Legislature(2015 - 2016)BARNES 124

04/18/2015 09:00 AM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 1:15 p.m. Today --
+ SB 107 INSURANCE; RISK MG'T; HOLDING COMPANIES TELECONFERENCED
Moved SB 107 Out of Committee
+ SB 15 LIFE INSURANCE POLICY PREMIUM TAX TELECONFERENCED
Moved SSSB 15 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
           HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         April 18, 2015                                                                                         
                            9:11 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
Representative Jim Colver                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 15                                                                                       
"An  Act relating  to the  tax on  policy year  premiums for  life                                                              
insurance policies."                                                                                                            
                                                                                                                                
     - MOVED SSSB 15 OUT OF COMMITTEE                                                                                           
                                                                                                                                
SENATE BILL NO. 107                                                                                                             
"An  Act relating  to insurance;  relating to  risk based  capital                                                              
for domestic insurers  and fraternal benefit  societies, including                                                              
provisions related  to insurers subject to risk  based capital and                                                              
action  level  event  requirements;  relating  to  review  by  the                                                              
director of  insurance of  an insurer's  risk based capital  plan;                                                              
relating  to confidentiality  and sharing  of certain  information                                                              
submitted  to the director  of insurance;  relating to  evaluating                                                              
an insurance  holding company  and the  acquisition of  control of                                                              
or  merger  with  a  domestic  insurer;  relating  to  risk  based                                                              
capital, risk  management, and own  risk and solvency  assessments                                                              
of insurers; clarifying  provisions related to risk  based capital                                                              
plans; relating  to exemptions  by the  director of insurance  for                                                              
certain domestic  and casualty  insurers from  risk based  capital                                                              
requirements; relating  to insurance holding  companies, including                                                              
filing   requirements,   divestiture,   content   of   statements,                                                              
notifications,    and   hearings;    relating   to    registration                                                              
requirements  of  insurers;  relating to  transactions  within  an                                                              
insurance  holding  company  system or  transactions  involving  a                                                              
domestic  insurer;  relating  to  management  and  examination  of                                                              
domestic insurers  that are part  of an insurance  holding company                                                              
system;  adding  provisions  relating   to  participation  by  the                                                              
director  of  insurance  in a  supervisory  college;  relating  to                                                              
civil  and  criminal  penalties for  violations  by  insurers  and                                                              
individuals; relating  to provisions  for risk management  and own                                                              
risk and solvency  assessments by insurers; relating  to operating                                                              
requirements  for  controlling insurance  producers;  relating  to                                                              
producer-controlled  insurers;  adding  and  amending  definitions                                                              
related to insurers; and providing for an effective date."                                                                      
                                                                                                                                
     - MOVED SB 107 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 15                                                                                                                   
SHORT TITLE: LIFE INSURANCE POLICY PREMIUM TAX                                                                                  
SPONSOR(s): SENATOR(s) COGHILL                                                                                                  
                                                                                                                                
01/21/15       (S)       PREFILE RELEASED 1/16/15                                                                               
01/21/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/15       (S)       L&C, FIN                                                                                               
02/04/15       (S)       SPONSOR SUBSTITUTE INTRODUCED-REFERRALS                                                                
02/04/15       (S)       L&C, FIN                                                                                               
02/26/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/26/15       (S)       Heard & Held                                                                                           
02/26/15       (S)       MINUTE(L&C)                                                                                            
03/03/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/03/15       (S)       Moved SSSB 15 Out of Committee                                                                         
03/03/15       (S)       MINUTE(L&C)                                                                                            
03/04/15       (S)       L&C RPT 3DP                                                                                            
03/04/15       (S)       DP: GIESSEL, MEYER, STEVENS                                                                            
03/23/15       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/23/15       (S)       Heard & Held                                                                                           
03/23/15       (S)       MINUTE(FIN)                                                                                            
04/08/15       (S)       FIN AT 1:30 PM SENATE FINANCE 532                                                                      
04/08/15       (S)       Moved SSSB 15 Out of Committee                                                                         
04/08/15       (S)       MINUTE(FIN)                                                                                            
04/09/15       (S)       FIN RPT 3DP 2NR                                                                                        
04/09/15       (S)       DP: BISHOP, DUNLEAVY, HOFFMAN                                                                          
04/09/15       (S)       NR: MACKINNON, OLSON                                                                                   
04/15/15       (S)       TRANSMITTED TO (H)                                                                                     
04/15/15       (S)       VERSION: SSSB 15                                                                                       
04/15/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/15/15       (H)       L&C                                                                                                    
04/18/15       (H)       L&C AT 9:00 AM BARNES 124                                                                              
                                                                                                                                
