Legislature(1999 - 2000)

02/21/2000 03:23 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
           HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                          
                        February 21, 2000                                                                                       
                            3:23 p.m.                                                                                           
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Norman Rokeberg, Chairman                                                                                        
Representative Lisa Murkowski                                                                                                   
Representative John Harris                                                                                                      
Representative Tom Brice                                                                                                        
Representative Sharon Cissna                                                                                                    
Representative Jerry Sanders                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Representative Andrew Halcro, Vice Chairman                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
HOUSE BILL NO. 284                                                                                                              
"An Act relating to uninsured and underinsured motor vehicle                                                                    
insurance."                                                                                                                     
                                                                                                                                
     - MOVED CSHB 284(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 310                                                                                                              
"An Act relating to the Alaska Insurance Guaranty Association;                                                                  
and amending Rule 24, Alaska Rules of Civil Procedure."                                                                         
                                                                                                                                
     - MOVED CSHB 310(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 314                                                                                                              
"An  Act  clarifying   the  requirements  for   limited  liability                                                              
companies and partnerships to qualify  for the Alaska bidder's and                                                              
disability  preferences  under  the State  Procurement  Code;  and                                                              
providing for an effective date."                                                                                               
                                                                                                                                
     - BILL HEARING POSTPONED TO 2/23                                                                                           
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL: HB 284                                                                                                                  
SHORT TITLE: UNINSURED MOTOR VEHICLE INSURANCE                                                                                  
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 1/12/00      1906     (H)  READ THE FIRST TIME - REFERRALS                                                                     
 1/12/00      1907     (H)  L&C, JUD                                                                                            
 2/18/00               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 2/18/00               (H)  Scheduled But Not Heard                                                                             
 2/21/00               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
                                                                                                                                
BILL: HB 310                                                                                                                  
SHORT TITLE: ALASKA INSURANCE GUARANTY ASSOCIATION                                                                              
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 1/21/00      1973     (H)  READ THE FIRST TIME - REFERRALS                                                                     
 1/21/00      1973     (H)  L&C, JUD                                                                                            
 2/21/00               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
PAT HARMAN, Legislative Aide                                                                                                    
     to Representative Pete Kott                                                                                                
Alaska State Legislature                                                                                                        
Capitol Building, Room 118                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified on behalf of Representative Kott,                                                                
sponsor of HB 284.                                                                                                              
                                                                                                                                
MICHAEL COHN, Attorney                                                                                                          
1023 West 16th Avenue                                                                                                           
Anchorage, Alaska 99501                                                                                                         
POSITION STATEMENT:  Testified on HB 284.                                                                                       
                                                                                                                                
BOB LOHR, Director                                                                                                              
Division of Insurance                                                                                                           
Department of Community and Economic Development                                                                                
P.O. Box 110805                                                                                                                 
Juneau, Alaska 99811-0805                                                                                                       
POSITION STATEMENT:  Testified on HB 284; testified on HB 310,                                                                  
Version H.                                                                                                                      
                                                                                                                                
MICHAEL LESSMEIER                                                                                                               
State Farm Insurance                                                                                                            
245 North Franklin, Suite 400                                                                                                   
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified on HB 284; testified on HB 310,                                                                  
Version H.                                                                                                                      
                                                                                                                                
TOM ANDRITSCH, Chairman                                                                                                         
Alaska Insurance Guaranty Association                                                                                           
1101 Cordova, Number 142                                                                                                        
Anchorage, Alaska 99501                                                                                                         
POSITION STATEMENT:  Testified on HB 310, Version H.                                                                            
                                                                                                                                
DANE HAVARD, President, Northern Adjusters Incorporated                                                                         
     and Fund Administrator for the Alaska Insurance Guaranty                                                                   
Association                                                                                                                     
1401 Rudakof                                                                                                                    
Anchorage, Alaska 99508                                                                                                         
POSITION STATEMENT:  Testified on HB 310, Version H.                                                                            
                                                                                                                                
JOHN GEORGE                                                                                                                     
National Association of Independent Insurers                                                                                    
3328 Fritz Cove Road                                                                                                            
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified on HB 310, Version H.                                                                            
                                                                                                                                
PAUL GROSSI, Director                                                                                                           
Division of Workers' Compensation                                                                                               
Department of Labor and Workforce Development                                                                                   
P.O. Box 25512                                                                                                                  
Juneau, Alaska 99802-5512                                                                                                       
POSITION STATEMENT:  Testified on HB 310, Version H.                                                                            
                                                                                                                                
DON THOMAS, Counsel                                                                                                             
     for Alaska Insurance Guaranty Association                                                                                  
Attorney                                                                                                                        
Delaney, Wiles, Hayes, Gerety & Ellis, Incorporated                                                                             
1007 West Third Avenue, Suite 400                                                                                               
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT:  Testified on HB 310, Version H.                                                                            
                                                                                                                                
SARAH MCNAIR-GROVE, Actuary                                                                                                     
Division of Insurance                                                                                                           
Department of Community and Economic Development                                                                                
P.O. Box 110805                                                                                                                 
Juneau, Alaska 99811-0805                                                                                                       
POSITION STATEMENT:  Answered questions on HB 310, Version H.                                                                   
                                                                                                                                
DWIGHT PERKINS, Deputy Commissioner                                                                                             
Department of Labor and Workforce Development                                                                                   
P.O. Box 21149                                                                                                                  
Juneau, Alaska 99802-1149                                                                                                       
POSITION STATEMENT:  Testified on HB 310, Version H.                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 00-16, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                                                                    
Standing Committee meeting to order at 3:23 p.m.  Members present                                                               
at the  call to  order were  Representatives Rokeberg,  Murkowski,                                                              
Harris and Brice.   Representatives Cissna and  Sanders arrived as                                                              
the meeting was in progress.                                                                                                    
                                                                                                                                
HB 284-UNINSURED MOTOR VEHICLE INSURANCE                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG  announced the first order of  business would be                                                              
HOUSE  BILL   NO.  284,   "An  Act   relating  to  uninsured   and                                                              
underinsured motor vehicle insurance."                                                                                          
                                                                                                                                
Number 0095                                                                                                                     
                                                                                                                                
PAT HARMAN,  Legislative  Aide to Representative  Pete Kott,  came                                                              
forward to  testify on behalf  of Representative Kott,  sponsor of                                                              
HB 284.  He  stated that all of the committee  members should have                                                              
received a  letter over the  interim from Michael  Cohn, attorney.                                                              
He indicated Mr.  Cohn might be online to testify.   He said there                                                              
is an  apparent situation  where there is  a loophole in  the law.                                                              
There are situations  where an uninsured "phantom"  vehicle leaves                                                              
the scene  of an accident  and may not  have made direct  physical                                                              
contact with the  victim.  An example of this is  the victim of an                                                              
accident who is at a stoplight and  is struck by a second vehicle,                                                              
which strikes the  victim as a result of a third  vehicle striking                                                              
the second  vehicle, and then the  third vehicle leaves  the scene                                                              
of the accident.   Since the current law requires  direct physical                                                              
contact, the victim  is not able to collect under  their uninsured                                                              
motorists  insurance because  the "phantom"  vehicle did  not make                                                              
direct physical contact with the  victim's vehicle.  The intent of                                                              
HB 284  is to correct  this situation.   There is also  a proposed                                                              
amendment to HB 284 which reads as follows:                                                                                     
                                                                                                                                
     Section 1.  AS 28.20.455(f) is amended to read:                                                                            
                                                                                                                                
               (f)  If both the owner and operator of the                                                                       
uninsured   vehicle are unknown,  payment under the  uninsured and                                                              
underinsured motorists  coverage shall be made only  where  direct                                                              
physical   contact  between   the  insured   and  uninsured     or                                                              
underinsured motor  vehicles has occurred, or where  the  accident                                                          
is  witnessed  by  a disinterested  person,  not    occupying  the                                                          
insured vehicle,  who will  attest to the   facts of  the accident                                                          
and the  involvement of  a motor  vehicle  that left  the accident                                                          
scene without  being   identified.   A vehicle  that has  left the                                                          
scene of the   accident with an insured vehicle is  presumed to be                                                              
uninsured  if the  person insured  reports  the accident  to   the                                                              
appropriate authorities within 24 hours.                                                                                        
                                                                                                                                
     Insert twice the underlined portion above to the underlined                                                                
section of bill:                                                                                                                
                                                                                                                                
          Section 1, page 1, lines 7-8.                                                                                         
          Section 2, page 1, line 15 through page 2, line 2.                                                                    
                                                                                                                                
There have been discussions with  people in the industry, and they                                                              
are coming  forward with  a compromise  that may satisfy  industry                                                              
and some of the consumer aspects  of the bill.  When the laws were                                                              
drafted this loophole was an unintended  oversight and HB 284 is a                                                              
fairly simple concept attempting to correct the situation.                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG asked if the amendment  pertains only to Section                                                              
1, subsection (f).                                                                                                              
                                                                                                                                
MR. HARMAN  clarified the  amendment pertains  to both  Sections 1                                                              
and 2  in HB 284.   The intent of  the amendment is  in situations                                                              
where  direct   physical  contact  does   not  occur  to   have  a                                                              
disinterested  witness,  other than  the  insured,  attest that  a                                                              
"phantom" vehicle was involved.                                                                                                 
                                                                                                                                
Number 0392                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG wondered:                                                                                                     
                                                                                                                                
     You say you're at a stoplight  and you're car A, there's                                                                   
     somebody behind you that's car  B.  And car C comes down                                                                   
     the  pike and  hits car  B in  the back  which hits  car                                                                   
     A...Is that kind  of what happened in that  back pattern                                                                   
     there?                                                                                                                     
                                                                                                                                
MR.  HARMAN clarified  that is  not the  case that  Mr. Cohn  will                                                              
testify to,  but it is a more  simple example of the  situation he                                                              
was trying to describe.                                                                                                         
                                                                                                                                
CHAIRMAN  ROKEBERG wondered  whether, if  nobody else was  around,                                                              
the driver of car B could be considered a disinterested party.                                                                  
                                                                                                                                
MR.  HARMAN  said  he  believes  the driver  of  car  B  would  be                                                              
considered disinterested with respect to the amendment.                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG  said it is important  to make sure this  is not                                                              
an  undue burden  on  the  industry and  in  no way  would  affect                                                              
consumers negatively.   He also commented that it  is important to                                                              
make sure the insurance companies pay when there is damage.                                                                     
                                                                                                                                
Number 0582                                                                                                                     
                                                                                                                                
MICHAEL  COHN,   Attorney,  testified   via  teleconference   from                                                              
Anchorage.   He noted that  he had a  situation come  up regarding                                                              
the  impacts  of AS  28.20.445(f).   This  is  the  reason he  had                                                              
written a letter to all of the Alaska  state legislators regarding                                                              
this statute.  He explained:                                                                                                    
                                                                                                                                
     I was working for a law office  and representing a woman                                                                   
     that  had been  struck by  another  vehicle on  O'Malley                                                                   
     Road in  Anchorage.  The  other vehicle had  crossed the                                                                   
     center  line   and  struck   her.    That  vehicle   was                                                                   
     uninsured,  and I  felt  that we  had  some clear  fault                                                                   
     involved,  so  we  sought uninsured  coverage  from  the                                                                   
     injured party's insurance company.                                                                                         
                                                                                                                                
     However,  their defense  was  that the  individual  that                                                                   
     crossed  the line and  hit her was  faced with a  sudden                                                                   
     emergency  when another  vehicle  came out  from a  side                                                                   
     street  blocking his  line of traffic  causing a  sudden                                                                   
     emergency which  resulted in  him losing control  of his                                                                   
     vehicle.   And,  at  the time,  I  was unaware  of  this                                                                   
     provision and  I said, well, even if that  other vehicle                                                                   
     that  left  the scene  would  be  the equivalent  of  an                                                                   
     uninsured vehicle  and so it  wouldn't matter  which one                                                                   
     had  actually hit  her, there would  still be  liability                                                                   
     and then I  was informed of this provision.   And when I                                                                   
     looked it up,  since the first person was  claiming that                                                                   
     the vehicle  that left  the scene was  the cause  of the                                                                   
     accident and it did not directly  strike my client, they                                                                   
     were  then claiming  that there was  no liability  under                                                                   
     the  uninsured motorist  coverage.   And, in this  case,                                                                   
     there happened  to be other  witnesses who had  seen the                                                                   
     other vehicle which left the scene.                                                                                        
                                                                                                                                
     So, I  assume that the reason  for the provision  in the                                                                   
     first place was so that someone  couldn't leave the road                                                                   
     due to  their own negligence  or carelessness,  strike a                                                                   
     tree, and then claim that they  swerved to avoid another                                                                   
     car that  they couldn't locate.   In this case,  we have                                                                   
     other  witnesses.   It was clearly  witnesses that  were                                                                   
     not with just  the injured individual that  would attest                                                                   
     to the other vehicle that actually  caused the accident.                                                                   
                                                                                                                                
