Legislature(2013 - 2014)BARNES 124
03/25/2013 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB168 | |
| HB102 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 168 | TELECONFERENCED | |
| += | HB 102 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 25, 2013
3:19 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Bob Herron
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 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."
- MOVED CSHB 168(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 102
"An Act relating to property exemptions for retirement plans,
individual retirement accounts, and Roth IRAs; relating to
transfers of individual retirement plans; relating to the rights
of judgment creditors of members of limited liability companies
and partners of limited liability partnerships; relating to the
Uniform Probate Code, including pleadings, orders, liability,
and notices under the Uniform Probate Code and the Alaska
Principal and Income Act, the appointment of trust property, the
Alaska Uniform Prudent Investor Act, co-trustees, trust
protectors, and trust advisors; relating to the Alaska Principal
and Income Act; relating to the Alaska Uniform Transfers to
Minors Act; relating to the disposition of human remains;
relating to the tax on insurers for life insurance policies;
relating to insurable interests for certain insurance policies;
relating to restrictions on transfers of trust interests;
relating to discretionary interests in irrevocable trusts;
relating to the community property of married persons; and
amending Rule 64, Alaska Rules of Civil Procedure, and Rule
301(a), Alaska Rules of Evidence."
- MOVED CSHB 102(L&C) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 168
SHORT TITLE: TRAVEL INSURANCE
SPONSOR(s): LABOR & COMMERCE
03/15/13 (H) READ THE FIRST TIME - REFERRALS
03/15/13 (H) L&C
03/25/13 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 102
SHORT TITLE: RETIREMENT PLANS; ROTH IRAS; PROBATE
SPONSOR(s): KELLER
02/01/13 (H) READ THE FIRST TIME - REFERRALS
02/01/13 (H) L&C, JUD
02/25/13 (H) L&C AT 3:15 PM BARNES 124
02/25/13 (H) Heard & Held
02/25/13 (H) MINUTE(L&C)
03/20/13 (H) L&C AT 3:45 PM BARNES 124
03/20/13 (H) Heard & Held
03/20/13 (H) MINUTE(L&C)
03/22/13 (H) JUD AT 1:00 PM CAPITOL 120
03/22/13 (H) <Bill Hearing Canceled>
03/25/13 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
ANNA LATHAM, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the sponsor, Representative
Kurt Olson, presented HB 168 and explained the changes in the
proposed committee substitute, Version O.
JOHN FIELDING, Attorney
Steptoe & Johnson, LL&C
Washington, D.C.
POSITION STATEMENT: Testified in support of HB 168.
ERNEST PRAX, Staff
Representative Wes Keller
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Wes Keller,
sponsor, presented changes in the proposed committee substitute
for HB 102.
BRET KOLB, Director
Division of Insurance (DOI)
Anchorage Office
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 102.
ACTION NARRATIVE
3:19:46 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:19 p.m. Representatives
Chenault, Millett, Reinbold, Josephson, and Olson were present
at the call to order. Representatives Saddler and Herron
arrived as the meeting was in progress.
HB 168-TRAVEL INSURANCE
3:20:08 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 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."
3:20:22 PM
ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State
Legislature, on behalf of Representative Kurt Olson, sponsor,
stated that HB 168 is based on National Council of Insurance
Legislators (NCOIL) recommendations, who have worked with states
for the goal of improving consumer protection and creating
consistency in travel insurance sales. She provided a section-
by-section analysis. Section 1 would redefine travel insurance,
which provides insurance coverage for personal risks connected
to travel including trip interruptions, cancellations, lost
baggage or personal effects, damage to accommodations or rental
vehicles, for sickness, accident, disability, or death occurring
during travel. This insurance does not include comprehensive
medical insurance that provides coverage for trips lasting six
months or longer. She reiterated that this is NCOIL's attempt
to standardize the definition of travel insurance in all 50
states. Alaska's version is slightly modified, she said.
MS. LATHAM said Section 2 would add a new section defining
travel insurance and identifying who may transact travel
insurance. It would allow a person who transacts travel
services the ability to sell those products under the direction
of a person holding a travel insurance limited producer's
license. It would also require a travel insurance limited
producer to maintain a register of all persons selling insurance
on their behalf, and to provide a training program. It would
limit the information that a person transacting travel insurance
may and may not provide to a customer. It also would make a
travel insurance limited producer liable for the acts of a
person selling travel insurance on the producer's behalf.