BILL: SB 107                                                                                                                  
SHORT TITLE: INSURANCE; RISK MG'T; HOLDING COMPANIES                                                                            
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
04/11/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/11/15       (S)       L&C                                                                                                    
04/11/15       (S)       L&C AT 11:00 AM BELTZ 105 (TSBldg)                                                                     
04/11/15       (S)       Heard & Held                                                                                           
04/11/15       (S)       MINUTE(L&C)                                                                                            
04/14/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
04/14/15       (S)       Scheduled but Not Heard                                                                                
04/16/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
04/16/15       (S)       Moved  SB 107 Out of Committee                                                                         
04/16/15       (S)       MINUTE(L&C)                                                                                            
04/17/15       (S)       L&C RPT 3DP 1NR                                                                                        
04/17/15       (S)       DP: COSTELLO, GIESSEL, MEYER                                                                           
04/17/15       (S)       NR: STEVENS                                                                                            
04/18/15       (H)       L&C AT 9:00 AM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR JOHN COGHILL                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as the prime sponsor of SB 15.                                                                 
                                                                                                                                
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Department of Commerce, Community, & Economic Development (DCCED)                                                               
Anchorage, Alaska, Alaska                                                                                                       
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of SB 15.                                                                                                            
                                                                                                                                
WESTON EILER, Staff                                                                                                             
Senator Mia Costello                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of the prime sponsor of                                                              
SB 107, the Senate Labor & Commerce Committee, Senator Mia                                                                      
Costello, Chair.                                                                                                                
                                                                                                                                
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Department of Commerce, Community, & Economic Development (DCCED)                                                               
Anchorage, Alaska, Alaska                                                                                                       
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of SB 107.                                                                                                           
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:11:45 AM                                                                                                                    
                                                                                                                                
CHAIR  KURT OLSON  called the  House Labor  and Commerce  Standing                                                            
Committee meeting  to order  at 9:11  a.m.  Representatives  Kito,                                                              
Josephson, Tilton, Hughes,  and Olson were present at  the call to                                                              
order.  Representatives  LeDoux and Colver arrived  as the meeting                                                              
was in progress.                                                                                                                
                                                                                                                                
             SB 15-LIFE INSURANCE POLICY PREMIUM TAX                                                                        
                                                                                                                                
9:12:09 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the first  order of business  would be                                                              
SPONSOR SUBSTITUTE  FOR SENATE  BILL NO. 15,  "An Act  relating to                                                              
the tax on policy year premiums for life insurance policies."                                                                   
                                                                                                                                
9:12:16 AM                                                                                                                    
                                                                                                                                
SENATOR  JOHN  COGHILL, Alaska  State  Legislature,  characterized                                                              
the bill  as simple  in concept,  but one  with complexities.   He                                                              
said  that SB  15 would  reduce the  premium taxes  for single  or                                                              
group life  insurance polies from 0.1  percent to 0.08.   In 1997,                                                              
one of  his predecessors introduced  the trust administration  law                                                              
that  created trusts  in Alaska,  which was  unique.   Previously,                                                              
the insurance director  mentioned offshore investment  issues, and                                                              
the  concept was  to attract  to the  United States  that type  of                                                              
investment.   In 2010, Alaska had  $208 million in  investment for                                                              
single  or group  life  insurance  as a  result  of its  favorable                                                              
trust law,  noting other  states enacted  similar laws,  including                                                              
South  Dakota,   which  has  had   the  effect  of   reducing  the                                                              
investment in  Alaska to  $79 million.   This bill was  introduced                                                              
to attract additional investment in Alaska.                                                                                     
                                                                                                                                