CHAIRMAN ROKEBERG asked if his client swerved and hit something.                                                                
                                                                                                                                
MR. COHN clarified that his client actually got hit by another                                                                  
car.  The person driving the car that hit his client claimed he                                                                 
was not negligent because he was avoiding another car.                                                                          
                                                                                                                                
CHAIRMAN  ROKEBERG  wondered if  the  person  who hit  Mr.  Cohn's                                                              
client had insurance.                                                                                                           
                                                                                                                                
MR. COHN stated  that he was uninsured.  Some  money was recovered                                                              
from him  because his own reactions  to avoid an accident  were in                                                              
dispute.  In certain circumstances,  the person who hit his client                                                              
might be found to  not be involved even though he  hit her because                                                              
of a  third vehicle.   He thought this  circumstance was  the type                                                              
that could affect every person in  Alaska because most people have                                                              
uninsured motorist coverage.                                                                                                    
                                                                                                                                
CHAIRMAN ROKEBERG wondered if this  situation deals with proximate                                                              
cause.  He said it is a classic tort case.                                                                                      
                                                                                                                                
MR. COHN  said the  problem  with this  case is with  the way  the                                                              
statute is  worded.   There would  not be  any recoveries  for the                                                              
fault of  the car  that did not  strike the  injured person.   His                                                              
client thought she  could not recover under an  uninsured motorist                                                              
coverage against the person that came out of the side street.                                                                   
                                                                                                                                
Number 0899                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked  if there are any cases in  court law that                                                              
give direction about whether or not  they should refer back to the                                                              
proximate cause.                                                                                                                
                                                                                                                                
MR. COHN said  the big problem is  the way the statute  is worded.                                                              
He explained  that under  proximate  cause a person  can cause  an                                                              
accident and  not be  the person that  directly strikes  the other                                                              
vehicle.   Direct physical  contact means that  a person  might be                                                              
the negligent party  that causes the accident, but  not be the one                                                              
that  directly, physically  impacts  the other  vehicle.   As  the                                                              
statute is  worded, that  person might be  the proximate  cause of                                                              
the accident, but then be absolved of liability.                                                                                
                                                                                                                                
CHAIRMAN  ROKEBERG  asked, "For  the  statute  then you'd  have  a                                                              
causative action against that person  pulling out onto the roadway                                                              
then, you think under tort law?"                                                                                                
                                                                                                                                
                                                                                                                                
MR. COHN replied  a person could have had a  claim under uninsured                                                              
motorists  coverage.    The  woman involved  in  the  accident  he                                                              
described earlier would have recovered for full damages.                                                                        
                                                                                                                                
CHAIRMAN  ROKEBERG wondered  if  a person  could  claim under  the                                                              
uninsured motorists coverage if the responsible party drove off.                                                                
                                                                                                                                
MR. COHN responded yes.                                                                                                         
                                                                                                                                
Number 0991                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI  described a  scene in which a  dog darts                                                              
out into  the road  and is  responsible for  causing an  accident.                                                              
She wondered if it would be correct  that this situation would not                                                              
be covered because it is not a motor  vehicle that left the scene.                                                              
                                                                                                                                
MR. COHN has  not analyzed that before.  Because  this pertains to                                                              
uninsured and  underinsured motor vehicle insurance,  the accident                                                              
would have to  involve an uninsured or underinsured  motor vehicle                                                              
for that particular coverage to take  affect.  He is not sure what                                                              
the affect would be if a dog or something else was responsible.                                                                 
                                                                                                                                
REPRESENTATIVE MURKOWSKI  is trying to  think this through.   From                                                              
what  she  has read  in  statute,  it  appears  it  has to  be  an                                                              
uninsured vehicle which is unknown.                                                                                             
                                                                                                                                
MR. COHN said that is correct.                                                                                                  
                                                                                                                                
REPRESENTATIVE  MURKOWSKI   reiterated  that  it  has   to  be  an                                                              
uninsured vehicle which precipitates the event.                                                                                 
                                                                                                                                
MR. COHN added that if it is an unknown  vehicle he believes under                                                              
the law  that vehicle  would be considered  an uninsured  vehicle.                                                              
He noted that  the statute states, "the vehicle that  has left the                                                              
scene of  the accident when an  insured vehicle is presumed  to be                                                              
uninsured,  if the  person  insured reports  the  accident to  the                                                              
appropriate  authorities  within 24  hours".   He  said under  the                                                              
statute as it is presently worded,  that vehicle would be presumed                                                              
to be  uninsured.  He  has a question  regarding the  language and                                                              
stated:                                                                                                                         
                                                                                                                                
     I see this language as sort  of a compromise in that, if                                                                   
     there's a concern  about a person that there's  no other                                                                   
     witness  to that can  then make a  claim that they  were                                                                   
     struck  when  they swerved  on  the  road on  their  and                                                                   
     there's   no other  witness  to the accident.   I  don't                                                                   
     know if there's  that concern which is why  this bill as                                                                   
     written  would protect  the client  that I  had if  that                                                                   
     similar situation happened in  the future, but might not                                                                   
     protect every individual that  is in an accident with an                                                                   
     uninsured  vehicle that  leaves the  scene.  So,  that's                                                                   
     one question.                                                                                                              
                                                                                                                                
     The second one I had where it  says "a person other than                                                                   
     the  insured";  So,  you  can  have  a  situation  where                                                                   
     somebody's  driving  in a  car and,  even  if they  have                                                                   
     passengers  with  them,  in  certain  situations,  those                                                                   
     other passengers  could be considered covered  under the                                                                   
     insurance.   So, would  these passengers  in the car  be                                                                   
     insured and whether their testimony  would be sufficient                                                                   
     to support recovery,  is the question I have  under this                                                                   
     bill.                                                                                                                      
                                                                                                                                
Number 1243                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG said  that is a good point.  He  wondered if Mr.                                                              
Cohn is  referring to the suggested  amendment and whether  or not                                                              
he has a copy of it.                                                                                                            
                                                                                                                                
MR.  COHN  wondered  if  Chairman Rokeberg  is  referring  to  the                                                              
language which  states "or where  a person other than  the insured                                                              
attests that  a motor  vehicle involved in  the accident  left the                                                              
scene without being identified".                                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG responded  no.  The language he  is referring to                                                              
states  "or where  the accident  is witnessed  by a  disinterested                                                              
person not  occupying the insured  vehicle who will attest  to the                                                              
facts of the  accident or the involvement of a  motor vehicle that                                                              
left the accident scene without being identified".                                                                              
                                                                                                                                
MR. COHN wondered  if the version, as it's worded  now, means that                                                              
the person  could not rely on  other witnesses that were  in their                                                              
own car.                                                                                                                        
                                                                                                                                
CHAIRMAN ROKEBERG stated that is correct.                                                                                       
                                                                                                                                
MR.  COHN said,  if he  understood earlier  testimony, they  could                                                              
perhaps  rely on  the testimony  of  the individual  in the  other                                                              
vehicle who claims to have swerved to avoid an accident.                                                                        
                                                                                                                                
CHAIRMAN ROKEBERG  said that  is correct and  added that  it could                                                              
also be anyone  else who may have  been a witness to  the accident                                                              
such as a  person standing on the  sidewalk.  He stated,  "I guess                                                              
the desire  here is  to not allow  somebody to  have a  single car                                                              
accident and  then rely on trumped  up testimony from  a passenger                                                              
to try and make a claim under uninsured motorists."                                                                             
                                                                                                                                
MR. COHN replied  that it seems to  be a situation that  can apply                                                              
in all cases where  people would be able testify.   He wondered if                                                              
it  should be  under  the general  rules  of tort  law  or for  an                                                              
arbitrator to  determine if someone  is telling the  truth because                                                              
all of the uninsured motor vehicle  provisions would probably have                                                              
an arbitration clause in the contract.                                                                                          
                                                                                                                                
CHAIRMAN ROKEBERG stated that is  a good question.  He thanked Mr.                                                              
Cohn for bringing this issue to the  attention of the Legislature.                                                              
                                                                                                                                
MR.  COHN said  he is  gratified  by the  number  of responses  he                                                              
received by legislators.                                                                                                        
                                                                                                                                
Number 1402                                                                                                                     
                                                                                                                                
BOB  LOHR,   Director,  Division   of  Insurance,  Department   of                                                              
Community and  Economic Development, testified  via teleconference                                                              
from Anchorage.                                                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG asked  Mr. Lohr if he is in receipt  of the bill                                                              
and its  amendment, and  wondered if  the Department of  Community                                                              
and Economic Development (DCED) has any comments on it.                                                                         
                                                                                                                                
MR. LOHR stated  he has seen the  bill and Mr. Cohn's  letter.  He                                                              
noted that the Division did respond  to the letter.  He asked if a                                                              
copy of that response is available to the committee members.                                                                    
                                                                                                                                
CHAIRMAN  ROKEBERG  indicated they  are  not  in receipt  of  that                                                              
response.                                                                                                                       
                                                                                                                                
Number 1430                                                                                                                     
                                                                                                                                
MR. LOHR said:                                                                                                                  
                                                                                                                                
     If I may I would just (indisc.)  one example, a scenario                                                                   
     that was set  out in that letter which is  the basis for                                                                   
     the   Division's  support   for  the   concept  of   the                                                                   
     bill...Car 1 through  no fault of Car 1's  driver is hit                                                                   
     by Car  2 only  because Car 3,  whose driver was  acting                                                                   
     negligently, struck Car 2 forcing  it to hit Car 1.  Car                                                                   
     3 flees the scene.  In this  scenario, Car 1 will not be                                                                   
     able to  recover damages from  Car 2 because Car  2 will                                                                   
     not  be  allocated  fault  under   Alaska's  comparative                                                                   
     faults laws  and, therefore, will not be  legally liable                                                                   
     for the damages to Car 1.                                                                                                  
                                                                                                                                
     Without legal  liability, Car 2's insurer will  not have                                                                   
     an obligation to  pay out under its policy.   Car 1 will                                                                   
     not be able  to recover from Car 3 since Car  3 left the                                                                   
     scene and  the owner  and operator are  unknown.   Car 1                                                                   
     also  cannot recover  under  its  uninsured/underinsured                                                                   
     motorists  coverage  because  it  did  not  have  direct                                                                   
     physical  contact   with  Car  3  as  required   by  [AS                                                                   
     28.20].445(f).    Car  1,  therefore,  is  left  without                                                                   
     coverage  for the  damage arising out  of the  accident.                                                                   
     This  result is  contrary  to the  intent  of the  motor                                                                   
     vehicle  safety responsibility  and mandatory  insurance                                                                   
     laws  where  there's  a single  provision  which  is  to                                                                   
     ensure  compensation for  innocent  victims involved  in                                                                   
     automobile accidents.  Therefore,  the Division supports                                                                   
     HB  284  and could  live  with  the direction  that  the                                                                   
     amendment seems to be going.                                                                                               
                                                                                                                                
Number 1524                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked if Mr. Lohr has seen the amendment.                                                                     
                                                                                                                                
MR. LOHR stated he has not seen the  actual text of the amendment,                                                              
but has heard it described.                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG pointed out that  the amendment would prohibit a                                                              
witness  in  the car  from  being  the disinterested  party.    He                                                              
wondered if Mr. Lohr has a comment on that.                                                                                     
                                                                                                                                
MR. LOHR  replied that he  reserves the opportunity  to follow-up.                                                              
He observed  that the  Regulatory Commission  of Alaska  (RCA), in                                                              
situations  like this,  gives the  witnesses the  weight they  are                                                              
due.  He said the fact that a witness  is in the car of an insured                                                              
person would certainly be a factor  the arbitrator would take into                                                              
account, but would do so in an able manner.                                                                                     
                                                                                                                                
Number 1582                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  wondered if  there would have  to either  be an                                                              
administrative  hearing or  litigation unless  there is  mandatory                                                              
arbitration clause.                                                                                                             
                                                                                                                                
MR. LOHR said that is correct.                                                                                                  
                                                                                                                                
Number 1650                                                                                                                     
                                                                                                                                
MICHAEL LESSMEIER,  State Farm Insurance, came forward  to testify                                                              
on HB 284.  He commented:                                                                                                       
                                                                                                                                
     I think that to view this in  context you almost need to                                                                   
     go  back  to 1983,  which  is  when this  state  adopted                                                                   
     mandatory insurance.  And I  would just briefly tell you                                                                   
     that the  current scheme  that we  have was a  mandatory                                                                   
     offer of  uninsured and underinsured motorists  coverage                                                                   
     to be coupled with residents  being required to also buy                                                                   
     liability insurance to basically  give people an ability                                                                   
     to  protect themselves  from drivers  that we know  will                                                                   
     drive  uninsured  no  matter   how  much,  or  what  the                                                                   
     penalties are for driving without insurance.                                                                               
                                                                                                                                
