Legislature(1993 - 1994)
03/24/1994 03:00 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE
STANDING COMMITTEE
March 24, 1994
3:00 p.m.
MEMBERS PRESENT
Rep. Bill Hudson, Chairman
Rep. Joe Green, Vice Chair
Rep. Brian Porter
Rep. Bill Williams
Rep. Eldon Mulder
Rep. Joe Sitton
MEMBERS ABSENT
Rep. Jerry Mackie
COMMITTEE CALENDAR
*HB 514: "An Act relating to risk based capital for
insurers; and providing for an effective date."
CSHB 514(L&C) PASSED OUT OF COMMITTEE
HB 506: "An Act relating to student loans; to sanctions
for defaulting on a student loan, including denial
of a state occupational license or disbursement of
state money; and providing for an effective date."
CSHB 506(L&C) PASSED OUT OF COMMITTEE
*HB 360: "An Act relating to civil liability for guest
passengers on an aircraft or watercraft; and
providing for an effective date."
PASSED OUT OF COMMITTEE
(* First public hearing.)
WITNESS REGISTER
DAVE WALSH, Director
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
465-2515
Position Statement: Supported HB 514
REP. CON BUNDE
Alaska State Legislature
State Capitol
Juneau, Alaska 99801-1182
465-4843
Position Statement: Prime Sponsor of HB 506
JOE McCORMICK, Executive Director
Postsecondary Education Commission
Department of Education
3030 Vintage Blvd.
Juneau, Alaska 99811
465-6740
Position Statement: Supported HB 514
PAIGE ADAMS
Student Representative
University of Alaska, Sitka
6-B Lifesaver Dr.
Sitka, Alaska 99835
966-2244
Position Statement: Supported HB 506
PATTI SWENSON, Staff
Rep. Con Bunde
Alaska State Legislature
State Capitol
Juneau, Alaska 99801-1182
465-4843
Position Statement: Presented HB 360
JOHN GEORGE, Lobbyist
9515 Morraine Way
Juneau, Alaska 99801
789-0172
Position Statement: Supported HB 360
MIKE PANNONE
Alaska Airmen Association
1515 E. 13th
Anchorage, Alaska 99501
272-1251
Position Statement: Supported HB 360
MIKE SCHNEIDER
880 N Street, Suite 202
Anchorage, Alaska 99501
277-9306
Position Statement: Opposed HB 360
PREVIOUS ACTION
BILL: HB 514
SHORT TITLE: RISK BASED CAPITAL FOR INSURERS
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
02/28/94 2551 (H) READ THE FIRST TIME/REFERRAL(S)
02/28/94 2551 (H) L&C, STATE AFFAIRS, JUDICIARY
03/24/94 (H) L&C AT 03:00 PM CAPITOL 17
BILL: HB 506
SHORT TITLE: STUDENT LOAN PROGRAM
SPONSOR(S): HEALTH, EDUCATION AND SOCIAL SERVICES BY REQUEST
JRN-DATE JRN-PG ACTION
02/16/94 2416 (H) READ THE FIRST TIME/REFERRAL(S)
02/16/94 2416 (H) HES, L&C, FINANCE
03/03/94 (H) HES AT 03:00 PM CAPITOL 106
03/03/94 (H) MINUTE(HES)
03/07/94 (H) MINUTE(HES)
03/08/94 (H) MINUTE(HES)
03/08/94 (H) MINUTE(HES)
03/08/94 (H) MINUTE(HES)
03/11/94 2720 (H) HES RPT CS(HES) 3DP 4NR 2AM
03/11/94 2721 (H) DP: G.DAVIS, BUNDE, TOOHEY
03/11/94 2721 (H) NR: VEZEY, OLBERG, NICHOLIA,
KOTT
03/11/94 2721 (H) AM: B.DAVIS, BRICE
03/11/94 2721 (H) -FISCAL NOTE (DCED) 3/11/94
03/11/94 2721 (H) -ZERO FISCAL NOTE (DOE)
3/11/94
03/22/94 (H) L&C AT 03:00 PM CAPITOL 17
03/22/94 (H) MINUTE(L&C)
03/24/94 (H) L&C AT 03:00 PM CAPITOL 17
BILL: HB 360
SHORT TITLE: AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW
SPONSOR(S): REPRESENTATIVE(S) BUNDE
JRN-DATE JRN-PG ACTION
01/11/94 2032 (H) READ THE FIRST TIME/REFERRAL(S)
01/11/94 2032 (H) LABOR & COMMERCE, JUDICIARY
03/24/94 (H) L&C AT 03:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 94-29, SIDE A
Number 001
CHAIRMAN HUDSON convened the meeting at 3:15 p.m. and
invited DAVE WALSH to present HB 514.