3:22:06 PM
MS. LATHAM said NCOIL prepared this model sine 41 different
qualifications were required for travel agents to become
licensed to sell insurance across the U.S. Additionally, many
states do not accept the same electronic applications, which
impact the length of time it takes to become licensed in an
industry with high job turnover. Further, travel agents really
are not in the insurance business since insurance sales account
for approximately 2 percent of the overall revenue. The travel
industry has changed significantly in the past 20 years from
brick and mortar to Internet transactions that cross state
lines. This NCOIL model would establish a licensing framework
that reflects the unique distribution system of travel insurance
in the industry and will place the regulatory burden on the
insurer, who develops and distributes the product. This would
improve consumer protection by requiring clear accountability
and notice to the consumer and regulator with respect to who is
responsible for the sale. This model clearly distinguishes
between licensed and non-licensed activities for limited lines
of product, such as travel insurance, and would promote
uniformity to help states more effectively govern these
products. Thus far, a version of this model travel insurance
has been enacted in eight states and awaits governor signatures
in two other states, with bills pending in 16 states, including
Alaska. She concluded that this bill is deregulatory in nature
and would bring Alaska in line with the national model.
CHAIR OLSON related this is similar with what occurs for
customers of car rentals when the person at the counter offers
them a limited insurance product.
3:25:30 PM
REPRESENTATIVE REINBOLD moved to adopt the committee substitute
(CS) for HB 168, Version O, [labeled 28-LS0562\O, Bailey,
3/22/13] as the working document [Version O was before the
committee.]
CHAIR OLSON objected for purpose of discussion.
3:25:59 PM
MS. LATHAM explained the changes made in the proposed committee
substitute (CS) for HB 168, Version O. She highlighted that the
changes were technical in nature, for purposes of clarity, and
none were substantive changes. She referred to page 4, line 26,
which reorganizes the language that requires the travel
insurance limited producer to maintain a register. Everything
in the register is contained in subsection (a), (b), & (c). On
page 5 line 7, the language requires a person transacting travel
insurance to complete a training program.
CHAIR OLSON removed his objection.
3:27:41 PM
REPRESENTATIVE JOSEPHSON asked whether this bill will create
difficulties when people feel they need recourse and have not
received benefits of the travel insurance. He assumed the
people would still go to the original broker for assistance.
MS. LATHAM answered that HB 168 contains consumer protection,
such that complaints or comments would be directed to the
producer. She previously asked the department about complaints
with the 259 resident and nonresident limited lines of insurance
registered in the state. She advised that the Division of
Insurance reported very few complaints; however, she agreed any
complaints would be addressed by the producer.
3:29:13 PM
JOHN FIELDING, Attorney, Steptoe & Johnson, LL&C, stated his
firm represents the U.S. Travel Insurance Association. He urged
members to adopt HB 168. He said the U.S. Travel Insurance
Association believes this bill is good for consumers,
regulators, and the industry. First, this bill is good for
consumers since it will provide training to retail travel agents
who offer and disseminate the products. It also requires
disclosures to consumers, not currently required, in terms of
the product and the retail travel agents permitted to offer it.
Second, it is good for regulators since it provides a
streamlined process to provide regulators information in case
anything goes wrong. Finally, it is good for the industry,
such as the U.S. Travel Insurance Association (USTIA) members,
since the process is difficult for retail travel agents to
comply with obligations throughout the U.S. The industry has
changed significantly and some agents must be licensed in
numerous states across the country, but these agents are travel
agents and not insurance agents. This bill would appropriately
place the onus on the insurance members and the intermediaries
who are the insurance "players" in this program. They must
comply and ensure that everyone in the system is in compliance.
He urged members to support HB 168.
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 168.
3:32:26 PM
REPRESENTATIVE JOSEPHSON stated he would support the bill since
it is a good bill. People need to be careful about their
policies, he said. He recalled his own experience in which he
represented four deceased Germans who died west of Whitehorse.
The case became a vicious dispute about jurisdiction and
questions arose as to whether the case should be filed in Alaska
or in Canada. This bill just brought back his experiences and
he reiterated his support for HB 168.
3:34:09 PM
CHAIR OLSON remarked he has been involved with the bill from the
NCOIL perspective and declared a conflict. The intent of this
bill is to provide standardization, level the playing field, and
remove unnecessary hurdles.
3:34:38 PM
REPRESENTATIVE REINBOLD moved to report the proposed committee
substitute (CS) for HB 168, Version O, [labeled 28-LS0562\O,
Bailey, 3/22/13] out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, the CSHB 168(L&C) was reported from the House
Labor and Commerce Standing Committee.
3:34:57 PM
The committee took an at-ease from 3:34 p.m. to 3:38 p.m.