     And  so,  what the  legislature  did  is they  struck  a                                                                   
     balance  and  it  created a  scheme  for  uninsured  and                                                                   
     underinsured  motorists   coverage  because   before  in                                                                   
     "1993"   some  companies   were  offering   underinsured                                                                   
     motorists  coverage, but  there  weren't many.   And  we                                                                   
     didn't   have  a  comprehensive   scheme,  and   so  the                                                                   
     legislature  created  a comprehensive  scheme  that  had                                                                   
     some  balance.     And  the   balance  was   to  provide                                                                   
     protection from uninsured and  underinsured motorists in                                                                   
     certain  situations  with  the   idea  being  that  that                                                                   
     coverage would then be affordable  for people.  And this                                                                   
     provision was  a provision that is commonly  in statutes                                                                   
     requiring  uninsured and  underinsured motorists  simply                                                                   
     to prevent fraud.                                                                                                          
                                                                                                                                
     What we have done is we have  met with the sponsor in an                                                                   
     effort to  work out some  language that would  deal with                                                                   
     the situation Mr. Cohn refers  to, but also provide some                                                                   
     reasonable protection from claims  that are difficult to                                                                   
     fight and  claims that experience  has shown we  need to                                                                   
     be  protected  from  because   ultimately  the  cost  of                                                                   
     uninsured and underinsured motorists  is important for a                                                                   
     number of reasons.                                                                                                         
                                                                                                                                
     That  cost  is  ultimately   borne  by  the  people  who                                                                   
     purchase it  and to the  extent that this  coverage gets                                                                   
     too expensive,  people won't  purchase it.   And so  you                                                                   
     want to keep  the coverage at somewhat of  an affordable                                                                   
     level and that's  why this balance was drawn.   We tried                                                                   
     to  strike another  balance  in the  proposed  amendment                                                                   
     that is before you and that  balance would basically say                                                                   
     that  if there's  is  not physical  contact.   In  other                                                                   
     words,  there   is  no  objective  way  of   tying  this                                                                   
     uninsured  or  underinsured  vehicle  to  the  accident.                                                                   
     Then we  at least  need a disinterested  witness who  is                                                                   
     not occupying the vehicle.   And I think that balance is                                                                   
     acceptable  to the  sponsor  and I  would  hope that  it                                                                   
     would be acceptable to this committee.                                                                                     
                                                                                                                                
Number 1783                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI wondered  how a disinterested party would                                                              
be  defined.   She  asked if  it  is something  that  needs to  be                                                              
defined as a person  who, for example, is not related  by blood or                                                              
the individual in the car.                                                                                                      
                                                                                                                                
MR. LESSMEIER  stated that  he believes  "disinterested"  would be                                                              
defined as  someone who  is not in  the car  and somebody  that is                                                              
simply unbiased.   He said it is  a commonly defined term,  and he                                                              
does not think it needs to be defined.                                                                                          
                                                                                                                                
REPRESENTATIVE  MURKOWSKI  said  it  goes back  to  what  somebody                                                              
stated earlier  regarding  the weighting  given to credibility  of                                                              
the witness.  She commented:                                                                                                    
                                                                                                                                
     If, in  fact, your only  witness happens to  be somebody                                                                   
     that  you have  gone out  and had  a few  beers with  on                                                                   
     several  occasions; does  that automatically  disqualify                                                                   
     him  from giving  any  kind of  credible  testimony?   I                                                                   
     wouldn't think so, but I think  that that should perhaps                                                                   
     be  taken  into account  when  we  look  at his  or  her                                                                   
     testimony.    So, I  would  hate  to think  that  you're                                                                   
     automatically going  to discard and say because  you are                                                                   
     a  disinterested  person,  you  knew  this  person  from                                                                   
     whatever relationship,  therefore we can't take  it into                                                                   
     account.  So, I would like to  think that if we're going                                                                   
     to  say,  if we're  not  going  to define  exactly  what                                                                   
     "disinterested" is,  and I think that that  is difficult                                                                   
     to do,  there does need to  be some weighting  that goes                                                                   
     into  the   testimony  that's   being  given  by   those                                                                   
     individuals.                                                                                                               
                                                                                                                                
CHAIRMAN  ROKEBERG  said  he thinks  Mr.  Lessmeier's  points  are                                                              
important.  He said:                                                                                                            
                                                                                                                                
     The public policy issue here  is a balancing of whether,                                                                   
     perhaps,  there may  be a  very rare  injustice done  to                                                                   
     somebody  that thinks they  had insurance coverage  when                                                                   
     they get hit,  by not paying that person  off versus the                                                                   
     larger  citizenry of the  State who  may be, because  of                                                                   
     any  relative  increase  cost,  may  be  dissuaded  from                                                                   
     buying  insurance which is  mandated.   And to not  have                                                                   
     some   parameter  here,   like   the  disinterested   or                                                                   
     occupier,  you would open  yourself up  to what I  would                                                                   
     consider; the  insurance industry would  open themselves                                                                   
     up to any  constant strain of claims that  were bogus if                                                                   
     not to say fraudulent.                                                                                                     
                                                                                                                                
MR. LESSMEIER said that is basically it.                                                                                        
                                                                                                                                
CHAIRMAN ROKEBERG stated, "So, there's  a matrix here of judgement                                                              
that goes beyond  just the view of  this and it makes  it a little                                                              
more difficult."                                                                                                                
                                                                                                                                
Number 1943                                                                                                                     
                                                                                                                                
MR. LESSMEIER explained:                                                                                                        
                                                                                                                                
     There have been  a number of changes made  back since we                                                                   
     originally  adopted these mandated  offers of  uninsured                                                                   
     and underinsured motorists coverage  and I don't know if                                                                   
     you folks have looked at the  premiums that you pay, but                                                                   
     the  premiums for  UM and  UI, ...  I know  my own  have                                                                   
     gotten  to the  point where  it's  almost equivalent  to                                                                   
     what I pay for liability coverage.   And part of that is                                                                   
     because we  have made change  after change after  change                                                                   
     to these coverages over the years.                                                                                         
                                                                                                                                
     We  have increased  the  mandated  offers to  the  point                                                                   
     where  I think  the mandated  offers  now are  something                                                                   
     like a million,  two million of coverage.   It really is                                                                   
     a good thing  because that's really the only  control we                                                                   
     sometimes  have is the  ability to  go out and  purchase                                                                   
     our own  coverage.  We  can't control what  other people                                                                   
     do, but every time we make a  change like, there also is                                                                   
     a cost  and whenever  there's a cost  and you raise  the                                                                   
     costs of  a product then there  are a certain  number of                                                                   
     people  that, for  whatever reason,  will choose not  to                                                                   
     pay that cost.  So, there always is a balance.                                                                             
                                                                                                                                
CHAIRMAN ROKEBERG  asked Mr. Lessmeier to provide  the House Labor                                                              
and Commerce Standing  Committee and the House  Judiciary Standing                                                              
Committee with  a brief  description of what  the costs  have been                                                              
historically and what the trend line is.                                                                                        
                                                                                                                                
MR. LESSMEIER said he would certainly try to do that.                                                                           
                                                                                                                                
Number 2064                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MURKOWSKI   referred  back  to  the   issue  of  a                                                              
disinterested person.  She is concerned  that they are not able to                                                              
define  it more.    She  realizes the  issue  can be  delved  into                                                              
further in the Judiciary Committee.   She feels comfortable moving                                                              
the bill out of committee.                                                                                                      
                                                                                                                                
REPRESENTATIVE HARRIS made a motion to adopt Amendment 1.                                                                       
                                                                                                                                
REPRESENTATIVE  BRICE objected.   He  concurs with  Representative                                                              
Murkowski's statements  with respect  to defining a  disinterested                                                              
person.   He believes  it muddies  the waters  a little  more than                                                              
he's comfortable with.  He thinks  there is a process by which the                                                              
people  who will  have the  final  decision weigh  the factors  of                                                              
whose presenting  what.  For this  reason, he is  more comfortable                                                              
with this  than just excluding  somebody from  being able to  be a                                                              
witness.                                                                                                                        
                                                                                                                                
A roll call vote was taken.  Representatives  Rokeberg, Murkowski,                                                              
Sanders   and   Harris   voted    in   favor   of   Amendment   1.                                                              
Representatives  Cissna and  Brice voted  against it.   Therefore,                                                              
Amendment 1 was  adopted by the House Labor and  Commerce Standing                                                              
Committee by a vote of 4-2.                                                                                                     
                                                                                                                                
REPRESENTATIVE  BRICE made a  motion to move  HB 284,  as amended,                                                              
out  of committee  with  individual recommendations  and  attached                                                              
fiscal note.  There be no objection,  CSHB 284(L&C) moved from the                                                              
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
HB 310-ALASKA INSURANCE GUARANTY ASSOCIATION                                                                                  
                                                                                                                                
Number 2240                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  announced the next  order of business  would be                                                              
HOUSE  BILL NO.  310, "An  Act relating  to  the Alaska  Insurance                                                              
Guaranty Association; and amending  Rule 24, Alaska Rules of Civil                                                              
Procedure."                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HARRIS  made  a   motion  to  adopt  the  proposed                                                              
committee  substitute  (CS) for  HB  310 [Version  H,  1-LS1030\H,                                                              
Ford, 1/27/00]  as a  working draft.   There  being no  objection,                                                              
Version H was adopted.                                                                                                          
                                                                                                                                
Number 2325                                                                                                                     
                                                                                                                                
MICHAEL LESSMEIER,  State Farm Insurance, came forward  to testify                                                              
on HB 310, Version H.  He stated:                                                                                               
                                                                                                                                
     I   have  been   working   with  the   Alaska   Guaranty                                                                   
     Association [Alaska  Insurance Guaranty Association]  to                                                                   
     bring this  legislation before you  and I want  to thank                                                                   
     you and the  committee for considering it.   I think you                                                                   
     all by now  that the Alaska Guaranty Association  is the                                                                   
     entity,  it  is  a  non-profit  entity,  that  it  is  a                                                                   
     creature  of state  statute and  it is  the entity  that                                                                   
     steps  in  and  deals with  claims  against  that  would                                                                   
     otherwise  be made  against  an insurance  company  that                                                                   
     goes insolvent.   And  it is  truly a consumer  oriented                                                                   
     organization,  and I think  you all  also know that  all                                                                   
     insurers that  do business in  the State of  Alaska have                                                                   
     responsibilities   to  the  Guaranty  Association   and,                                                                   
     ultimately, the  way it works is the Association  to the                                                                   
     extent it pays  out money that it can't  collect against                                                                   
     the   insolvent  insurer   assesses   people  that   buy                                                                   
     insurance policies  in Alaska.   So, it is  ultimately a                                                                   
     risk-sharing concept.                                                                                                      
                                                                                                                                
     The current law  was adopted in 1970 and  although there                                                                   
     had been  changes, things have  moved, as I  understand,                                                                   
     much  more  quickly  than  the  changes.    There  is  a                                                                   
     National Association  of Insurance Commissioners',  NAIC                                                                   
     Model  Act, and the  purpose of  the legislation  before                                                                   
     you  is to  bring  Alaska more  in  conformity with  the                                                                   
     Model  Act.    And  it  is  my  understanding  that  the                                                                   
     Division of Insurance supports these changes.                                                                              
                                                                                                                                
Number 2461                                                                                                                     
                                                                                                                                
TOM ANDRITSCH, Chairman, Alaska Insurance Guaranty Association,                                                                 
testified via teleconference from Anchorage.  He stated:                                                                        
                                                                                                                                
     I  was elected  to that  position  [Chairman] last  June                                                                   
     when  the  former chairman  resigned  and moved  out  of                                                                   
     state.   The last  two chairmen  of this committee  were                                                                   
     both from Alaska  National Insurance Company.   I am the                                                                   
     president  of  Umialik  Insurance  Company,...I've  held                                                                   
     that position  since 1986.   Prior to this, I  was vice-                                                                   
     president and  general manager of Providence  Washington                                                                   
     Insurance Company  in Alaska from 1978 to 1986.   And as                                                                   
     a  representative of  Umialik,  I've been  on the  Board                                                                   
     since  the  early  1990s,  and I  was  formerly  on  the                                                                   
     Guaranty Association  Board with Providence  Washington.                                                                   
     I did serve as ... [tape switched sides]                                                                                   
                                                                                                                                
TAPE 00-16, SIDE B                                                                                                              
Number 0004                                                                                                                     
                                                                                                                                
MR. ANDRITSCH continued:                                                                                                        
                                                                                                                                
     ... recommended  changes to the Act to conform  with the                                                                   
     NAIC  and   NCIGF  [National  Conference   of  Insurance                                                                   
     Guaranty   Funds]  Model   Act,  to   the  Director   of                                                                   
     Insurance,  Dave Walsh.   At that  time, nothing  really                                                                   
     happened, but  in 1996, Jim  Pfeifer (ph), the  chairman                                                                   
     of the  Guaranty Association,  advanced the issue  again                                                                   
     with  director, Marianne  Burke.  This  issue was  again                                                                   
     pursued  by the next  chairman, Ray  McMahon (ph),  with                                                                   
     Marianne Burke with discussions  on proposed changes and                                                                   
     generally agreed upon areas  to be advanced in this bill                                                                   
     that would  be supported by  the Division of  Insurance.                                                                   
     I've also  met with our new  director, Bob Lohr,  to get                                                                   
     into  agreement on  the changes  proposed  in this  bill                                                                   
     that are being advanced.                                                                                                   
                                                                                                                                