9:14:09 AM                                                                                                                    
                                                                                                                                
SENATOR COGHILL  pointed out that  one concern expressed  was that                                                              
this  is a  "race to  the  bottom," which  he  acknowledged was  a                                                              
legitimate concern;  however, he hoped to increase  the investment                                                              
in Alaska,  which will improve  the workforce, attract  investment                                                              
to Alaska,  and would bring a  premium tax benefit.   Although the                                                              
state may lose  volume and lose the  tax value, if the  volume was                                                              
increased,  it will also  increase the  tax value  to Alaska.   He                                                              
hoped  this  would bring  the  policy  year premium  for  policies                                                              
exceeding  $100,000 to  a  rate competitive  to  other states,  in                                                              
particular,  South Dakota.   He  explained that  this would  bring                                                              
Alaska's basic  premium tax  rate even  with South Dakota's  rate.                                                              
He offered his  belief that Alaska's trust administration  law was                                                              
attractive, but this  will entice investors in Alaska.   This bill                                                              
was  brought  to  the  sponsor  by  the  trust  administrators  in                                                              
Alaska.                                                                                                                         
                                                                                                                                
9:16:19 AM                                                                                                                    
                                                                                                                                
LORI WING-HEIER,  Director, Division  of Insurance, Department  of                                                              
Commerce, Community,  & Economic Development (DCCED),  stated that                                                              
SSSB 15  would reduce the  premium tax from  0.10 to 0.08  on life                                                              
insurance  policies  exceeding  $100,000.     She  referred  to  a                                                              
spreadsheet  in   members'  packets  entitled  "Prepared   by  the                                                              
Division of Insurance  at the request of Senator  John Coghill for                                                              
SB 15."  The  amount of tax collected starts at  $104 thousand and                                                              
if  it was  reduced to  .08 it  would  be $84,000,  which makes  a                                                              
difference of  about $20,000 on about  112 polices.  She  said the                                                              
table goes  through 2012  to highlight the  number of  polices and                                                              
the difference  in the  tax that  would be  collected at  the 0.08                                                              
rate.  She said  South Dakota reported that when  it reduced their                                                              
tax to  0.08 percent,  in 2010  that 29  companies wrote  policies                                                              
over $100 million  with $97 million in premium taxes  and in 2014,                                                              
South Dakota collected  $120 million in premium  collected from 32                                                              
companies.  She  recapped that South Dakota did  enjoy an increase                                                              
in volume from the insurance industry.                                                                                          
                                                                                                                                
9:18:20 AM                                                                                                                    
                                                                                                                                
MS.  WING-HEIER  said this  was  submitted with  an  indeterminate                                                              
fiscal note  since it  was not possible  to determine  the overall                                                              
effect of  the revenue  collected; however,  she reported  that in                                                              
2011, the difference  was $88,000.  She suggested  that the amount                                                              
was  fairly  small  in  terms  of  the  overall  revenue  for  the                                                              
division.                                                                                                                       
                                                                                                                                
9:19:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  referred  to  the  aforementioned  table  to                                                              
2011, to  $443,280 for 105 polices,  dropping to $112,535  and 105                                                              
polies.   He  asked  for further  clarification  on  the shift  in                                                              
revenue since  it seemed like the  division taxed the  same number                                                              
of policies.                                                                                                                    
                                                                                                                                
MS. WING-HEIER answered  that 2011 was an anomaly  since the state                                                              
had two large polices  over $300 million.  In fact,  these are the                                                              
types of  policies the insurance  companies hope to attract.   She                                                              
referred  to   the  total  life   premium  written  in   2011  for                                                              
$687,043,543 which dropped in 2012 to $352,786,601.                                                                             
                                                                                                                                
9:21:10 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON  related his understanding  the Division  of Insurance                                                              
supported the bill.                                                                                                             
                                                                                                                                
MS. WING-HEIER  answered yes; that  the division does  support the                                                              
bill.                                                                                                                           
                                                                                                                                
9:21:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX wondered whether  the policies  in question                                                              
were  a finite  number of  potential policies  since the  language                                                              
referred  to policies  over $100,000  in premium.   She asked  the                                                              
reason that people would move their policies to Alaska.                                                                         
                                                                                                                                
MS. WING-HEIER  answered that there  was not a finite  number, but                                                              
that  life insurance  is one  tool  in retirement  planning.   She                                                              
said that  the division has  seen an increase  in this  tool being                                                              
used in  financial planning,  especially by  young people  who are                                                              
starting  to look  at their  financial  future.   She offered  her                                                              
belief that  young people  are buying  bigger policies.   Further,                                                              
she advised  that people  do not  need to live  in Alaska  to take                                                              
advantage  of  this  tax  structure.   The  insurance  brokers  or                                                              
producers in the  state could sell to people in the  Lower 48, but                                                              
the state will collect the tax.                                                                                                 
                                                                                                                                
9:23:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked whether these policies  are used when                                                              
someone dies  or if  the [policies] are  cash values  since people                                                              
use them for retirement planning.                                                                                               
                                                                                                                                