HB 102-RETIREMENT PLANS; ROTH IRAS; PROBATE
3:38:34 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 102, "An Act relating to property exemptions for
retirement plans, individual retirement accounts, and Roth IRAs;
relating to transfers of individual retirement plans; relating
to the rights of judgment creditors of members of limited
liability companies and partners of limited liability
partnerships; relating to the Uniform Probate Code, including
pleadings, orders, liability, and notices under the Uniform
Probate Code and the Alaska Principal and Income Act, the
appointment of trust property, the Alaska Uniform Prudent
Investor Act, co-trustees, trust protectors, and trust advisors;
relating to the Alaska Principal and Income Act; relating to the
Alaska Uniform Transfers to Minors Act; relating to the
disposition of human remains; relating to the tax on insurers
for life insurance policies; relating to insurable interests for
certain insurance policies; relating to restrictions on
transfers of trust interests; relating to discretionary
interests in irrevocable trusts; relating to the community
property of married persons; and amending Rule 64, Alaska Rules
of Civil Procedure, and Rule 301(a), Alaska Rules of Evidence."
CHAIR OLSON recapped that the committee previously has a
presentation, adopted the proposed committee substitute (CS),
Version U, and took public testimony.
3:39:00 PM
ERNEST PRAX, Staff, Representative Wes Keller, Alaska State
Legislature, on behalf of Representative Wes Keller, sponsor,
referred to the committee substitute (CS) Version U, [labeled
28-LS0335\U, Bannister, 2/26/13]. He briefly explained the
differences from the original version to Version U, which
corrects a drafting error on page 3, line 3. The committee
substitute also deleted Section 38 of the original bill, since
some question arose as to the necessity of the language. Thus
the sponsor deleted the language. [Section 38 would expand the
allowable time an insurance contract may be procured on the life
of body of a person with whom there is a significant financial
interest in the continued life of that person being insured].
3:39:59 PM
REPRESENTATIVE SADDLER asked for clarification on whether these
remarks reflected the changes in Version U.
REPRESENTATIVE CHENAULT asked for clarification on Section 38.
CHAIR OLSON noted that a draft amendment in members' packets
labeled U.1 conceptual will not be offered.
3:41:37 PM
REPRESENTATIVE REINBOLD made a motion to adopt Amendment 1,
labeled [28-LS0335\U.3, Bannister, 3/20/13], which read, as
follows:
Page 35, line 22:
Delete "a single" [AN INDIVIDUAL]"
Insert "an individual"
Page 35, lines 23 - 24:
Delete "or for a group or other type of policy
that insures the life of one or more individuals"
Insert ", or for a life insurance policy issued
for delivery to a trust that was formed under the laws
of this state or contains a provision that laws of
this state govern the validity, construction, and
administration of the trust,"
Page 44, following line 1:
Insert a new subsection to read:
"(d) AS 21.09.210(m), as amended by sec. 37 of
this Act, applies to a life insurance policy issued
for delivery to a trust if the life insurance policy
is issued for delivery to a trust on or after the
effective date of AS 21.09.210(m), as amended by sec.
37 of this Act."
Reletter the following subsection accordingly.
CHAIR OLSON objected for the purpose of discussion.
3:41:58 PM
BRET KOLB, Director, Division of Insurance (DOI); Anchorage
Office, Department of Commerce, Community & Economic Development
(DCCED), stated that Amendment 1 would delete the language "or
for a group or other type of policy that insures the life of one
or more individuals" which the division thought was broad and
[adds language that] ties it to trusts. The intent of HB 102 is
to address trusts and the way the bill was originally drafted it
broadened out the premium tax handling for every type of
insurance instead of limiting it to insurance related to trusts.
He clarified that the language in Amendment 1, lines 8-10
defines it to limit the bill to a life insurance policy
delivered for a trust that would receive the favorable
treatment, which is 2.7 percent premium tax for the first
$100,000 in premium and one-tenth of one percent for the premium
above the first $100,000.
3:43:44 PM
REPRESENTATIVE JOSEPHSON asked where the state would stand vis-
à-vis other states in terms of rate charges over $100,000 and
whether Alaska would be the most generous rate.
MR. KOLB answered no; that other states, perhaps South Dakota,
offer eight-tenths of one percent for insurance above the first
$100,000 of premium as opposed to one-tenth of one percent,
although he admitted he was unsure of the rate for the first
$100,000.
3:44:36 PM
REPRESENTATIVE JOSEPHSON asked whether the insured person for
the trust needs to have some connection to Alaska, such as
property or other nexus.
MR. KOLB answered that that the question pertains to trust law
and not insurance so unfortunately he doesn't know the answer.
REPRESENTATIVE JOSEPHSON asked whether an amendment in members'
packets labeled U.2 would be offered.
CHAIR OLSON answered yes.
CHAIR OLSON removed his objection. There being no further
objection, Amendment 1 was adopted.