     The intent is  to bring the Alaska statute  more in line                                                                   
     with  the model  Act as supported  by the  NAIC and  the                                                                   
     NCIGF.    The  NAIC  has  been  advancing  towards  more                                                                   
     standardization  and  uniformity  of state's  acting  to                                                                   
     move   towards  the   model  Act.     In  dealing   with                                                                   
     insolvencies,     in     various     states,     various                                                                   
     administrations find it less  cumbersome and complicated                                                                   
     if  we're all  playing basically  with the  same set  of                                                                   
     rules.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MURKOWSKI  referred  to  the  Board  of  Governors                                                              
proposed in  Version H.  She  asked what the reasoning  was behind                                                              
the  provision   for  replacing  two  insurer  members   with  the                                                              
appointment of two public members on the board.                                                                                 
                                                                                                                                
MR. ANDRITSCH  explained that it  is in conformity with  the model                                                              
Act.   He said there  are only eight  members at the  present time                                                              
and one vacancy.                                                                                                                
                                                                                                                                
REPRESENTATIVE MURKOWSKI  wondered if  is the intent to  have nine                                                              
members by adding a public member.                                                                                              
                                                                                                                                
MR. ANDRITSCH replied yes.                                                                                                      
                                                                                                                                
REPRESENTATIVE  MURKOWSKI  asked  for further  clarification  that                                                              
this is being done to follow the model Act.                                                                                     
                                                                                                                                
MR. ANDRITSCH affirmed that.                                                                                                    
                                                                                                                                
Number 0107                                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG wondered  if all  insurance  companies that  do                                                              
business in  the state,  not just those  domiciled in  Alaska, are                                                              
covered by the Alaska Insurance Guaranty Association Act.                                                                       
                                                                                                                                
MR.  ANDRITSCH  replied no.    It  does not  include  non-admitted                                                              
companies.                                                                                                                      
                                                                                                                                
CHAIRMAN  ROKEBERG  asked  Mr. Andritsch  to  define  non-admitted                                                              
companies.                                                                                                                      
                                                                                                                                
MR. ANDRITSCH explained  that it deals with the  way the companies                                                              
are  licensed  in  Alaska.   Companies  which  are  surplus  lines                                                              
markets are not  admitted, but operate as surplus  lines market in                                                              
the state.  They sell insurance in  the state, but are not covered                                                              
under the Guaranty Association.                                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG  wondered if surplus  lines markets  are similar                                                              
to reinsurances.                                                                                                                
                                                                                                                                
MR. ANDRITSCH stated  that is not necessarily the  case.  He said,                                                              
"It can  be primary  insurance also,  but they  just haven't  gone                                                              
through the  process of  becoming admitted  in the  state.   And I                                                              
think Director can answer that better than I can."                                                                              
                                                                                                                                
Number 0150                                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG  asked,  "But  it's  not just  those  that  are                                                              
domiciled, like Umialik or Alaska National?"                                                                                    
                                                                                                                                
MR.  ANDRITSCH  said  that  is correct  and  there  are  very  few                                                              
domiciled companies in Alaska that would qualify for this.                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG wondered, "So,  if it's an admitted company from                                                              
Wisconsin  and they  go  bankrupt,  then we  still  may have  some                                                              
obligations under this association for them?"                                                                                   
                                                                                                                                
MR. ANDRITSCH said absolutely.                                                                                                  
                                                                                                                                
Number 0175                                                                                                                     
                                                                                                                                
DANE HAVARD, President, Northern  Adjusters Incorporated, and Fund                                                              
Administrator  for  the  Alaska  Insurance  Guaranty  Association,                                                              
testified via teleconference from Anchorage.  He stated:                                                                        
                                                                                                                                
     My  company has  handled  the claims  on  behalf of  the                                                                   
     Guaranty  Association  since   1978  and  has  been  the                                                                   
     contract   administrator  since   1984.    My   personal                                                                   
     involvement  with the  Association began  in about  1978                                                                   
     when I joined Northern Adjusters.                                                                                          
                                                                                                                                
     Our main function  for the Association is  to handle the                                                                   
     day-to-day operations of the  Association, and I'll list                                                                   
     out a  few of those and  you may have some  questions on                                                                   
     some of those at some point.   But we handle the receipt                                                                   
     of all the claims when a carrier  is declared insolvent,                                                                   
     we receive  those claims, we calculate the  amounts that                                                                   
     we feel  are needed  to pay  (indisc. -- coughing),  and                                                                   
     then we  assess that  amount to all  the members  of the                                                                   
     Guaranty Association.                                                                                                      
                                                                                                                                
     After  that,  we  handle the  insurance  claims  of  the                                                                   
     insolvent  carrier  on  behalf of  the  Association  and                                                                   
     report  those and  all financial  data to  the Board  of                                                                   
     Directors.   We file  claims then  with the receiver  of                                                                   
     the estate in whatever state  that carrier was domiciled                                                                   
     and we  seek a  recovery of funds  after they have  sold                                                                   
     off the  assets and  collected all  the funds that  they                                                                   
     can  from  the insolvent  carriers  estate.    Following                                                                   
     that,  then we  might  refund any  excess  money to  the                                                                   
     members  after   all  the  reported  claims   have  been                                                                   
     sufficiently funded.                                                                                                       
                                                                                                                                
     Just   for  background  information,   since  1984   the                                                                   
     Association  has  incurred over  $24  million in  claims                                                                   
     resulting   from   insolvencies  and   we've   recovered                                                                   
     approximately  $17  million   from  the  receivers.    I                                                                   
     believe   you  have  before   you  a  document   [Alaska                                                                   
     Insurance Guaranty  Association-HB 310 handout  included                                                                   
     in bill  packet] that may  give you a little  operations                                                                   
     history of  the Guaranty Association  and I'll  be happy                                                                   
     to walk  you through that if  you'd like and give  you a                                                                   
     little more detail.                                                                                                        
                                                                                                                                
CHAIRMAN  ROKEBERG asked  Mr.  Havard  to go  ahead  and walk  the                                                              
committee through that document.                                                                                                
                                                                                                                                
MR.   HAVARD  explained   that  the   Alaska  Insurance   Guaranty                                                              
Association  (AIGA)  in general  is  a  mechanism to  pay  covered                                                              
claims of  those insurance carriers  that have been declared  by a                                                              
court to be   insolvent.  An amount is assessed  to each member of                                                              
the Association  and the collected  assessment is used to  pay the                                                              
claims of the  insolvent carrier.  The assessment  is based on the                                                              
amount of  direct-written  premium a company  collects on  Alaskan                                                              
insurance policies.                                                                                                             
                                                                                                                                
MR. HAVARD  stated that a receiver  is generally appointed  by the                                                              
court  and,  generally, the  receiver  might  be the  Division  of                                                              
Insurance  who  then  might  appoint   a  debit  receiver  in  the                                                              
insolvent carrier's  state of domicile.  The receiver,  similar to                                                              
an executor,  of the estate of  the insolvent company  attempts to                                                              
sell of  the assets of  the carrier and  gather the  liquid assets                                                              
from all  possible sources.   The receiver  also set a  date after                                                              
which  he/she will  not allow  any additional  claims against  the                                                              
estate.  This date is referred to  as the bar date.  This deadline                                                              
is typically less than a year.                                                                                                  
                                                                                                                                
MR.  HAVARD  said he  believes  the  statute for  receivership  in                                                              
Alaska states that  it must be in excess of six  months.  There is                                                              
no  deadline which  exists for  insureds  or claimants  to file  a                                                              
claim against the  AIGA.  In the past, the lack  of a deadline has                                                              
resulted  in situations  where the  AIGA was  still receiving  and                                                              
paying claims  after the deadline  for filing claims  for recovery                                                              
against the estate  of the insolvent carrier had  passed.  In such                                                              
situations,  the cost  of  these  old claims  is  borne solely  by                                                              
subsequent purchasers of insurance through premium surcharges.                                                                  
                                                                                                                                
MR.  HAVARD further  stated  that after  paying  the expenses  and                                                              
claims of  the estate, the receiver  distributes the funds  to the                                                              
AIGA to reimburse for claims and  administrative expenses paid.  A                                                              
receiver  will  review  each  claim  submitted  by  the  AIGA  for                                                              
reimbursement and  denies recovery on  claims filed with  the AIGA                                                              
after  the  bar  date  established  by  the  receiver.    This  is                                                              
necessary  to allow a  fixed date  on which  to calculate  the pro                                                              
rata amounts  to be  distributed to each  creditor of  the estate.                                                              
When collected  assessments and recovered funds  from the receiver                                                              
exceed  the  amount  needed  to   pay  claims  and  administrative                                                              
expenses of  the AIGA for  that particular insolvency,  the excess                                                              
funds are refunded  to the membership in proportion  to the amount                                                              
originally assessed.                                                                                                            
                                                                                                                                
MR. HAVARD said  the Act allows members to recoup  the assessments                                                              
that they pay through surcharges  on insurance premiums charged to                                                              
policyholders.   Historically, the AIGA has recovered  millions of                                                              
dollars  for  liquidators/receivers  of insolvent  members.    The                                                              
recovery is rarely 100 percent on  the dollar.  Thus, the recovery                                                              
of assets  from the  estate of insolvent  insurers plays  a direct                                                              
role in  reducing the cost of  property and casualty  insurance to                                                              
Alaska policyholders.                                                                                                           
                                                                                                                                
Number 0427                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked Mr. Havard  to direct committee members to                                                              
the section in Version H relating to the bar date.                                                                              
                                                                                                                                
MR. HAVARD said he believes the bar  date is referenced in Section                                                              
7, page 4, under AS 21.80.060(a)(1)(B).                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG wondered if the bar date is set by the court.                                                                 
                                                                                                                                
MR. HAVARD replied yes, it is part  of the model Act.  The AIGA is                                                              
recommending the bar date be the  final date the receiver sets for                                                              
the insolvent  carrier.  In order  for a creditor to make  a claim                                                              
against the  insolvent estate,  the creditor must  do so  before a                                                              
certain date.   The AIGA  is suggesting the  same bar date  be set                                                              
for submitting claims against the AIGA.                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG  asked Mr. Havard  to provide an example  of how                                                              
the bar date comes into play.                                                                                                   
                                                                                                                                
MR. HAVARD  replied that there have  been quite a few  claims that                                                              
have come  up on  some of the  cases related  to asbestos.   These                                                              
claims have  arisen several years  after the closure date  for the                                                              
insolvent carrier.                                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG  wondered if it is like a  worker's compensation                                                              
claim.                                                                                                                          
                                                                                                                                
MR.   HAVARD  indicated   there   may  have   been  two   worker's                                                              
compensation claims.   It is  difficult to identify  exactly where                                                              
there had been any worker's compensation  claims that the bar date                                                              
would have been a problem for.                                                                                                  
                                                                                                                                
Number 0546                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked what an asbestos claim is.                                                                              
                                                                                                                                
MR.  HAVARD  explained  that  some of  the  asbestos  claims  they                                                              
received  related  to  people  filing   products  liability  cases                                                              
against a manufacturer or distributor of asbestos products.                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG   inquired,  "So,   there  have   been  general                                                              
liability for damages?"                                                                                                         
                                                                                                                                
MR. HAVARD replied yes.                                                                                                         
                                                                                                                                
Number 0568                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG wondered if the  current statute states that the                                                              
bar date cannot be less than six months.                                                                                        
                                                                                                                                
MR. HAVARD commented that the current  statute does not have a bar                                                              
date.   He explained, "If  someone would  like to present  a claim                                                              
that had never been presented before,  they could do so 10, 20, 50                                                              
years after the insolvent carrier was declared insolvent."                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG  asked if the courts  allow for the  closing out                                                              
of an insolvency now.                                                                                                           
                                                                                                                                
MR. HAVARD  indicated the court  will allow the  insolvent carrier                                                              
to close  by the receiver.   The AIGA  has a separate  statute and                                                              
they do not have  a bar date.  The AIGA must take  all claims that                                                              
come in  and investigate  them regardless  of  when they come  in.                                                              
One of  the problem this  presents is  the more time  that passes,                                                              
the  more likely  it  will  be the  AIGA  is prejudiced  in  their                                                              
investigation   because  the  documentation   and  witnesses   are                                                              
sometimes difficult to locate.                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG wondered  if the courts now typically  set a bar                                                              
date.                                                                                                                           
                                                                                                                                
MR. HAVARD  clarified that  there is  a liquidation statute  which                                                              
contains a bar date and the courts  are able to set a bar date for                                                              
this.  In the  Guaranty Act, the courts do not  come into play and                                                              
they do not set a bar date.                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG said  there is  some type  of a  bar date  as a                                                              
practical matter, but it is a variable now.                                                                                     
                                                                                                                                