MS.  WING-HEIER  answered   these  policies  can  be   used  as  a                                                              
beneficiary for life  estate planning purposes or  they could have                                                              
a cash value that  people could draw on, but it  would just depend                                                              
on how it was structured with the broker.                                                                                       
                                                                                                                                
9:24:09 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON commented  that these policies are also  used to cover                                                              
taxes after death on large estates.                                                                                             
                                                                                                                                
MS. WING-HEIER agreed that was correct.                                                                                         
                                                                                                                                
9:24:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES   asked  Ms.  Wing-Heier  to   predict  the                                                              
additional potential revenue the state might collect.                                                                           
                                                                                                                                
MS.  WING-HEIER said  she did  not have  an answer  at this  time,                                                              
although   the  committee   requested  it.     Unfortunately   her                                                              
financial  staff was  currently on  leave  so she  wasn't able  to                                                              
access  and compile  data to  predict  the overall  effect of  the                                                              
bill;  however,  the insurance  agents  and brokers  believe  this                                                              
change will be beneficial.                                                                                                      
                                                                                                                                
9:26:31 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  asked  whether   she  was  confident  this                                                              
change will increase revenue.                                                                                                   
                                                                                                                                
MS. WING-HEIER  answered that  she was optimistic.   She  said she                                                              
has spent time with  the sponsor and agents, who  are confident it                                                              
will.                                                                                                                           
                                                                                                                                
9:26:56 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after first  determining no  one wished to  testify,                                                              
closed public testimony on SSSB 15.                                                                                             
                                                                                                                                
9:27:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES moved to  report SSSB  15 out of  committee                                                              
with  individual  recommendations   and  the  accompanying  fiscal                                                              
notes.  There  being no objection,  SSSB 15 was reported  from the                                                              
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
9:27:35 AM                                                                                                                    
                                                                                                                                
The committee took a brief at ease.                                                                                             
                                                                                                                                
CHAIR OLSON recessed to a call of the Chair.                                                                                    
                                                                                                                                
1:19:41 PM                                                                                                                    
                                                                                                                                
CHAIR   OLSON    reconvened   the    committee   at    1:19   p.m.                                                              
Representatives  Tilton, Colver,  Hughes,  Josephson, LeDoux,  and                                                              
Olson were  present when the  meeting reconvened.   Representative                                                              
Kito arrived as the meeting was in progress.                                                                                    
                                                                                                                                
         SB 107-INSURANCE; RISK MG'T; HOLDING COMPANIES                                                                     
                                                                                                                                
1:19:51 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that  the next order  of business  would be                                                              
SENATE BILL  NO. 107, "An Act  relating to insurance;  relating to                                                              
risk based  capital for  domestic insurers  and fraternal  benefit                                                              
societies,  including provisions  related to  insurers subject  to                                                              
risk based capital  and action level event  requirements; relating                                                              
to  review by  the  director of  insurance  of  an insurer's  risk                                                              
based capital  plan; relating  to confidentiality  and sharing  of                                                              
certain  information  submitted  to  the  director  of  insurance;                                                              
relating  to  evaluating  an insurance  holding  company  and  the                                                              
acquisition  of control  of  or merger  with  a domestic  insurer;                                                              
relating  to risk  based capital,  risk management,  and own  risk                                                              
and  solvency  assessments  of  insurers;   clarifying  provisions                                                              
related to  risk based  capital plans;  relating to exemptions  by                                                              
the  director  of  insurance for  certain  domestic  and  casualty                                                              
insurers  from  risk  based  capital   requirements;  relating  to                                                              
insurance  holding   companies,  including  filing   requirements,                                                              
divestiture, content  of statements, notifications,  and hearings;                                                              
relating  to registration  requirements of  insurers; relating  to                                                              
transactions  within  an  insurance   holding  company  system  or                                                              
transactions   involving   a   domestic   insurer;   relating   to                                                              
management and examination  of domestic insurers that  are part of                                                              
an insurance  holding company  system; adding provisions  relating                                                              
to participation  by the  director of  insurance in a  supervisory                                                              
college; relating  to civil and criminal penalties  for violations                                                              
by  insurers and  individuals;  relating  to provisions  for  risk                                                              
management  and own  risk and  solvency  assessments by  insurers;                                                              
relating  to  operating  requirements  for  controlling  insurance                                                              
producers;  relating to producer-controlled  insurers;  adding and                                                              
amending  definitions related  to insurers;  and providing  for an                                                              
effective date."                                                                                                                
                                                                                                                                