HB 514 - RISK BASED CAPITAL FOR INSURERS
Number 029
DAVE WALSH, Director, Division of Insurance, Department of
Commerce and Economic Development, presented HB 514. Mr.
Walsh stated that HB 514 establishes a new way to determine
insurance companies' solvency in Alaska. Alaskan insurers
fair well under this proposed risk based capital legislation
and currently have capital and surplus levels higher than
the amount indicated in the risk based capital formula.
MR. WALSH went on to say this proposed risk based capital
legislation is based on the NAIC (National Association of
Insurance Carriers) risk based capital model law that has
been adopted as a minimum standard for state accreditation
under the NAIC Accreditation Program. The NAIC
Accreditation Program establishes minimum standards of
regulation through adoption of statutes and procedures.
State accreditation is granted by the NAIC after an on-site
review verifying that these minimum standards are met. The
Alaska Division of Insurance received its accreditation in
December 1992 and is committed to maintaining the standards
of the NAIC Accreditation Program.
MR. WALSH provided a position paper and sectional analysis
on HB 514, which is available in the committee files.
MR. WALSH stated that consumers, industry, Alaskan domestics
and the department is supportive of HB 514.
MR. WALSH proposed an amendment that included a number of
changes, mostly technical. Mr. Walsh stated these
amendments were adopted in the Senate version of the bill.
Number 261
REP. PORTER asked if there was a percentage that is
considered for investment as opposed to risk.
Number 266
MR. WALSH responded yes. He stated that there were a number
of different triggers for a review of an insurance company's
investment. One of them is that no company can invest more
than 5% of its assets in one type of investment without
approval of the regulator.
Number 297
REP. MULDER asked if HB 514 would increase the likelihood of
insolvency.
Number 302
MR. WALSH stated he believed it would decrease the
likelihood of insolvency because it would trigger the times
when regulators would step in.
Number 325
REP. MULDER asked what it would mean for State Farm and
other national outfits.
Number 340
MR. WALSH answered that it would mean very little to them.
If anything, it could have a very positive affect on the
market.
Number 350
REP. PORTER moved Amendment 1 offered by Mr. Walsh. No
objections were heard; it was so ordered.
Number 360
REP. MULDER moved CSHB 514(L&C) with individual
recommendations and zero fiscal notes. No objections were
heard; it was so ordered.
HB 506 - STUDENT LOAN PROGRAM
Number 398
REP. CON BUNDE, Co-Chair of the House HESS Committee,
sponsor of HB 506, explained to the committee that there was
a letter in their packet that addresses a loophole in the
bill regarding people who are enrolled but not attending
classes. The letter suggests an amendment that would change
the bill to incorporate this technical amendment.
Number 429
REP. PORTER asked what the difference was between being
admitted to school or enrolled in school.
REP. BUNDE responded that you could be admitted to a program
but not necessarily be enrolled that semester.
Number 447
MR. JOE McCORMICK, Executive Director, Postsecondary
Education Commission, Department of Education, explained
that an amendment would address the misinterpretation that
some students have that they can't apply for the loan until
after they are actually attending classes.
Number 465
The committee discussed the language of the amendment in an
effort to clarify the intent of the amendment, which was
that an applicant does not have to be enrolled in a program
to apply for a loan.
Number 520
REP. BUNDE stated that the program has been working without
this amendment and he felt the amendment may cause more
problems than it fixes. He withdrew the amendment from
consideration.
Number 560
REP. PORTER stated that he would still support the concept
of the student loan program comparing its listing of
defaultees against the Department of Administration's list
of vendors on contract with the state.
Number 570
CHAIRMAN HUDSON explained that he spoke with Commissioner
Usera and she had decided to take the amendment referenced
above to the Finance Committee for their consideration.
Number 580
REP. GREEN and REP. MULDER told the committee that the
commissioner wanted to have the language in statute that
would add language to the bid package sent to potential
vendors that they need not apply if they are in default to
the state on any loan.
Number 590
CHAIRMAN HUDSON told the committee he would like to send the
bill on without the amendment and abide by the wishes of the
commissioner, unless someone on the committee had an
amendment they wished to present now.
Number 595
REP. PORTER moved an amendment to the bill to delete
subsection (c), page 5, lines 22, 23 and 24.
Number 600
REP. BUNDE told the committee that the student loan program
would probably not survive if the program had to keep coming
back to the legislature for appropriations from the general
fund.
Number 607
MR. McCORMICK explained that the reason they put subsection
(c) in HB 506 was to assure priority over other loans.
Number 630
REP. SITTON stated that from a practical standpoint this
would be impossible to implement.
Number 640
REP. PORTER believed there were other programs that could
make a good case for top priority for garnishment. He added
that the one program he was thinking of was the victim
compensation board.
