Legislature(1995 - 1996)
05/05/1995 03:10 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR & COMMERCE STANDING COMMITTEE
May 5, 1995
3:10 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Norman Rokeberg, Vice Chairman
Representative Jerry Sanders
Representative Beverly Masek
Representative Kim Elton
Representative Gene Kubina
Representative Brian Porter
MEMBER ABSENT
All members present
COMMITTEE CALENDAR
HB 328: "An Act relating to reduced fees and group
discounts for visits to the state museum and its
branches; and providing for an effective date."
PASSED OUT OF COMMITTEE
*CSSB 53(JUD): "An Act relating to regulation of risk retention
or purchasing groups; to preemption of the
regulation of insurance agents and insurance
producers; to the general powers of the director
of the division of insurance; to insurance
examination hearings; to insurer certificates of
authority; to annual and quarterly statements,
taxes, and prohibited acts of insurers; to
reinsurance credit allowed a domestic insurer;
to risk based capital for insurers; to insurer
assets and liabilities; to insurer investments;
to insurance holding companies; to regulation,
licensing, examination, and trade practices of
insurance producers, managing general agents,
third-party administrators, brokers, independent
adjusters, and reinsurance intermediary
managers; to surplus lines insurance; to
criminal insurance acts; to premium increases in
automobile insurance; to insurance rating; to
assigned risk pools; to filing and approval of
certain insurance policy forms; to required
insurance coverage for acupuncture, nurse
midwives' services, mammography, and
phenylketonuria; to health insurance provided by
small employers; to transfer of an insurer's
status as a domestic insurer; to quarterly
statements of benevolent associations, fraternal
benefit societies, and health maintenance
organizations; to reciprocal insurers; to the
definition of `member insurer' for purposes of
the Alaska Life and Disability Insurance
Guaranty Association; to electronic insurance
data transfer and insurance funds transfer; to
the definitions of `managing general agent' and
`person' applicable to insurance law; to
automobile assigned risk plans; placing a person
employed by the division of insurance as an
actuary or assistant actuary into the exempt
service; amending Alaska Rule of Civil Procedure
45; and providing for an effective date."
PASSED OUT OF COMMITTEE
(* First public hearing)
WITNESS REGISTER
GEORGE DOZIER, Legislative Assistant
to Representative Pete Kott
Alaska state Legislature
Capitol Building, Room 432
Juneau, AK 99801-1182
Telephone: (907) 465-3777
POSITION STATEMENT: Gave sponsor statement for HB 328
JOHN LITTEN
Sitka Tours
211 Crabapple
Sitka, AK 99835
Telephone: (907) 747-8443
POSITION STATEMENT: Testified in support of HB 328
FRANK PIVAL, Division Manager
Gray Line of Alaska
3241 Hospital Drive
Juneau, AK 99801
Telephone: (907) 586-9625
POSITION STATEMENT: Testified in support of HB 328
SHEILA PETERSON, Special Assistant
to the Commissioner
Department of Education
801 West Tenth Street, Suite 200
Juneau, AK 99801-1894
POSITION STATEMENT: Testified in support of HB 328
BRUCE KATO, Chief Curator
Alaska State Museum
Department of Education
395 Whittier Street
Juneau, AK 99801-1746
Telephone: 465-4866
POSITION STATEMENT: Answered questions on HB 328
DAVE STEBING, Assistant Attorney General
Commercial Section
Civil Division
Department of Law