1:20:14 PM                                                                                                                    
                                                                                                                                
WESTON   EILER,  Staff,   Senator  Mia   Costello,  Alaska   State                                                              
Legislature, on behalf  of the Senate Labor &  Commerce Committee,                                                              
Senator Mia  Costello, Chair, explained  that SB 107  would update                                                              
Alaska's  insurance statutes  to  comply with  national  standards                                                              
and  maintain the  accreditation  of  the Division  of  Insurance,                                                              
Department   of  Commerce,   Community   &  Economic   Development                                                              
(DCCED).    The  provisions  in  the  bill  would  bring  Alaska's                                                              
insurance  laws in  line with  federal law  and national  industry                                                              
best practices.   The provisions in the bill have  been thoroughly                                                              
vetted  by  the  department,  stakeholders,   industry,  and  this                                                              
committee  [passed out  the companion  bill, HB  164 on  3/25/15].                                                              
He  deferred to  the  Division of  Insurance  to answer  technical                                                              
questions and the importance to the division.                                                                                   
                                                                                                                                
1:21:23 PM                                                                                                                    
                                                                                                                                
LORI WING-HEIER,  Director, Division  of Insurance, Department  of                                                              
Commerce, Community,  & Economic  Development (DCCED),  provided a                                                              
brief  section-by-section analysis  of SB  107.   She stated  that                                                              
Section  1 pertained  to risk-based  capital and  would adopt  the                                                              
model law  315 and  amendments to  model law  312 [adopted  by the                                                              
National  Association  of  Insurance Commissioners  (NAIC).    She                                                              
stated  that risk-based  capital  considers  the  solvency of  the                                                              
insurance company,  taking into  account what  they are  doing for                                                              
underwriting, investments,  and measuring against the  ratio.  She                                                              
directed attention to  the first six pages of the  bill related to                                                              
AS  21.14,  which  references  risk-based  capital  plan  and  the                                                              
regulatory  control  events  to measure  whether  the  company  is                                                              
solvent or  not, and if not,  the Division of Insurance  will step                                                              
in  for  liquidation.    She  directed  attention  to  Section  2,                                                              
beginning  on  page  8,  to  Section  20,  which  relates  to  the                                                              
insurance  holding  companies.    This would  make  amendments  to                                                              
model law  440 [passed  by the National  Association of  Insurance                                                              
Commissioners  (NAIC),  in  particular,  as  the  state  considers                                                              
holding companies  as an  "umbrella" would  allow the division  to                                                              
identify  other  companies within  the  umbrella.   She  explained                                                              
that currently  the division  can see  the insurance company  that                                                              
is  domiciled in  Alaska,  but with  these  changes, the  division                                                              
will be  able to identify  the other  entities within  the holding                                                              
companies to determine  whether the companies are  subsidizing one                                                              
another or what  the interactions are, including  their financials                                                              
and  identify  any problems  that  may  impact the  insurer  doing                                                              
business in Alaska.                                                                                                             
                                                                                                                                
1:24:01 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER  remarked  that the insurance  holding company  was                                                              
the biggest part  of this bill, through Section 46.   She directed                                                              
attention to  Section 46, related  to ORSA [Own Risk  and Solvency                                                              
Assessment].  She  said this provision would be new  to the state,                                                              
which  places the  onus  on insurers  to  file  a risk  management                                                              
report  or an  ORSA  to identify  relevant  risks, not  previously                                                              
identified  for  the  division  outside   of  a  normal  financial                                                              
examination.                                                                                                                    
                                                                                                                                
CHAIR OLSON  added that this  bill would incorporate  the National                                                              
Association  of  Insurance  Commissioners   (NAIC)  model  law  to                                                              
ensure that all states are in line.                                                                                             
                                                                                                                                