TAPE 94-29, SIDE A
Number 001
MR. McCORMICK stated he was very willing to compromise on
this issue and reiterated how important he felt it was for
this legislation to pass this session.
Number 014
CHAIRMAN HUDSON stated that he was sympathetic to the idea
of a person losing their permanent fund dividend it they
were delinquent in their student loan. He added that he
felt that giving priority of the student loan program over
some of the other programs was not good public policy. The
chair stated he supported the amendment.
CHAIRMAN HUDSON asked if there were any objections to Rep.
Porter's previously offered amendment. No objections were
heard; it was so ordered.
Number 049
MS. PAIGE ADAMS, Student Representative, University of
Alaska, Sitka, testified via teleconference in support of HB
506. She stated she didn't have anything else to add.
Number 070
REP. GREEN moved CSHB 506 with individual recommendations
and accompanying fiscal notes. No objections were heard; it
was so ordered.
HB 360 - AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW
Number 085
REP. CON BUNDE, Prime Sponsor of HB 360, stated that HB 360
was offered in response to the current law that permits a
person to get sued if they take friends out fishing or
flying and there is an accident. This bill would allow that
to happen without jeopardizing personal finances. The bill
would provide for the guest passenger to acknowledge that
there are inherent risks when traveling in recreational
vehicles to access the outdoors.
REP. BUNDE stressed that the bill does not excuse anyone
from responsibility for gross negligence.
REP. BUNDE offered an amendment that would include
watercraft in the bill, stating it was an oversight in
drafting.
CHAIRMAN HUDSON asked for an explanation of the exception on
line 14, page 1.
REP. BUNDE answered that the exception covers the situation
where a person is demonstrating the use of a vehicle for the
purpose of selling it to the person.
Number 156
REP. GREEN asked if this would provide for the release of
liability that is not afforded to an operator of an
automobile.
Number 167
REP. BUNDE responded that it did. He noted that the risk is
somewhat different than boating or flying.
Number 175
REP. MULDER asked if any other states have guest passenger
laws on automobiles.
Number 180
MS. PATTI SWENSON, Staff, Rep. Bunde, responded that there
were no guest passenger laws for automobiles.
Number 194
REP. MULDER offered a technical amendment to page 2, line 1,
to add "watercraft." No objections were heard; it was so
ordered.
Number 205
REP. PORTER moved Amendment 1 with friendly amendment. No
objections were heard; it was so ordered.
Number 214
MR. JOHN GEORGE, Lobbyist, representing the National
Association of Independent Insurers and the Alaska Outdoor
Council, testified in support of HB 360. He stated that it
was important to understand that when buying aircraft
insurance you buy two different things, one for the number
of seats you have and two for what the airplane does when it
crashes into something.
Number 257
MR. MIKE PANNONE, immediate past president of the Alaska
Airmen's Association, testified via teleconference in
support of HB 360.
Number 267
MR. MIKE SCHNEIDER testified via offnet in opposition to HB
360. Mr. Schneider noted that HB 360 is special interest
legislation that would treat watercraft and aircraft owners
differently than owners of other types of vehicles and may
pose a constitutional problem.
MR. SCHNEIDER suggested that owners of aircraft and
watercraft may conclude that they don't need insurance if
this bill passes, since they would be immune to any
liability. If an owner fails to purchase insurance and the
law is found infirm, the owner would find himself in a bad
legal situation.
MR. SCHNEIDER stated that litigation against uninsured
persons in this kind of situation is rare and rarely results
in significant judgments.
MR. SCHNEIDER said that HB 360 would make it impossible for
persons who wish to insure their liability to protect their
family if something did happen.
Number 337
CHAIRMAN HUDSON asked if other states have this kind of
immunity.
Number 342
MR. SCHNEIDER replied that he did not know.
Number 349
REP. BUNDE listed 14 states that have guest passenger
legislation.
Number 360
REP. GREEN asked, even if an operator was not liable under
HB 360, would not the operator be able to contractually deal
with an insurance company?
Number 362
REP. BUNDE replied yes.
Number 376
CHAIRMAN HUDSON asked Mr. Schneider why he thought this bill
would be declared unconstitutional.
Number 378
MR. SCHNEIDER replied that since the bill would establish
different classes of people: those that operate aircraft
and have guest passengers as opposed to those who operate
anything else. Mr. Schneider believed this would trigger an
equal protection analysis. Under Alaskan constitutional law
there is a sliding scale analysis where you have to show a
reasonable relationship between the legislative enactment
and the purpose that it seeks.
Number 410
REP. BUNDE noted that the Department of Law helped craft HB
360 and did not raise any constitutional problems.
Number 415
REP. PORTER moved HB 360 as amended with individual
recommendations and zero fiscal notes. No objections were
heard; it was so ordered.
CHAIRMAN HUDSON adjourned the meeting at 4:25 p.m.
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