1031 West Fourth Avenue, Suite 200
Anchorage, AK 99501-1994
Telephone: (907) 269-5100
POSITION STATEMENT: Testified on SB 53
SHERMAN ERNOUF, Administrative Assistant
to Senator Tim Kelly
Alaska State Legislature
Capitol Building, Room 101
Juneau, AK 99801-1182
Telephone: (907) 465-3844
POSITION STATEMENT: Answered questions on SB 53
MARIANNE K. BURKE, Director
Central Office
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, AK 99811-0805
Telephone: (907) 465-2515
POSITION STATEMENT: Answered questions on SB 53
KEN SYKES, Market Analyst
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, AK 99811
Telephone: (907) 465-2564
POSITION STATEMENT: Answered questions on SB 53
JOAN BROWN, Administrative Officer
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, AK 99811-0805
Telephone: (907) 465-2597
POSITION STATEMENT: Answered questions on SB 53
MIKE FORD, Attorney
Legislative Legal Services
Legislative Affairs Agency
130 Seward Street, Suite 404
Juneau, AK 99801-2105
POSITION STATEMENT: Answered questions on SB 53
PREVIOUS ACTION
BILL: HB 328
SHORT TITLE: DISCOUNT FOR STATE MUSEUM VISIT BY GROUPS
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
05/02/95 1740 (H) READ THE FIRST TIME - REFERRAL(S)
05/02/95 1740 (H) LABOR AND COMMERCE
05/03/95 (H) L&C AT 03:00 PM CAPITOL 17
05/04/95 (H) L&C AT 03:00 PM CAPITOL 17
05/05/95 (H) L&C AT 03:00 PM CAPITOL 17
BILL: SB 53
SHORT TITLE: OMNIBUS INSURANCE REFORM
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
01/25/95 83 (S) READ THE FIRST TIME - REFERRAL(S)
01/25/95 84 (S) L&C, JUD
02/28/95 (S) L&C AT 01:30 PM FAHRENKAMP RM 203
03/02/95 (S) L&C AT 01:30 PM FAHRENKAMP RM 203
03/02/95 (S) MINUTE(L&C)
03/07/95 515 (S) L&C RPT CS 1DP 4NR NEW TITLE
03/07/95 516 (S) ZERO FISCAL NOTE (DCED)
03/27/95 (S) JUD AT 01:30 PM BELTZ ROOM 211
03/27/95 (S) MINUTE(JUD)
04/05/95 (S) JUD AT 01:30 PM BELTZ ROOM 211
04/05/95 (S) MINUTE(JUD)
04/06/95 891 (S) JUD RPT CS 2DP 3NR NEW TITLE
04/06/95 892 (S) PREVIOUS ZERO FN (DCED)
04/10/95 (S) RLS 01:00 PM FAHRENKAMP ROOM 211
04/10/95 (S) MINUTE(RLS)
04/18/95 1058 (S) RULES TO CALENDAR 4/18/95
04/18/95 1065 (S) READ THE SECOND TIME
04/18/95 1065 (S) JUD CS ADOPTED UNAN CONSENT
04/18/95 1066 (S) ADVANCED TO THIRD READING UNAN
CONSENT
04/18/95 1066 (S) READ THE THIRD TIME CSSB 53(JUD)
04/18/95 1067 (S) PASSED Y16 N3 E1
04/18/95 1067 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
04/18/95 1068 (S) COURT RULE(S) FAILED Y12 N7 E1
04/18/95 1068 (S) TAYLOR NOTICE OF RECONSIDERATION
04/19/95 1088 (S) HELD ON RECONSIDERATION TO 4/20
04/20/95 1122 (S) RECON TAKEN UP - IN THIRD READING
04/20/95 1123 (S) PASSED ON RECONSIDERATION Y17 N3
04/20/95 1123 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
04/20/95 1123 (S) COURT RULE(S) SAME AS PASSAGE
04/20/95 1126 (S) TRANSMITTED TO (H)
04/21/95 1417 (H) READ THE FIRST TIME - REFERRAL(S)
04/21/95 1417 (H) LABOR & COMMERCE, JUDICIARY
04/28/95 (H) JUD AT 01:00 PM CAPITOL 120
04/28/95 (H) L&C AT 03:00 PM CAPITOL 17
05/01/95 (H) L&C AT 03:00 PM CAPITOL 17
05/01/95 (H) MINUTE(L&C)
05/03/95 (H) L&C AT 03:00 PM CAPITOL 17
05/04/95 (H) L&C AT 03:00 PM CAPITOL 17
05/05/95 (H) L&C AT 03:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 95-56, SIDE A
Number 000
The House Labor and Commerce Committee was called to order by
Chairman Pete Kott at 3:10 p.m. Members present at the call to
order were Representatives Kott, Masek, Sanders, Elton and
Rokeberg. Members absent were Representative Porter and Kubina.