1:25:09 PM                                                                                                                    
                                                                                                                                
MS.  WING-HEIER  acknowledged that  everything  in  this bill  was                                                              
based on  the NAIC  model law, with  a small  portion of  the bill                                                              
consisting of  technical drafting changes  made to comport  to the                                                              
legislature's drafting  style.  She  said the last section  of the                                                              
bill,  Section 47  would  amend  provisions related  to  insurance                                                              
producer  agents,  administration,  and  brokers.    She  directed                                                              
attention to page  29, which would remove the  requirement to send                                                              
certified   mail,  and   adds  insurance   producers  instead   of                                                              
licensees,  since  the division  would  not  have licensees.    In                                                              
response  to  Representative  Hughes, she  directed  attention  to                                                              
page  23, Section  46, AS  21.23.030,  which was  a new  provision                                                              
related  to  Own  Risk  and  Solvency  Assessment  (ORSA)  Summary                                                              
Report   based   on  the   National   Association   of   Insurance                                                              
Commissioners (NAIC) model law.                                                                                                 
                                                                                                                                
MS.  WING-HEIER  reiterated  that  Section  47  would  provide  an                                                              
update  to  producer   agents  since  the  state   did  away  with                                                              
licensees who  are now  insurance producers,  to be in  compliance                                                              
with NAIC model.   She directed attention to page  32, Sections 49                                                              
and  50,  which   would  update  the  definition   of  "controlled                                                              
insurer"  to be  in  compliance with  NAIC  model  law.   Finally,                                                              
Section 51 made technical changes, she said.                                                                                    
                                                                                                                                
1:27:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON recalled  that  parts of  the bill  that                                                              
members had  concerns with  in the House  companion bill  [HB 164]                                                              
were  relative  to  discovery  and   confidentiality.    He  asked                                                              
whether those provisions were stripped from SB 107.                                                                             
                                                                                                                                
MS.  WING-HEIER  answered  yes; that  the  word  "privileged"  was                                                              
removed from SB  107.  She referred to a memo  from the Department                                                              
of  Law in  members' packets  [from Daniel  Wilkerson dated  April                                                              
15, 2015]  explaining what privileges  are still left in  AS 21.06                                                              
that would extend to insurers as to confidential provisions.                                                                    
                                                                                                                                
1:28:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  anything  in  the  bill                                                              
would alter  current law.   He appreciated  knowing that  the memo                                                              
was  in members'  packets.   He asked  whether that  was the  best                                                              
source to answer his question.                                                                                                  
                                                                                                                                
MS. WING-HEIER offered  her belief that it will.   She related her                                                              
understanding   that   the  concern   did   not   relate  to   the                                                              
confidentiality,  but  with  the  word,  "privilege."    The  word                                                              
"privilege" has been removed from the bill.                                                                                     
                                                                                                                                
1:28:40 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON directed  attention to the memo from  Daniel Dickinson                                                              
to Lori  Wing-Heir, Director of  the Division of  Insurance, dated                                                              
April 15, 2015.                                                                                                                 
                                                                                                                                
[The  committee did  not  take an  at-ease but  took  a moment  to                                                              
review the document.]                                                                                                           
                                                                                                                                
1:30:26 PM                                                                                                                    
                                                                                                                                
MR.  EILER,  in response  to  Chair  Olson, stated  that  comments                                                              
mentioned  by Representative  Josephson and  other members  of the                                                              
legislature were addressed in SB 107.                                                                                           
                                                                                                                                
1:30:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   LEDOUX  asked  for   a  page  reference   for  AS                                                              
21.06.060.                                                                                                                      
                                                                                                                                
MS.   WING-HEIER   answered   that   AS   21.06.060   relates   to                                                              
confidentiality.   She was  not certain if  that provision  was in                                                              
the  bill, but  the foregoing  statute  describes the  protections                                                              
granted to information  and records designated as  confidential or                                                              
not available for  public inspection by the director,  [which also                                                              
extends  to  electronic  data], or  basically  the  documents  the                                                              
division  holds confidential  related to  documents collected  for                                                              
examination of  certificates for  the transaction of  insurance in                                                              
Alaska.                                                                                                                         
                                                                                                                                
CHAIR  OLSON suggested  that  copies of  AS  21.06.060 were  being                                                              
distributed to members.                                                                                                         
                                                                                                                                
1:31:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked for a moment to review a document.                                                                  
                                                                                                                                
1:32:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  directed  attention  to  AS  21.06.060(g),                                                              
which read, as follows:                                                                                                         
                                                                                                                                
      (g) The director may withhold information or records                                                                      
       from public inspection for as long as the director                                                                       
     finds the withholding is                                                                                                   
            (1) necessary to protect a person against                                                                           
     unwarranted injury; or                                                                                                     
          (2) in the public interest.                                                                                           
                                                                                                                                