MR. HAVARD indicated that bar date  does not protect the AIGA.  It                                                              
only allows  the receiver to close  out the estate  and distribute                                                              
the assets.                                                                                                                     
                                                                                                                                
Number 0662                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  noted there  is one  case regarding  LICA (Life                                                              
Insurance Company  of Alaska)  he is familiar  with.   He believes                                                              
this case has been going on for almost 10 years.                                                                                
                                                                                                                                
MR. HAVARD believes there is a separate  statute for carriers such                                                              
as LICA.  They  are not part of the AIGA Act.   He is not familiar                                                              
with that case.   He said Don  Thomas, Attorney, might  be able to                                                              
provide information on that.                                                                                                    
                                                                                                                                
CHAIRMAN ROKEBERG  asked Mr.  Havard to  provide an example  other                                                              
than asbestos which relates to a protracted period of time.                                                                     
                                                                                                                                
MR. HAVARD said there have not been  very many of those and cannot                                                              
provide an example at this time.                                                                                                
                                                                                                                                
CHAIRMAN  ROKEBERG  requested that  Mr.  Havard  come up  with  an                                                              
example and provide it to his staff later.                                                                                      
                                                                                                                                
MR. HAVARD said he would.                                                                                                       
                                                                                                                                
Number 0709                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI referred  to the bar date and wondered if                                                              
the state  statutes on  statutes of limitations  do not  come into                                                              
play  at all.   She  gave  the example  of  a 10  year statute  of                                                              
limitation on a contract claim.                                                                                                 
                                                                                                                                
MR. HAVARD indicated  AIGA would have all of the  defenses even an                                                              
insurance  company might  have.   He explained,  "In other  words,                                                              
whatever defenses  that the original insurance policy  would have,                                                              
we  would have, and that would include  the statute of limitations                                                              
as they might apply them to the policy."                                                                                        
                                                                                                                                
Number 0762                                                                                                                     
                                                                                                                                
JOHN GEORGE,  National Association  of Independent Insurers,  came                                                              
forward to  testify on HB 310, Version  H.  He explained  that his                                                              
organization  is supportive  of the modifications  to the  current                                                              
AIGA Act.                                                                                                                       
                                                                                                                                
Number 0802                                                                                                                     
                                                                                                                                
PAUL  GROSSI,   Director,  Division   of  Workers'   Compensation,                                                              
Department  of Labor and  Workforce Development,  came forward  to                                                              
testify on HB 310, Version H.  He  indicated the division has some                                                              
concerns  regarding   the  bar  date  with  respect   to  workers'                                                              
compensation.   He said  there could be  problems with  a specific                                                              
bar date  for workers'  compensation claims.   In AS  23.30.105(a)                                                              
there is an allowance  for a claim to be filed  two years from the                                                              
date of knowledge of the problem.                                                                                               
                                                                                                                                
CHAIRMAN ROKEBERG  asked if  Mr. Grossi  is referring to  existing                                                              
statute.                                                                                                                        
                                                                                                                                
MR. GROSSI  clarified that  he is  referring to existing  workers'                                                              
compensation statutes.  These statutes  seem to run contrary to AS                                                              
21.80.060(a)(1)(B).   He is not sure  if the problem is  a big one                                                              
or a  small one.  The  Division does not  know how many  claims in                                                              
the past have arisen from insolvent carriers.  He said:                                                                         
                                                                                                                                
     The only insurance  company that I know of  that covered                                                                   
     workers'  comp[ensation],  that  became  insolvent,  was                                                                   
     PACMAR  [Pacific Marine].   And that  was quite a  while                                                                   
     back and  I don't  know that  there were any  particular                                                                   
     latent  defects.  Obviously,  if the  court would  set a                                                                   
     really early  time bar, six  months,...there might  be a                                                                   
     real problem...In  the case  of latent defects,  there's                                                                   
     really no  specific time  bar, and I  think you  came up                                                                   
     with a classic  example in an asbestos case.   It can be                                                                   
     15 years before  the symptoms show up in  those types of                                                                   
     cases  from the  original exposure.    If that  happens,                                                                   
     obviously, there would be no  coverage from the Guaranty                                                                   
       Association under this statute if the court sets a                                                                       
      time, say two years, six months,...so, that coverage                                                                      
     wouldn't be there from the Guaranty Association.                                                                           
                                                                                                                                
CHAIRMAN ROKEBERG  wondered if there had been  any asbestos claims                                                              
made in this state under workers' compensation.                                                                                 
                                                                                                                                
MR.  GROSSI replied  yes and  noted there  have been  a number  of                                                              
them.  He indicated those types of claims are subsiding.                                                                        
                                                                                                                                
CHAIRMAN ROKEBERG asked if there was a rash of those cases.                                                                     
                                                                                                                                
MR. GROSSI  said he feels they  were related more to  exposure and                                                              
now  exposure  is far  less  common.   He  indicated  the laws  on                                                              
asbestos safety came out at a later date.                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG  pointed out  that most  of the asbestos  claims                                                              
were bogus and there was no real exposure.                                                                                      
                                                                                                                                
MR. GROSSI said asbestos exposure  claims are not the only type of                                                              
latent defects which the Division  has.  He reiterated he does not                                                              
know if this is a big problem or a small one.                                                                                   
                                                                                                                                
Number 1030                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked  Mr. Grossi if he is aware  that this bill                                                              
has been  in draft  for three years  and has  not been  changed in                                                              
many years.   The insurance companies in this state  have paid out                                                              
over $7 million  in claims as a  result of the AIGA  program which                                                              
protects consumers.                                                                                                             
                                                                                                                                
MR. GROSSI said he is aware of this.                                                                                            
                                                                                                                                
CHAIRMAN ROKEBERG  wondered, "You wouldn't want to  do anything to                                                              
hinder the passage of this bill, would you?"                                                                                    
                                                                                                                                
MR. GROSSI  commented that  it would be  good to have  a provision                                                              
that would protect  both workers and employers  in this particular                                                              
situation.                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG  asked Mr.  Grossi to  clarify that the  current                                                              
statute states  that a workers'  compensation claim must  be filed                                                              
within two years of knowledge of a problem.                                                                                     
                                                                                                                                
MR.  GROSSI  clarified  that  it  must  be  within  two  years  of                                                              
knowledge of  a problem.   A person  could still  make a  claim 20                                                              
years after exposure to asbestos.   The problem he sees is that an                                                              
employee cannot file a claim against  the AIGA, but can still file                                                              
a claim against their employer.                                                                                                 
                                                                                                                                
CHAIRMAN  ROKEBERG said  he  suspects that  most  of these  claims                                                              
would be filed after a two-year period.                                                                                         
                                                                                                                                
MR. GROSSI  disagreed  and stated  that the vast  majority  of the                                                              
claims   would  be   filed   within  two   years.     He   thinks,                                                              
statistically, a small number would be filed after two years.                                                                   
                                                                                                                                
Number 1122                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked, "So,  the exemption that you would                                                              
look for then would be to keep in  place what is existing now; two                                                              
years from the date of discovery?"                                                                                              
                                                                                                                                
MR. GROSSI  apologized and stated that  he did not spend  a lot of                                                              
time  on  this  bill.    He  sent  some  information  to  Chairman                                                              
Rokeberg.    He  suggests  some   type  of  workers'  compensation                                                              
exemption that  is similar to  what is in  there for amounts.   He                                                              
referred  to page  4,  lines 24  through 25,  of  Version H  which                                                              
states "the association  shall pay the full amount  of any covered                                                              
claim  arising out  a workers'  compensation policy".   A  similar                                                              
exception  could be  made for  the bar  date or there  could  be a                                                              
provision  for  the  requirement  of the  purchase  of  an  excess                                                              
policy.   This  would  allow  the AIGA  to  make claims  from  the                                                              
insolvency and  purchase some type  of policy.   The possibilities                                                              
of  this  would  need  to  be  discussed   with  the  Division  of                                                              
Insurance.                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG  commented, "Mr.  Grossi, you indicated  you are                                                              
not aware  of any  claims made  in an  insolvency situation  under                                                              
worker's comp[ensation]."                                                                                                       
                                                                                                                                
MR.  GROSSI  clarified that  many  claims  against the  AIGA  have                                                              
occurred in workers'  compensation as far as PacMar  is concerned.                                                              
He is  not aware  of the number  of claims  that were filed  under                                                              
latent defects.                                                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG  asked Mr. Grossi  to provide the  committee and                                                              
any subsequent  committees with  information regarding  the number                                                              
of  claims  and the  time  frame  involved particularly  with  the                                                              
PacMar case.                                                                                                                    
                                                                                                                                
MR. GROSSI said he would attempt to do that.                                                                                    
                                                                                                                                
Number 1303                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG stated:                                                                                                       
                                                                                                                                
     It  appears   to  me  you're   counting  on   a  fishing                                                                   
     expert...you want  to make sure this is  available, but,                                                                   
     on the other hand, we've got  a public policy issue here                                                                   
     of  the  need to  put  some  kind  of  a bar  on  claims                                                                   
     eventually  because  these are  insolvent  organizations                                                                   
     we're dealing with and we're  having by the goodwill and                                                                   
     the  statutory force  other companies  picking up  their                                                                   
     mistakes.  So, there's a balancing act.                                                                                    
                                                                                                                                
MR. GROSSI said he agrees.  He is concerned with the rare                                                                       
employee that has some sort of a latent defect.                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG remarked:                                                                                                     
                                                                                                                                
     You're not making a lot of headway  with asbestos for me                                                                   
     cause I'm  an old building  manager-owner guy  that does                                                                   
     not believe the  alarm that was raised in  this country.                                                                   
     As  a matter  of fact,  we did  more harm  than good  by                                                                   
     removing a lot  of asbestos around and kicking  it up in                                                                   
     the air.                                                                                                                   
                                                                                                                                
Number 1358                                                                                                                     
                                                                                                                                
MR. GROSSI responded:                                                                                                           
                                                                                                                                
     That was just  an example, but, obviously, it  was a bad                                                                   
     example.   But,  I mean, there  could be  any number  of                                                                   
     things.   A back injury  that's asymptomatic for  a long                                                                   
     period of time and then, you know, something happens.                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG presumes that most of these cases are open for                                                                
quite a lengthy period of time since there is a bar date.                                                                       
                                                                                                                                
Number 1411                                                                                                                     
                                                                                                                                
DON THOMAS, Counsel to AIGA, and Attorney, Delaney, Wiles, Hayes,                                                               
Gerety & Ellis, Incorporated, testified via teleconference from                                                                 
Anchorage.  He stated:                                                                                                          
                                                                                                                                
     We have  been counsel to  the Alaska Insurance  Guaranty                                                                   
     Association for  the better part of two decades.   I was                                                                   
     asked to offer a brief attorney's  perspective as to why                                                                   
     this  bill  should  pass...By  passing  this  bill,  the                                                                   
     Guaranty  Association  is  going  to  benefit  from  the                                                                   
     lessons learned  nationally over the last 30  years that                                                                   
     has  resulted in  the NAIC;  the  underlying model  Act,                                                                   
     which is  the source  of the Alaska  statute.  It  makes                                                                   
     certain  clarifications  and resolves  ambiguities  that                                                                   
     exist currently in the statute.                                                                                            
                                                                                                                                
     Adoption of  this bill would  also provide the  benefits                                                                   
     that come  with uniformity.   As far as these  insurance                                                                   
     these companies,  every state has an  insurance guaranty                                                                   
     association,  property and  casualty...virtually all  of                                                                   
     them  are based  on some  form  of the  NAIC Model  Act;                                                                   
     however,  the  initial  Model  Act dated  back  in  '69.                                                                   
     There were amendments  in the 80s.  For example,  it was                                                                   
     in 1985 that  the NAIC Model Act was amended  to add the                                                                   
     bar date  that is  now present in  this statute,  or one                                                                   
     that we would like to have added to the  statute.                                                                          
                                                                                                                                
     The states have been updating  their own acts at various                                                                   
     rates and so there is not the  uniformity that insurance                                                                   
     companies  would prefer  to have.   They  deal with  the                                                                   
     guaranty  associations across  the country.   Alaska  is                                                                   
     one of  them that has not  joined the ranks  and adopted                                                                   
     the most  current version  of the NAIC  Model Act.   The                                                                   
     amendments  also   (indisc.  -  coughing)   offer  minor                                                                   
     housekeeping  changes  that  would  be  nice  and  maybe                                                                   
     aren't going to change the way  the system operates, but                                                                   
     would be nice to have in there.                                                                                            
                                                                                                                                
     For  example,  the  slight  change  from  the  Board  of                                                                   
     Directors  to   Board  of  Governors  would   make  this                                                                   
     consistent  with the other  guaranty associations  found                                                                   
     in  AS  21.79. for  life  and  health insurers.    Also,                                                                   
     another  example of  a minor housekeeping  change is  in                                                                   
     the limit  to Section  120 of the  Act that changes  the                                                                   
     date  of the certified  financial report  from March  to                                                                   
     June which is in fact when the  AIGA has been submitting                                                                   
     its  report in  order to  obtain a  more favorable  rate                                                                   
     from the  auditors by  waiting until  after April  15 to                                                                   
     have that report done.                                                                                                     
                                                                                                                                