CHAIRMAN PETE KOTT stated that a quorum was present. He
announced the committee would hear HB 328 followed by CSSB
53(JUD).
HB 328 - DISCOUNT FOR STATE MUSEUM VISIT BY GROUPS
Number 017
The first order of business was HB 328, "An Act relating to
reduced fees and group discounts for visits to the state museum
and its branches; and providing for an effective date." CHAIRMAN
KOTT noted the bill was sponsored by the committee.
GEORGE DOZIER, LEGISLATIVE ASSISTANT TO REPRESENTATIVE PETE KOTT,
ALASKA STATE LEGISLATURE, testified that HB 328 was a very simple
bill. It grants specific statutory ability to the Alaska State
Museum for the negotiation of group discounts and group rates for
visits to the museum.
MR. DOZIER said until recently this had been a practice of the
museum. However, the Department of Law has taken a position
indicating this is not a permissible practice. This bill would
restore the situation to the status quo.
Number 037
REPRESENTATIVE JERRY SANDERS inquired if there was reference to
the size of the group.
Number 041
MR. DOZIER responded the bill didn't mention size. It simply
grants authority to the museum to negotiate and grant group
rates. He said he imagines it would be from two individuals on
up.
REPRESENTATIVE SANDERS asked if this would give the opportunity
for someone in a small group to complain.
Number 056
MR. DOZIER said he didn't think this would provide legal grounds
for complaints. The negotiation remains within the discretion of
the museum, and doesn't require the museum to grant group rates.
Number 062
CHAIRMAN KOTT added there could be some discretion applied by the
museum. He said if you had two or three people, they probably
wouldn't receive a group rate.
Number 078
JOHN LITTEN, SITKA TOURS, testified from Sitka, via
teleconference, in support of HB 328. He noted his company is a
bus company. Mr. Litten said museums, unique as they might be,
need the ability to remain affordable as well as competitive with
other attractions. When his company packages their tours in
Sitka, they pay admission into places such as the Rapture Center,
Bald Eagle Center, Russian Dancers, the Russian Cathedral and the
Sheldon Jackson State Museum. The wholesalers that buy the tours
from him want to pick and choose those attractions by their cost
and affordability. Therefore, it becomes very important that the
state museums have the ability to negotiate prices for volume
operators to remain competitive. In the past, you had to have a
volume approximately 10,000 people before you really had a break
on the cost of going through the door.
Number 119
CHAIRMAN KOTT said this answered a question which asked earlier.
He said they are negotiating a discount, based on volume, through
the season.
Number 126
REPRESENTATIVE SANDERS inquired if all of the tours currently go
through the museum as a matter of course.
Number 131
MR. LITTEN replied that certain cruise lines have the state
museums on their tours, primarily Holland America in Juneau which
uses the state museum exclusively. In the past often when state
starts looking at fees for admission into the museums, they are
operating on their calendar year. The tour companies are in the
position where they must forecast and set their tariff as much as
a year to eighteen months ahead of time. They've had problems
with the lack of flexibility on the state's behalf as they'll
implement or increase fees right before the season starts. The
tour companies don't have the chance to incorporate that in which
forces the operators to bypass the attraction for the entire
year. HB 328 would benefit organizations so they would have the
ability to negotiate and wouldn't be facing that situation.
Number 153
CHAIRMAN KOTT asked if the fees were negotiated on an annual
basis or if they were they based on a head count.
Number 157
MR. LITTEN stated the fees were negotiated annually as well as on
a head count basis. For example, if they bring in 10,000 people
the price might go down from $2.00 to $1.80.
Number 168
FRANK PIVAL, DIVISION MANAGER, GRAY LINE OF ALASKA, explained
that Gray Line of Alaska is a subsidiary of Holland America
Cruise Lines. Testified in support of HB 328. He explained it
is a budgetary situation for their company. They pay fees to
many different entities. He gave an example of a situation that
has occurred when the fees were changed. He said last year they
were paying $1.60 to the museum and the price then jumped to
$3.00. His company told him they would have to drop something
from the tour because the budget was already set in concrete. In
1986, they dropped the museum from their tours when the price
changed from $1.00 to $2.00.