REPRESENTATIVE  LEDOUX   asked  for  examples  of   the  types  of                                                              
information  that wouldn't  be considered  confidential under  any                                                              
of  the  aforementioned   provisions,  but  would   be  considered                                                              
confidential under this "catch all" language.                                                                                   
                                                                                                                                
1:32:45 PM                                                                                                                    
                                                                                                                                
MS.  WING-HEIER replied  that  in  the new  "ORSA"  [Own Risk  and                                                              
Solvency  Assessment],  Chapter  23,  insurers will  be  asked  to                                                              
provide information  on any  mergers and  acquisitions.   However,                                                              
in the  normal course of business  [insurers] will not  want their                                                              
competitors  to   have  access  to   any  merger   or  acquisition                                                              
information  the companies  are considering.   The insurers  would                                                              
ask the division  to keep that information confidential  until the                                                              
mergers or  acquisitions were made  public, she said.   Thus, this                                                              
would  be information  withheld  from  the  public, but  would  be                                                              
declared in the reporting to the division.                                                                                      
                                                                                                                                
1:33:36 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON asked  whether  that  was a  result  of the  American                                                              
International Group [AIG].                                                                                                      
                                                                                                                                
MS. WING-HEIER answered yes.                                                                                                    
                                                                                                                                
1:33:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON   referred  to  paragraph   (2)  of  the                                                              
aforementioned  April 15, 2015,  memo from  the Department  of Law                                                              
to the  Division of  Insurance, which  suggests  there would  be a                                                              
presumption of  confidentiality that  could be overcome;  however,                                                              
he  acknowledged  that  this  is  complicated.   He  asked  for  a                                                              
prediction of when this might reach the House floor for a vote.                                                                 
                                                                                                                                
CHAIR OLSON suggested  that it would likely be  today or tomorrow.                                                              
He offered  to set up  an appointment for  Ms. Wing-Heier  to meet                                                              
with members.                                                                                                                   
                                                                                                                                
MS.  WING-HEIER advised  the aforementioned  provision  [paragraph                                                              
(2)] in  AS 21.06.060  is existing  law and SB  107 does  not make                                                              
any  changes  to  those provisions.    She  stated  this  language                                                              
merely  clarifies  what remains  in  statute since  the  provision                                                              
related to "privilege" was not added to SB 107.                                                                                 
                                                                                                                                
1:36:12 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after first  determining no  one wished to  testify,                                                              
closed public testimony on SB 107.                                                                                              
                                                                                                                                
1:36:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES moved  to report  SB 107  out of  committee                                                              
with  individual  recommendations   and  the  accompanying  fiscal                                                              
note.   There being  no objection,  SB 107  was reported  from the                                                              
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
1:36:46 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Labor and  Commerce Standing  Committee meeting  was adjourned  at                                                              
1:36 p.m.                                                                                                                       

Document Name Date/Time Subjects
SSSB15 ver W.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Sponsor Statement.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Sectional Analysis.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Fiscal Note-DCCED-DOI-02-20-15.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Supporting Documents-Letter-Alaska Bankers Association-4-10-15.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Supporting Documents-Letter-Alaska Trust Company-2-13-15.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Supporting Documents-Letter-Cook Schuhmann Groseclose Inc-3-26-15.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Supporting Documents-Letter-Jonathan G. Blattmachr-4-15-15.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Supporting Documents-Life Insurance in Alaska 2015.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Supporting Documents-Revenue Source Book Fall 2014.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SSSB15 Supporting Documents-Email-Division of Insurance-4-9-15.pdf HL&C 4/18/2015 9:00:00 AM
SB 15
SB107 ver E.PDF HL&C 4/18/2015 9:00:00 AM
SB 107
SB107 Sponsor Statement.pdf HL&C 4/18/2015 9:00:00 AM
SB 107
SB107 Sectional Analysis.pdf HL&C 4/18/2015 9:00:00 AM
SB 107
SB107 Fiscal Note-DCCED-DOI-04-11-14.pdf HL&C 4/18/2015 9:00:00 AM
SB 107
SB107 Supporting Documents-Letter NAIMC Support 3-30-15.pdf HL&C 4/18/2015 9:00:00 AM
SB 107
SB107 Supporting Documents-Financial Regulation Standards & Accreditation Program.pdf HL&C 4/18/2015 9:00:00 AM
SB 107
SB107 Supporting Documents-NAIC Accreditation Brief.pdf HL&C 4/18/2015 9:00:00 AM
SB 107