Number 1608                                                                                                                     
                                                                                                                                
     I would like to respond to a  couple of comments already                                                                   
     made regarding  the bar date.   As I indicated,  the bar                                                                   
     date  has been  included in  the model  Act since  1985.                                                                   
     I've  looked   at  a  summary  of  the  50   states  and                                                                   
     identified   this  national   conference  on   insurance                                                                   
     guaranty funds that simply every  state guaranty fund is                                                                   
     basically  joined  in with  this  national  organization                                                                   
     (indisc.--paper    shuffling),   which    acts   as    a                                                                   
     clearinghouse,  basically, for  information,  and ...  I                                                                   
     have a summary  of 50 states' laws that says  there that                                                                   
     39 states currently have some version of a bar date.                                                                       
                                                                                                                                
     We do  not have any  bar date at all.   And some  of the                                                                   
     questions I was hearing gave  me the impression that you                                                                   
     might think  there is  some version of  a bar date,  but                                                                   
     there is  no bar date in  the Act.  Presently,  at best,                                                                   
     the  Guaranty Association  can benefit  from statute  of                                                                   
     limitations  offenses that might  be asserted;  however,                                                                   
     in Alaska we do have the discovery  rule that applies to                                                                   
     statute  of  limitations  when   the  statute  does  not                                                                   
     actually begin  to run until  the payment has  notice of                                                                   
     the elements that  was cause of action, so  you can have                                                                   
     a  situation where  the statute  of limitations  doesn't                                                                   
     begin to  run until years  after the underlying  act has                                                                   
     taken place.                                                                                                               
                                                                                                                                
     As  far  as   the  bar  date,  vis-a-vis   the  workers'                                                                   
     comp[ensation]-type  claims, the  NAIC was  the one  who                                                                   
     carved    out   the   exception    for   the    workers'                                                                   
     comp[ensation] in terms of the  fact that that there was                                                                   
     no  monetary limit  unlike  anybody else's  claims  that                                                                   
     cannot  exceed a  $500, 000  gap  (indisc. -  coughing).                                                                   
     There  is  no such  limit  for  workers'  comp[ensation]                                                                   
     claims; however,  the same entity  that carved  out that                                                                   
     exception,  the   NAIC  did  not  carve  out   any  such                                                                   
     exceptions for  workers' comp[ensation] when  it drafted                                                                   
     the bar date  language.  And I've been unable  to locate                                                                   
     any cases  that have said  anything about the  fact that                                                                   
     somehow that's  not consistent...So, it's the  wisdom of                                                                   
     the NAIC that has come up with  this language and how it                                                                   
     should it be applied.                                                                                                      
                                                                                                                                
Number 1760                                                                                                                     
                                                                                                                                
     One  thing I  wanted  to mention  -  something I  wasn't                                                                   
     aware of until  Chairman Rokeberg made reference  to who                                                                   
     are members  of the Guaranty Association, and  there has                                                                   
     been a significant  change that needs to  be addressed -                                                                   
     I wasn't  involved in the  change between this  bill, as                                                                   
     initially   introduced,   and    then   this   committee                                                                   
     substitute.     An  important   change  exists   in  the                                                                   
     definition  of member  insurer  which is  in Section  18                                                                   
     [page  13, line  24, Version  H] of  the draft  original                                                                   
     language  regarding  member  insurer when  the  original                                                                   
     bill  as introduced  said that the  member was  somebody                                                                   
     whose  life insurance,  which is  (A) and  then (B),  is                                                                   
     licensed to transact insurance in the state.                                                                               
                                                                                                                                
     I see here, and I have no (indisc.)  Chairman Rokeberg's                                                                   
     comment  that under  the committee  substitute  licensed                                                                   
     has been changed  to authorized which could  lend itself                                                                   
     to an interpretation that these  surplus lines that were                                                                   
     being  referenced are  probably  authorized to  transact                                                                   
     insurance  in this state,  but not necessarily  license.                                                                   
     I'm  not sure  how that  occurred  between the  original                                                                   
     bill and this committee substitute,  and, perhaps, those                                                                   
     people that  were involved in  that, which would  be Mr.                                                                   
     Andritsch and  Director Lohr, can tell the  committee if                                                                   
     that's  supposed  to  represent   something  substantive                                                                   
     there.                                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG  asked  if  it is  Mr.  Thomas's  opinion  that                                                              
changing the  word from "licensed"  to "authorized"  would include                                                              
the surplus lines.                                                                                                              
                                                                                                                                
MR. THOMAS  said he does  not know what  the intent would  be, but                                                              
stated he  could see  someone making the  argument that  there was                                                              
some intent  behind making that  change because "authorized"  is a                                                              
larger subset than simply "licensed".                                                                                           
                                                                                                                                
Number 1925                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI wondered  if there are any states that do                                                              
allow for  a specific workers'  compensation exception to  the bar                                                              
date.                                                                                                                           
                                                                                                                                
MR.  THOMAS  referred   to  the  summary  he   referenced  in  his                                                              
testimony.  It was his understanding  that Connecticut appeared to                                                              
have a specific exception for workers' compensation.                                                                            
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked:                                                                                                 
                                                                                                                                
     With  the legislation  as it's  drafted  now that  would                                                                   
     allow  the court  to  set the  date  for  the filing  of                                                                   
     claims --  so, for instance,  if we had a  really thorny                                                                   
     asbestos issue, I'm assuming  that the court is going to                                                                   
     look at the  types of claims that we may  have presented                                                                   
     and, rather than just automatically  say...there's a set                                                                   
     time-table, they would look  at the types of claims that                                                                   
     are generally  presented and  could make allowances  for                                                                   
     that?                                                                                                                      
                                                                                                                                
MR. THOMAS said  he thinks there is a statute  that specifies some                                                              
sort  of time  frame  for when  the bar  date  in the  liquidation                                                              
action has to  be set.  He does  not know if it is  termed that it                                                              
cannot be  any less  than a certain  time or  more than  a certain                                                              
time.  The  first hurdle to  clear would be whatever  the existing                                                              
statute provides for.  He said:                                                                                                 
                                                                                                                                
     Please  keep   in  mind  that  this  bar   date  in  the                                                                   
     liquidation,...the disorder  that comes out of the court                                                                   
     who  is entering  the order  of  liquidation, it  simply                                                                   
     states...any  claims  against  the  insolvent  insurer's                                                                   
     estate  have  to be  filed  by  such  and such  a  date.                                                                   
     There's  nothing in  there that says  any claim  against                                                                   
     the Guaranty  Association has  to be  filed by such  and                                                                   
     such a date.   This language that we are  proposing here                                                                   
     in this bill,  which is virtually identical  to the NAIC                                                                   
     language, now  adopts that bar  date that is set  in the                                                                   
     order of liquidation  for the insolvent insurer  is also                                                                   
     being the deadline for filing  a claim with the Guaranty                                                                   
     Association in order for it to be covered.                                                                                 
                                                                                                                                
REPRESENTATIVE MURKOWSKI  wondered about how much  flexibility the                                                              
courts actually have with the bar  date.  She thinks if there is a                                                              
fair amount of  flexibility, then there may not be  a problem from                                                              
the perspective of workers' compensation.                                                                                       
                                                                                                                                
Number 2177                                                                                                                     
                                                                                                                                
MR. THOMAS explained  that there have been a couple  of cases that                                                              
have talked  about the  reasons for  bar dates  from other  states                                                              
that have  language similar  to the NAIC  model language.   It has                                                              
been commented that the purpose is  to allow for early liquidation                                                              
of  the  insurer  which  would  then  benefit  the  claimants  and                                                              
policyholders.  The requirement to  have claims filed by a certain                                                              
date indicates an  intention on the part of the NAIC  to provide a                                                              
cut-off  date and  to have  a reasonable  limit  to liability  and                                                              
finality to the proceedings.                                                                                                    
                                                                                                                                
MR.  THOMAS said  this  would allow  the AIGA  to  seek a  greater                                                              
reimbursement  from the receiver  for the claim  that is  paid out                                                              
for properly filed covered claims.   Without that the distribution                                                              
is prolonged to the detriment of  other claimants.  The liquidator                                                              
of the insolvent  insurer does not wait until it  is marshaled all                                                              
of the  possible assets of  the estate.   As the assets  are being                                                              
collected,  there is a  procedure called  early access  because is                                                              
the  intent is  to try  to get  the money  into the  hands of  the                                                              
people that deserve  it as quickly as possible.   Typically, there                                                              
is not enough money to cover all the claims much less the                                                                       
interest loss.  Mr. Thomas further said:                                                                                        
                                                                                                                                
     So, you  have this principle  of early access  where the                                                                   
     liquidator  will  go to  the  court who  is  supervising                                                                   
     liquidation  and  say, "I've  collected  this amount  of                                                                   
     money.  This  would allow me to pay at  least 25 percent                                                                   
     of all claims right now and  still have enough left over                                                                   
     for the contingent claims or  other claims that or other                                                                   
     things that will have to be paid out in the future."                                                                       
                                                                                                                                
     And  when   you  have  a   situation  of  the   Guaranty                                                                   
     Association,  for  example,  in  the  PacMar  estate,  I                                                                   
     believe  it was  the largest  creditor, to  the tune  of                                                                   
     about 85  percent of the  claims came from  the Guaranty                                                                   
     Association.  And when it's  out there saying, "We don't                                                                   
     really know how much are claim  is because we don't have                                                                   
     (indisc.)coming  in because there's  no bar date."   And                                                                   
     the liquidator says, "I've got  to set more money aside,                                                                   
     reserve  more money  for the future,  because we  really                                                                   
     don't  know how  much the  Guaranty Association's  claim                                                                   
     might  be  by  the  time  the  liquidator  set  a  final                                                                   
     amount."...                                                                                                                
                                                                                                                                
     By having this  bar date, the liquidator  will know what                                                                   
     the value  is of the  Guaranty Association claim  sooner                                                                   
     and  can get  that money  distributed sooner.   I  think                                                                   
     that's  just  one  practical  benefit of  having  a  bar                                                                   
     date...I  think a  court  would look  at  that and  say,                                                                   
     "We'll give  some leeway here."   I think a  court would                                                                   
     generally be  reticent to make  it, you know,  like five                                                                   
     years  to  make  claims.   There  are  the  same  policy                                                                   
     concerns  behind a  statute  of limitations...You  don't                                                                   
     want those  claims to  get so stale  and what not,  that                                                                   
     they're  hard  to  resolve.   A  court  can  and  should                                                                   
     probably consider  what types of claims might  be coming                                                                   
     down  the  pike.    As  Mr.   Havard  said,  the  courts                                                                   
     typically  are  setting  these   bar  dates  as  to  the                                                                   
     liquidated estate  for about a year out.                                                                                   
                                                                                                                                
TAPE 00-17, SIDE A                                                                                                              
Number 0007                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked if it is correct that a typical bar date                                                                
would be a year.                                                                                                                
                                                                                                                                
MR. THOMAS indicated that is his understanding.  He believes Bob                                                                
Lohr, Director, Division of Insurance, Department of Community                                                                  
and Economic  Development, would have  a better basis  to identify                                                              
what that time frame generally is.                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG asked what is it a year from.                                                                                 
                                                                                                                                
MR. THOMAS specified that it is a  year from the date the order of                                                              
liquidation is entered.                                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG  wondered if Mr.  Thomas knows the  specifics of                                                              
the PacMar case in terms of timing.                                                                                             
                                                                                                                                
MR. THOMAS said he thinks Mr. Havard  would know because he had to                                                              
meet  the deadline  on behalf  of  the AIGA.   He  stated that  it                                                              
occurred sometime in the late 80s.                                                                                              
                                                                                                                                
Number 0089                                                                                                                     
                                                                                                                                
MR.  HAVARD indicated  he has  the date.   For  Pacific Marine  of                                                              
Alaska  (PacMar),  there were  actually  two  carriers.   One  was                                                              
Pacific  Marine of  Alaska and  the  other was  Pacific Marine  of                                                              
Washington.  He  believes PacMar of Alaska was  declared insolvent                                                              
in June of 1989.   The bar date was set in March  of 1990.  PacMar                                                              
of Washington  was declared  insolvent in June  of 1989  and their                                                              
bar date was set at October of 1989.                                                                                            
                                                                                                                                
CHAIRMAN ROKEBERG  wondered how long  it took to resolve  the case                                                              
after the bar date was set.                                                                                                     
                                                                                                                                
MR. HAVARD explained:                                                                                                           
                                                                                                                                