Number 189
CHAIRMAN KOTT asked what he thought the most substantial effect
would be if HB 328 were not adopted.
Number 192
MR. PIVAL responded they probably wouldn't include the museum
this year. This would hurt their tour because the museum is an
integral part of the city tour and the passengers would feel they
were missing something. He added that for the tours that don't
include the museum, they refer passengers to it.
Number 204
SHEILA PETERSON, SPECIAL ASSISTANT TO THE COMMISSIONER,
DEPARTMENT OF EDUCATION (DOE), testified in support of HB 328.
As Mr. Dozier indicated this problem arose when the department
changed their regulations and increased the fees to $3.00. She
said they did not have the flexibility to negotiate group rates.
In the past they would negotiate group rates with the minimum
amount of people being 1,500 per season. This then increased to
15,000 people per season. She said the way their regulations are
written, children under 19 are admitted free. Anyone over 19 is
$3.00. They would like the ability to negotiate group rates as
was done in the past.
Number 222
CHAIRMAN KOTT asked if those prices were the same for both the
Sheldon Jackson State Museum and the Alaska State Museum.
MS. PETERSON answered yes.
There being no further witnesses, CHAIRMAN KOTT closed public
testimony on HB 328.
Number 233
REPRESENTATIVE BEVERLY MASEK noted there was a zero fiscal note.
She referred to line 5 of the bill which states, "The department
may establish by regulation..." and asked if this would put an
added cost to the state.
Number 241
CHAIRMAN KOTT stated the operative word is "may." They are
taking the conservative approach, thus the reason for the zero
fiscal note.
Number 244
MS. PETERSON replied the department had promulgated new
regulations which became effective in April of this year. They
don't anticipate writing more regulations to negotiate group
contracts if HB 328 is passed.
Number 251
REPRESENTATIVE MASEK asked if the state museum was for profit or
non-profit.
Number 257
MS. PETERSON explained these are state museums funded through the
state. They do have program receipt authorization. They
received approximately $140,000 last year in museum fees. Ms.
Peterson noted the legislature has given the department the
program receipt authorization to receive those funds.
Number 265
REPRESENTATIVE MASEK said if the price is going to be reduced for
group rates, would that affect the overall amount of money the
state would contribute. She asked what the fees are used for.
Number 272
MS. PETERSON stated that the DOE feels if they do not have the
authority to negotiate with groups, these groups may not come in
large groups to the museum. The DOE will possibly lose revenue.
She noted that Bruce Kato, Director of Museums, could answer what
the actual fees were used for.
Number 278
BRUCE KATO, CHIEF CURATOR, ALASKA STATE MUSEUM, DEPARTMENT OF
EDUCATION, stated the funds were used for contractual services,
as well as for supplies. Through the years the museum has lost
funds from those two accounts. In 1986, when they began to
charge admission, those funds were used to compensate some of the
losses in their program. The legislature has the authority of
$158,600 that it allows the museum to use.
REPRESENTATIVE GENE KUBINA joined the meeting at 3:25 p.m.
Number 287
REPRESENTATIVE MASEK surmised this would effect all museums
statewide.
MR. KATO clarified that there are only two state museums within
DOE, the Alaska State Museum located in Juneau and the Sheldon
Jackson Museum located in Sitka.
Number 294
REPRESENTATIVE NORMAN ROKEBERG inquired if the museum in
Fairbanks was run by the university.
MR. KATO replied this was correct.
Number 297
CHAIRMAN KOTT encouraged anyone who had not been through the
state museum in Juneau to do so.
REPRESENTATIVE ELTON made a motion to move HB 328 out of the
House Labor and Commerce Committee with individual
recommendations and with the attached zero fiscal note.
Number 306
CHAIRMAN KOTT asked if there were objections. Hearing none, HB
328 passed out of the House Labor and Commerce Committee.