3:45:52 PM
REPRESENTATIVE REINBOLD made a motion to adopt Amendment 2,
labeled U.2 [labeled 28-LS0335\U.2, Bannister, 3/15/13], which
read as follows:
Page 1, line 12:
Delete "and"
Page 2, line 2:
Delete "Evidence"
Insert "Evidence; and providing for an effective
date"
Page 35, following line 27:
Insert a new bill section to read:
"* Sec. 38. AS 21.09.210(m), as amended by sec. 37
of this Act, is amended to read:
(m) The tax imposed under this section for an
individual [A SINGLE] life insurance policy [OR FOR A
GROUP OR OTHER TYPE OF POLICY THAT INSURES THE LIFE OF
ONE OR MORE INDIVIDUALS] shall be computed at the rate
of
(1) 2.7 percent of policy year premium up
to $100,000; and
(2) one-tenth of one percent of policy year
premium exceeding $100,000."
Renumber the following bill sections accordingly.
Page 43, line 9:
Delete "sec. 42"
Insert "sec. 43"
Page 43, line 13:
Delete "sec. 45"
Insert "sec. 46"
Page 43, line 15:
Delete "sec. 45"
Insert "sec. 46"
Page 44, line 2:
Delete "42"
Insert "43"
Page 44, following line 5:
Insert a new bill section to read:
"* Sec. 52. The uncodified law of the State of
Alaska is amended by adding a new section to read:
APPLICABILITY. AS 21.09.210(m), as amended by
sec. 38 of this Act, applies to a policy offered,
issued for delivery, or delivered on or after the
effective date of AS 21.09.210(m), as amended by sec.
38 of this Act. In this section, "policy" has the
meaning given in AS 21.97.900."
Renumber the following bill section accordingly.
Page 44, line 8:
Delete "sec. 42"
Insert "sec. 43"
Page 44, line 9:
Delete "sec. 49(a)"
Insert "sec. 50(a)"
Page 44, line 11:
Delete "sec. 45"
Insert "sec. 46"
Delete "sec. 49(b)"
Insert "sec. 50(b)"
Page 44, following line 13:
Insert a new bill section to read:
"* Sec. 54. AS 21.09.210(m), as amended by sec. 38
of this Act, and sec. 52 of this Act take effect five
years after the effective date of sec. 37 of this
Act."
3:46:06 PM
MR. KOLB explained that Amendment 2 would provide a sunset
provision after five years, so the statutes would revert to
exactly to how insurance is handled today. It would remove the
favorable trust treatment just to ensure that the process is
working adequately, he said.
3:46:56 PM
CHAIR OLSON commented that at this point it does not appear the
state has missed any premium sales. In fact, it appears the
state has been competitive on the few number of policies issued;
however, if it turns out that hundreds or thousands of policies
are over the limit of the premium, the state could lose a
significant amount of premium tax. He related his understanding
[Amendment 2] would not interfere with existing contracts, but
would apply to new contracts after the sunset date. The
proposed language change [in Amendment 2] would give the
director a means to determine whether an adjustment is required.
Additionally, this amendment would provide a means to measure
the effect of the change after a reasonable amount of time.
CHAIR OLSON removed his objection. There being no further
objection, Amendment 2 was adopted.
3:48:21 PM
REPRESENTATIVE REINBOLD moved to report the proposed committee
substitute (CS) for HB 102, Version U, [labeled 28-LS0335\U,
Bannister, 2/26/13] as amended, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 102 (L&C) was reported from the House Labor
and Commerce Standing Committee.
3:48:40 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
3:48 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB168 ver C.pdf |
HL&C 3/25/2013 3:15:00 PM |
HB 168 |
| HB168 Draft Proposed CS version O.PDF |
HL&C 3/25/2013 3:15:00 PM |
HB 168 |
| HB168 Sponsor Statement.pdf |
HL&C 3/25/2013 3:15:00 PM |
HB 168 |
| HB168 Sectional Analysis.pdf |
HL&C 3/25/2013 3:15:00 PM |
HB 168 |
| HB168 Supporting Documents-Letter ASTA 3-21-2013.pdf |
HL&C 3/25/2013 3:15:00 PM |
HB 168 |
| HB168 Supporting Documents-USTIA-Travel Producer Overview.pdf |
HL&C 3/25/2013 3:15:00 PM |
HB 168 |
| HB102 Draft Proposed Amendment U.2.PDF |
HL&C 3/25/2013 3:15:00 PM |
HB 102 |
| HB102 Draft Proposed Amendment U.3.PDF |
HL&C 3/25/2013 3:15:00 PM |
HB 102 |
| HB168 Fiscal Note-DCCED-DOI-03-22-13.pdf |
HL&C 3/25/2013 3:15:00 PM |
HB 168 |