     The way that  it works is once we get the  claim, if the                                                                   
     claim  has previously  been  filed with  Pacific  Marine                                                                   
     before they  went insolvent or  they are filed  prior to                                                                   
     the bar  date, then we will  handle them until  they run                                                                   
     out.    We  have  some  cases,  workers'  comp[ensation]                                                                   
     cases, that  will run  out for as  long as 20  years for                                                                   
     the life expectancy  of the employee.  So,  that doesn't                                                                   
     change that. What we do is we  reserve those cases based                                                                   
     on our best  estimate for what the cost will  be all the                                                                   
     way to  the end of the claim  which may be far  into the                                                                   
     future.   And we  set those reserves  and those  are the                                                                   
     amounts that we make against  the insolvent estate.  So,                                                                   
     the  only claims  we  would be  talking  about here  are                                                                   
     those  that were  not filed  either  with the  insolvent                                                                   
     carrier or  with the Guaranty Association prior  to that                                                                   
     bar date.                                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG  commented, "So, the  court set that  date under                                                              
the Alaska Statute of not less than six months."                                                                                
                                                                                                                                
MR. HAVARD  said he believes  that is correct.   He added  that in                                                              
some of  these cases, particularly  the large asbestos  cases, the                                                              
manufacturer  files contingent  claims.    The manufacturer  files                                                              
these  contingent claims  frequently prior  to the  bar date  even                                                              
though  they do  not  know the  amount or  the  number of  claims.                                                              
Litigation may occur several years  later.  He reiterated, "We try                                                              
to reserve our best estimate for  what that will cost the State of                                                              
Alaska."                                                                                                                        
                                                                                                                                
Number 0337                                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG  asked  Mr. Thomas  for  clarification  on  his                                                              
comment regarding  not having  a bar date  but having  a statutory                                                              
six-month minimum.                                                                                                              
                                                                                                                                
MR. THOMAS clarified that it refers to the liquidation Act.                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  wondered if there is  a de facto effect  on the                                                              
bar date.                                                                                                                       
                                                                                                                                
MR THOMAS  replied it would under  the adoption of Version  H, but                                                              
there is currently no de facto effect.                                                                                          
                                                                                                                                
CHAIRMAN ROKEBERG asked if courts  will set bar dates on their own                                                              
if they lack any statutory direction.                                                                                           
                                                                                                                                
MR. THOMAS responded no.  He explained  the courts have to set the                                                              
bar  date  under  the liquidation  Act,  not  under  the  Guaranty                                                              
Association  Act.   They  set  up  a deadline  for  filing  claims                                                              
against the insolvent  estate.  Everyone, including  the AIGA, has                                                              
to  meet that  deadline;  however,  there is  no  deadline for  an                                                              
insurer or  a claimant to come  to the AIGA with  causative action                                                              
and make a claim.  Under the existing  act, the AIGA would have to                                                              
pay that claim.  The AIGA would then  need to inform the insolvent                                                              
estate  they are now  subrogated  against them  and would like  to                                                              
recuperate  their money.   In the  situation where  the estate  no                                                              
longer  exists,  there  is  no  one  to  obtain  subrogation  from                                                              
anymore.  The  cost is passed on to purchasers  of Alaska policies                                                              
as opposed to obtaining anything from the insolvent estate.                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG   asked  Mr.  Thomas  to  reclarify   what  the                                                              
liquidation date is.                                                                                                            
                                                                                                                                
MR. THOMAS explained there is an  order of liquidation that has to                                                              
be entered.   This  is basically  recognition  by the court  which                                                              
declares  an  estate   insolvent  and  states  that   it  will  be                                                              
liquidated.  One of rules of liquidation  the court establishes is                                                              
the deadline for  claimants to file a claim against  the insolvent                                                              
estate.  He would  associate the term "liquidation  date" with the                                                              
date the order of liquidation was entered.                                                                                      
                                                                                                                                
Number 0542                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG wondered, "So,  there is a bar date by the court                                                              
order under that?"                                                                                                              
                                                                                                                                
MR. THOMAS replied yes.                                                                                                         
                                                                                                                                
CHAIRMAN  ROKEBERG   stated  he  was  confused   when  Mr.  Thomas                                                              
indicated that it is not a de facto bar date.                                                                                   
                                                                                                                                
MR.  THOMAS stressed  there is  no de  facto because  it does  not                                                              
prohibit anyone  who has a  valid claim, that  is not barred  by a                                                              
statute of limitations,  from going against the AIGA.   The cannot                                                              
go against the insolvent insurer  anymore, but they can go against                                                              
the AIGA.                                                                                                                       
                                                                                                                                
CHAIRMAN  ROKEBERG  referred back  to  the issue  of  "authorized"                                                              
versus "licensed".  He stated that  authorization in Alaska occurs                                                              
via  certification  and not  licensure.    He cited  AS  21.09.010                                                              
relating to  the certificate of  authority required.   He referred                                                              
to page  4, line  22, of  Version H  which states  that a  covered                                                              
claim for  return of unearned premium  may not exceed  $10,000 for                                                              
each policy.  He asked Mr. Thomas to explain what this means.                                                                   
                                                                                                                                
MR. THOMAS indicated he cannot explain  its meaning because he did                                                              
not draft the bill.  He stated it  is verbatim Model Act language.                                                              
The NAIC would need to answer that question.                                                                                    
                                                                                                                                
CHAIRMAN ROKEBERG wondered what an unearned premium is.                                                                         
                                                                                                                                
MR. THOMAS explained:                                                                                                           
                                                                                                                                
     That's  where  you  bought a  12-month  policy  and  the                                                                   
     insurer  goes  insolvent  after three  months  and  that                                                                   
     policy is  terminated and so  you pay for 12  months and                                                                   
     only  got three, you  should get  back three-fourths  of                                                                   
     your premium 'cause it was never earned.                                                                                   
                                                                                                                                
Number 0736                                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG  suggested  that   Mr.  Thomas  do  some  legal                                                              
research regarding  that because there may be  some question about                                                              
it.                                                                                                                             
                                                                                                                                
MR. THOMAS reiterated that the language  has been in the model Act                                                              
since 1985.   There have not  been any cases which  have discussed                                                              
capping that amount.                                                                                                            
                                                                                                                                
Number 0829                                                                                                                     
                                                                                                                                
BOB LOHR, Director, Division of Insurance,  Department of Economic                                                              
Development,  testified  via teleconference  from  Anchorage.   He                                                              
asked  Sarah McNair-Grove,  Actuary,  to assist  him in  answering                                                              
questions.                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG  referred to an  e-mail from Mr.  Lohr regarding                                                              
the $10,000  unearned premium  cap.  He  asked for an  explanation                                                              
regarding this issue.                                                                                                           
                                                                                                                                
MR. LOHR said this  is not a claim limit, but  an unearned premium                                                              
limit for  canceled policies.   It was  adopted in the  NAIC Model                                                              
Act in 1985.   He believes it represents an effort  to control the                                                              
cost of the  AIGA activities and  tries to define, in  a different                                                              
way, a limitation  on the size of policies that  would qualify for                                                              
full coverage.                                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG  referred once again  to the change of  the term                                                              
"licensed" to  "authorized" in  Version H, page  13, line 12.   He                                                              
asked  if   his  explanation   is  consistent   with  Mr.   Lohr's                                                              
understanding.                                                                                                                  
                                                                                                                                
Number 0932                                                                                                                     
                                                                                                                                
MR. LOHR affirmed that it is consistent,  but they do not have the                                                              
benefit  of  the drafter's  presence  today.   He  explained  that                                                              
"admitted insurer"  is a  defined term in  Alaska Statutes.   This                                                              
defines it as "authorized insurer"  and an "authorized insurer" is                                                              
one to whom the Director has issued  a certificate of authority to                                                              
transact the business of insurance in Alaska.                                                                                   
                                                                                                                                
CHAIRMAN ROKEBERG  wondered if there is a reason  the non-admitted                                                              
surplus line people are not covered by this.                                                                                    
                                                                                                                                
MR. LOHR does not believe they would  be covered, but he indicated                                                              
he would check.  He asked Sarah McNair-Grove if she knows.                                                                      
                                                                                                                                
SARAH MCNAIR-GROVE, Actuary, Division  of Insurance, Department of                                                              
Community  and  Economic  Development,   came  forward  to  answer                                                              
questions on HB 310, Version H.   She said surplus line people are                                                              
not  covered, but  she  is unfamiliar  with  the specific  history                                                              
behind   why they were  excluded.  The  AIGA only covers  admitted                                                              
insurers.                                                                                                                       
                                                                                                                                
Number 0993                                                                                                                     
                                                                                                                                
MR. GEORGE  noted he was the  former Director of Insurance  and is                                                              
the  one who  put  PacMar into  receivership.    He explained  the                                                              
reason non-admitted  insurers are not covered is  because they are                                                              
different  entity.   There  are requirements  in  order to  become                                                              
licensed.   They are a regulated  market and forms and  rates have                                                              
to be filed with the Director of Insurance                                                                                      
                                                                                                                                
CHAIRMAN  ROKEBERG  interjected   and  said  Alaska  has  licensed                                                              
insurers.                                                                                                                       
                                                                                                                                
MR. GEORGE clarified that the companies  that have certificates of                                                              
authority  are generically  called  licensed.   Companies with  no                                                              
certificate  of  authority  are the  unauthorized  market  or  the                                                              
surplus lines  market.  These are  companies which are  willing to                                                              
sell insurance, but  they are not willing to obtain  a certificate                                                              
of authority, file  their rates and their forms,  and be regulated                                                              
the same as authorized insurers.   Certain types of coverages have                                                              
been  carved out  that  these companies  may  write,  but only  if                                                              
authorized companies  will not write them.  An example  of this is                                                              
medical  malpractice or  architects'  errors  and omissions  where                                                              
there is no admitted market.                                                                                                    
                                                                                                                                
CHAIRMAN ROKEBERG asked if they pay premium taxes.                                                                              
                                                                                                                                
MR. GEORGE  replied that  they do pay  premium taxes.   The policy                                                              
holders who  have a  policy from an  unauthorized insurer  are not                                                              
entitled to collect from the AIGA.                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG wondered  if Mr. George knows of  anyone who was                                                              
barred from filing in the PacMar case.                                                                                          
                                                                                                                                
MR. GEORGE  said he does  not know of  anyone who was  barred from                                                              
filing.                                                                                                                         
                                                                                                                                
MR. LOHR stated that the division  supports Version H.  He is glad                                                              
to see this version offered because  there were some provisions in                                                              
the original  bill which  caused concern.   He believes  Version H                                                              
represents a  reasonable approach  to streamlining what  is needed                                                              
in    guaranty  association.    He   commented  on  the  testimony                                                              
regarding  the importance  of  uniformity among  the  states.   He                                                              
emphasized this in  light of some of the changes  the Gramm-Leach-                                                              
Bliley Act made  to financial services.  He  stressed streamlining                                                              
businesses  is  crucial.   Insurance  companies  need to  have  an                                                              
easier  time of  dealing  with  the multiple  jurisdictions  which                                                              
includes  guaranty association  as  one  of the  key  topics.   He                                                              
believes  if the  AIGA  bill were  left in  its  current it  could                                                              
represent   a  competitive  disadvantage   for  Alaska   insurance                                                              
companies and for the Alaska insurance  market with respect to the                                                              
national picture.  Adoption of those changes is well indicated.                                                                 
                                                                                                                                
Number 1233                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  asked Mr. Lohr to  comment on the bar  date and                                                              
workers'  compensation.   He also  asked Mr. Lohr  to provide  the                                                              
committee with written comments.                                                                                                
                                                                                                                                
MR. LOHR explained that the bar date  is not provided in law.  The                                                              
restriction is  a minimum amount  of time that must  occur between                                                              
the liquidation date and the bar  date itself.  There is, in fact,                                                              
a  minimum amount  of  time  that must  occur.   There  are  other                                                              
provisions that  provide for treating  a late claim as if  it were                                                              
timely  followed  if certain  conditions  are  met.   One  of  the                                                              
principal reasons  the PacAK [Pacific Marine Insurance  Company of                                                              
Alaska] and PacMar  liquidation has dragged out as  long as it has                                                              
is tied with late filed claims.   There were some filed as late as                                                              
four years  after the  bar date  that had  sufficient validity  to                                                              
them to  require a  substantial review  analysis by the  receiver,                                                              
then ultimately  litigation all the  way up to the  Supreme Court.                                                              
He commented:                                                                                                                   
                                                                                                                                
     I am  very pleased  to announce  that recently,  earlier                                                                   
     this month  actually, we achieved an agreement  with the                                                                   
     claimant  for  those,  which   is  the  Commissioner  of                                                                   
     Insurance  in Delaware, for  settlement of those  claims                                                                   
     in a  way that  should bring  the PacAK receivership  to                                                                   
     termination here in a very timely fashion.                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG asked if this case is over 11 years old.                                                                      
                                                                                                                                
MR. LOHR said that is correct.                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG  wondered, "You said there were  some provisions                                                              
for exceptions to claims and, therefore,  claims were made in this                                                              
case.  Is that under the liquidation provision?"                                                                                
                                                                                                                                
