                  
  provide authority to the director to specify requirements for                
  electronic data transfer (Sec. 102); and                                     
  otherwise make corrections and clarify statute provisions.                   
 The Committee Substitute incorporates amendments suggested by the             
 division as follows:                                                          
  A new bill section was added giving the director discretion to               
  accept an insurer examination report from a non-accredited                   
  state and would give the director clear authority to require                 
  extra examination supervision if a state was performing                      
  substandard examinations.                                                    
  Revisions were made to the sections pertaining to risk                       
  retention groups to avoid conflict with federal law.                         
  The fraudulent insurance acts provisions were modified to                    
  reflect the recommendations of the Department of Law.                        
  Language was added to various health insurance contract                      
  statutes to make them applicable to health maintenance                       
  And the section "Appointment of Independent Counsel:                         
  Conflicts of Interest" was deleted.  This independent counsel                
  provision was not authored by the division.  Legal counsel                   
  recently advised that this provision is neither necessary nor                
  consistent with the Alaska Supreme Court decision (CHI of                    
  Alaska, Inc. v. Employers Reinsurance Corporation, 844P.2d                   
  1113(Alaska 1993)                                                            
  it seeks to implement.                                                       
 Number 138                                                                    
 SENATOR MILLER moved to adopt the CS to SB 53 for discussion                  
 purposes.  There were no objections and it was so ordered.                    
 MS. BROWN said she has a proposed amendment on continuing education           
 provisions.  It contains language worked out between them and the             
 Agents and Brokers Association.  She clarified for Senator Kelly              
 that it does still require continuing education.                              
 SENATOR KELLY asked why lawyers were not required to have                     
 continuing education when almost all other professionals required             
 SENATOR MILLER moved to adopt the proposed amendment.  There were             
 no objections and it was so ordered.                                          
 SENATOR MILLER moved to adopt the Title amendment.  There were no             
 objections and it was so ordered.                                             
 SENATOR KELLY asked if there was any opposition to the bill.                  
 SHERMAN ERNOUF, Legislative Aide to Senator Kelly, said there was             
 no opposition.                                                                
 Number 190                                                                    
 SENATOR DUNCAN asked what was the Alaska Rule of Civil Procedure              
 45.  SENATOR KELLY said that it passed last year.                             
 GLORIA GLOVER said it was based on a request by the Department of             
 Law.  One of provisions in the law affects that Rule and they,                
 therefore, recommended to include it in this bill.                            
 BRUCE HEATH, Seward resident, said he had a problem with Section              
 MS. GLOVER clarified that Section 30 refers to Chapter 22 of the              
 Insurance statutes.  This is the Holding Company Act requiring that           
 a person who is going to acquire an insurance company must file               
 documents with them to review and approve that acquisition.  This             
 Section allows the director to get experts to review that filing in           
 order to advise them on the approval or disapproval.                          
 LINDA HALL said she was the past President of Alaska Agents                   
 Association and supported this bill.  Accreditation is very                   
 important for the Alaskan Insurance market place and is protection            
 for the consumer.                                                             
 Number 288                                                                    
 KEITH SILVER, President-elect of the Alaska Agents Association,               
 supported SB 53.                                                              
 SENATOR MILLER moved to pass CSSB 53 (L&C) from committee with                
 individual recommendations.  There were no objections and it was so           

Document Name Date/Time Subjects