MR. LOHR replied that is correct  and indicated he is referring to                                                              
the   rehabilitation  and   liquidation  chapter,   which  is   AS                                                              
21.78.292.  Subsection  C refers to late-filed  claims sharing and                                                              
distributions.                                                                                                                  
                                                                                                                                
CHAIRMAN  ROKEBERG   asked  if  that  is  under   the  liquidation                                                              
provision, but not a guaranty.                                                                                                  
                                                                                                                                
MR. LOHR stated that is correct and  pointed out this is where the                                                              
bar date parameters are established  also.  The bar date is set by                                                              
the Director of Insurance as the  statutory receiver in the notice                                                              
to the claimant and then it is approved by the court.                                                                           
                                                                                                                                
CHAIRMAN  ROKEBERG  asked,  "Is  that  under  you  regulations  or                                                              
policy?"                                                                                                                        
                                                                                                                                
MR. LOHR noted that it is also under AS 21.78.                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG  wondered if Mr.  Lohr is suggesting  that there                                                              
is a bar date  here and the testimony from Mr.  Thomas has been to                                                              
the contrary.                                                                                                                   
                                                                                                                                
MR.  LOHR  said  he  is  not  suggesting   there  is  a  bar  date                                                              
established by  statute, but rather  there is a minimum  time that                                                              
must occur between the order of liquidation  date and the bar date                                                              
established  by the    statutory  receiver in  the  notice to  the                                                              
claimant.                                                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG indicated  that is the issue here.   He wondered                                                              
if a bar date is promulgated by the statutory receiver.                                                                         
                                                                                                                                
Number 1436                                                                                                                     
                                                                                                                                
MR.  LOHR  replied  that  it  is  his  understanding  that  it  is                                                              
statutory and it is one of the requirements  of the Act.  He asked                                                              
Ms. McNair-Grove if she has any information.                                                                                    
                                                                                                                                
MS. MCNAIR-GROVE apologized and commented that she does not.                                                                    
                                                                                                                                
CHAIRMAN  ROKEBERG  asked  Mr. Lessmeier  if  there  is  confusion                                                              
between the terms "liquidation date" and "bar date".                                                                            
                                                                                                                                
MR. LESSMEIER said he thinks there  may be confusion because there                                                              
is a  bar date for  presentation of claims  against the  estate of                                                              
the  insolvent  receiver.   The  bar date  that  is  sought to  be                                                              
imposed  or created  by Version H  would apply  to claimants  that                                                              
would be making a claim against the  AIGA.  There are two separate                                                              
bar dates being  discussed.  He believes the bar  date Mr. Lohr is                                                              
referring  to  is the  bar  date  for claims  by  the  Association                                                              
against the receiver.                                                                                                           
                                                                                                                                
Number 1514                                                                                                                     
                                                                                                                                
MR.  LOHR said  he  believes  Mr. Lessmeier  is  correct.   He  is                                                              
referring to AS 21.78.100.                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG  asked Mr. George  what his recollection  of the                                                              
PacMar case is.                                                                                                                 
                                                                                                                                
MR. GEORGE  indicated he was gone  from the Division  of Insurance                                                              
during that case.                                                                                                               
                                                                                                                                
MR. LOHR  made a  final point concerning  Mr. Grossi's  testimony.                                                              
He believes  Mr. Grossi's characterization  of the  uncertainty of                                                              
the size  of the  problem is important.   Mr.  Lohr also  does not                                                              
know the  answer, but he  posed an alternative  if it is  a little                                                              
problem.   He suggests  that the  statutory receiver consult  with                                                              
the Division  of Workers'  Compensation to  establish a  bar date.                                                              
This   would  be   one  way   to  simply   establish  that   those                                                              
considerations  are factored  in.   Some  approach which  involves                                                              
consultation  and consideration,  but  does  not involve  outright                                                              
exclusion  or waiver  of  those  considerations  from the  process                                                              
would be a possible alternative.                                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG  stated that would  certainly be  an alternative                                                              
if they want to deviate from the Model Act.                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI  mentioned the comment made  in reference                                                              
to  filing contingent  claims in  order to  get in  under the  bar                                                              
date.  She does not see any reference  to the way the claim has to                                                              
be filed.  It is not a final claim  when it filed.  She wonders if                                                              
the filing  of a  contingent claim  can address  the problem  that                                                              
workers' compensation may be looking at.                                                                                        
                                                                                                                                
Number 1666                                                                                                                     
                                                                                                                                
MR. HAVARD said he is not aware there  ever was a contingent claim                                                              
on workers' compensation.  He explained  an injured employee would                                                              
generally know  at the time  they are  filing whether or  not they                                                              
are  injured.   Contingent  claims  are  normally done  on  large,                                                              
commercial types  of insureds  who are aware  they have  a problem                                                              
such  as with  asbestos.   A  contingent  claim  is filed  without                                                              
knowing the amount of claims.  He said:                                                                                         
                                                                                                                                
     In fact,  just today  I filed a  claim on behalf  of the                                                                   
     Guaranty  Association  with  the receiver  for  Pinnacle                                                                   
     Insurance  Company, who  was  found to  be insolvent  in                                                                   
     Georgia on the  date of September 20 of 1999,  but their                                                                   
     bar  date  is March  31  of  2000.   On  behalf  of  the                                                                   
     Guaranty  Association, who has  no bar  date, I filed  a                                                                   
     contingent claim with the State  of Georgia in the event                                                                   
     that Pinnacle  Insurance [does] present a  claim against                                                                   
     us.  But,  if we pass the bar date, most  likely Georgia                                                                   
     will not  allow me  to take any  claims that come  to me                                                                   
     after March 31.                                                                                                            
                                                                                                                                
     The Guaranty Association will  have to pay the claims on                                                                   
     Pinnacle  Insurance Company  next year  and will not  be                                                                   
     able  to file  them back  against  Pinnacle unless  they                                                                   
     file  them  with  me  prior   to  March  31,  unless  an                                                                   
     exception  is made  by the  receiver.   With respect  to                                                                   
     your  contingent  claims,...I  file  contingent  claims.                                                                   
     I've also had contingent claims  filed with us timely by                                                                   
     some of these large, commercial insureds.                                                                                  
                                                                                                                                
REPRESENTATIVE MURKOWSKI said that is helpful.                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG asked, "You said if we passed this                                                                            
legislation,...the Guaranty Association would be protected or                                                                   
liable?"                                                                                                                        
                                                                                                                                
Number 1774                                                                                                                     
                                                                                                                                
MR. HAVARD clarified:                                                                                                           
                                                                                                                                
     When I received notice from  Pinnacle that they had been                                                                   
     declared  insolvent, I  wrote a letter  to Pinnacle  and                                                                   
     said we  have no claims  for Pinnacle at this  point...I                                                                   
     received a  letter just a  short time ago  from Pinnacle                                                                   
     saying,  "No, there  are  no claims  in  Alaska, but  we                                                                   
     recommend you  file a contingent claim just  in case one                                                                   
     comes up."   But, if we receive a claim  after their bar                                                                   
     date,  it's likely  that they  will  have some  problems                                                                   
     with us filing it against them.                                                                                            
                                                                                                                                
     As  an example,  I will  go  back to  Pacific Marine  of                                                                   
     Washington.  I did actually  have a claim come up with a                                                                   
     commercial  insured  here in  the  State of  Alaska  who                                                                   
     received  notice of some  claims.  We  set up a  reserve                                                                   
     for those  and began to incur expenses  on investigating                                                                   
     those claims.                                                                                                              
                                                                                                                                
     Now, there was  some question as to the validity  of the                                                                   
     claims,  but  we investigated  them  and  did set  up  a                                                                   
     reserve.    We  filed  those  against  the  receiver  in                                                                   
     Washington  and  they  were  denied.    So,  the  Alaska                                                                   
     Guaranty  Association bears  the cost  of those  claims;                                                                   
     both the  expense and  the claims  if we ultimately  pay                                                                   
     any  out.   And we'll  not receive  any  funds from  the                                                                   
     Pacific  Marine  of  Washington  receiver  because  they                                                                   
     claimed  they were  late  filed.   Now  we started  some                                                                   
     litigation on  that matter and we did  ultimately settle                                                                   
     as a matter  of fact, but it's something  that's quite a                                                                   
     can  of worms  if we have  to go  there and  we felt  we                                                                   
     would lose.  So, we did manage  to settle out with them.                                                                   
                                                                                                                                
Number 1859                                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG asked  Mr.  Havard to  explain  the history  of                                                              
PacMar  with  respect  to  the  number   claims  and  late  claims                                                              
involved.  He  explained there is a desire to  assess the validity                                                              
of a bar date.                                                                                                                  
                                                                                                                                
MR. HAVARD  said he does  not believe  there were any  claims that                                                              
PacMar denied  as late filed.   He indicated  Mr. Lohr  alluded to                                                              
the fact that exceptions were made.   On the other hand, PacMar of                                                              
Washington did deny  some claims, but none of  those were workers'                                                              
compensation claims.   He thinks the workers'  compensation claims                                                              
which came  in after their bar  date were claims that  were simply                                                              
reopened  and had  already  been  filed.   He  believes they  were                                                              
timely filed, but does not know this for a fact.                                                                                
                                                                                                                                
CHAIRMAN  ROKEBERG   wondered  if  the  claims   could  have  been                                                              
legitimately filed in a timely fashion, but reopened.                                                                           
                                                                                                                                
MR. HAVARD said that is correct.                                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG asked if Mr. Havard  knows if there was any kind                                                              
of a bar date established by the courts for PacMar of Alaska.                                                                   
                                                                                                                                
MR. HAVARD  commented that there was  a bar date.  He  believes it                                                              
was  set  for  a  little  over  six   months  from  the  order  of                                                              
liquidation date.                                                                                                               
                                                                                                                                
CHAIRMAN ROKEBERG  asked if the AIGA  could still be subject  to a                                                              
claim from an alleged PacMar insured to this date.                                                                              
                                                                                                                                
MR.  HAVARD  replied   yes.    He  expects  to   receive  a  final                                                              
distribution from  the receiver probably within the  next three to                                                              
six  months.   At  that  point, there  will  not  be a  chance  of                                                              
returning to  the receiver   for any  claim whatsoever.   However,                                                              
the  AIGA may  receive  a brand  new  claim at  any  point in  the                                                              
future.                                                                                                                         
                                                                                                                                
Number 1977                                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG wondered  if that  is because  there is  no bar                                                              
date.                                                                                                                           
                                                                                                                                
MR. HAVARD said that is correct.                                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG  asked Mr. Grossi if listening  to the testimony                                                              
has changed his opinion any.                                                                                                    
                                                                                                                                
MR. GROSSI stated,  as indicated by the testimony,  that there was                                                              
no  problem with  the PacMar  case.   He thinks  it may  not be  a                                                              
problem, but  is not entirely sure.   There might still  be claims                                                              
out  there that  would be  barred  from filing  against the  AIGA.                                                              
Although, they are not barred from  filing a workers' compensation                                                              
claim.                                                                                                                          
                                                                                                                                
CHAIRMAN ROKEBERG  explained that  he would like  to move  HB 310,                                                              
Version H, to  the House Judiciary Standing Committee.   He thinks                                                              
the  bar date  issue might  be a  more appropriate  topic in  that                                                              
committee.                                                                                                                      
                                                                                                                                
Number 2084                                                                                                                     
                                                                                                                                
DWIGHT  PERKINS,  Deputy  Commissioner, Department  of  Labor  and                                                              
Workforce Development, came forward  to testify on HB 310, Version                                                              
H.  He stated:                                                                                                                  
                                                                                                                                
     Until  we saw  the introduction  of this  bill, you  did                                                                   
     talk to  Mr. Grossi  a little  about this,...and I  just                                                                   
     want to say  we were not in the development  of this and                                                                   
     so his inability  to show any case things  going on with                                                                   
     whether  it's going  to  be  a big  problem  or a  small                                                                   
     problem, is because we weren't  involved in the crafting                                                                   
     of  this legislation.   And  you know that  we've had  a                                                                   
     couple  of  major  pieces  of   legislation  we've  been                                                                   
     working  on and he  just hasn't had  the time to  review                                                                   
     it.  And we'll be more than  happy to try to come to the                                                                   
     Judiciary  Committee  and discuss  that  and if  there's                                                                   
     going to  be a  bigger problem.   But that's the  reason                                                                   
     he's not  laying it  out in front  of you today  as what                                                                   
     that problem may or may not be.                                                                                            
                                                                                                                                
CHAIRMAN ROKEBERG said he appreciates Mr. Perkins' comments.                                                                    
                                                                                                                                
REPRESENTATIVE MURKOWSKI  made a motion to move the  CS for HB 310                                                              
[Version  H,   1-LS1030\H, Ford,  1/27/00] out  of committee  with                                                              
individual  recommendations  and the  attached  zero fiscal  note.                                                              
There  being no  objection,  CSHB 310(L&C)  moved  from the  House                                                              
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
Number 2168                                                                                                                     
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:37 p.m.                                                                                                                       
                                                                                                                                

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