SB 53 - OMNIBUS INSURANCE REFORM
Number 306
The last order of business was CSSB 53(JUD), "An Act relating to
regulation of risk retention or purchasing groups; to preemption
of the regulation of insurance agents and insurance producers; to
the general powers of the director of the division of insurance;
to insurance examination hearings; to insurer certificates of
authority; to annual and quarterly statements, taxes, and
prohibited acts of insurers; to reinsurance credit allowed a
domestic insurer; to risk based capital for insurers; to insurer
assets and liabilities; to insurer investments; to insurance
holding companies; to regulation, licensing, examination, and
trade practices of insurance producers, managing general agents,
third-party administrators, brokers, independent adjusters, and
reinsurance intermediary managers; to surplus lines insurance; to
criminal insurance acts; to premium increases in automobile
insurance; to insurance rating; to assigned risk pools; to filing
and approval of certain insurance policy forms; to required
insurance coverage for acupuncture, nurse midwives' services,
mammography, and phenylketonuria; to health insurance provided by
small employers; to transfer of an insurer's status as a domestic
insurer; to quarterly statements of benevolent associations,
fraternal benefit societies, and health maintenance
organizations; to reciprocal insurers; to the definition of
'member insurer' for purposes of the Alaska Life and Disability
Insurance Guaranty Association; to electronic insurance data
transfer and insurance funds transfer; to the definitions of
'managing general agent' and 'person' applicable to insurance
law; to automobile assigned risk plans; placing a person employed
by the division of insurance as an actuary or assistant actuary
into the exempt service; amending Alaska Rule of Civil Procedure
45; and providing for an effective date."
CHAIRMAN KOTT stated they first would hear testimony from the
teleconference line in Anchorage.
Number 325
DAVE STEBING, ASSISTANT ATTORNEY GENERAL, COMMERCIAL SECTION,
CIVIL DIVISION, DEPARTMENT OF LAW, was first to testify on the
measure. He informed the committee his client is the Division of
Insurance (DOI). He said he was prepared to talk on anything
relating to the independent counsel provision. He gave the
following background on the provision:
It's a provision which was added into the division's omnibus at a
late date without the division's knowledge. This independent
counsel provision, which is found in the omnibus, near the end of
the bill, would add a new section to the insurance code at
21.89.100. The proposed legislation implements an Alaska Supreme
Court decision from 1993, which is called CHI of Alaska v.
Employers Reinsurance. The citation for that case is
A44P22.11.13. That case, in brief, stems from the proposition
that an insurer or a purchaser of insurance has a unilateral
right to select independent counsel to represent them, and they
can do that at the insurance companies expense. That is kind of
a controversial decision. The Alaska Supreme Court has followed
the California Supreme Court in a case called the Cumis decision.
The Cumis decision was issued in 1984, and its right to
independent counsel has been referred to in various states
thereafter as the Cumis Council.
MR. STEBING continued that Alaska now has the Cumis Counsel and
this the proposed legislation added on to the omnibus bill seeks
to implement the CHI decision. The CHI decision is not
identified anywhere in the legislation but is clearly what is
sought to be implemented. The proposed language in this
provision is essentially the same as California's. California's
law was controversial and was intended to resolve problems which
arose when the Cumis Counsel remedy came into existence. He
explained some of the problems which the Wall Street noted in an
article was that attorneys were abusing this right by creating
conflicts of interest and there were even some multi million
dollar fraud situations.
MR. STEBING stated this was a controversial provision. He is not
convinced this is a pro-consumer provision. The DOI is charged
with protecting Alaskan insurance consumers. Some might think
they're charged with protecting insurance companies and that is
not true. However, DOI is supposed to provide a level playing
field and facilitate a healthy insurance industry. However, the
Alaska Supreme Court in the Northern Adjusters decision of 627 P
2nd.205 of 1981, said the purpose of Title 21 was to protect
Alaskan insurance consumers. With that in mind, he believes that
this provision presents some problems in trying to implement the
CHI decision and its focuses on when a conflict of interest
arises between an attorney and the insured.
MR. STEBING said it was his opinion the reference in subsection
(b) to narrowly defines conflict of interest. This is an
advantage to insurance companies in that they are excluding from
conflict of interest, a claim for punitive damages and a claim of
damages in excess of policy limits. Those are two classic
instances of a conflict of interest. He said over the past few
years they have spent hundreds of hours collectively working on
this, and at the last minute this provision is added on that
presents some controversy.
MR. STEBING felt there would be a problem with the DOI having to
determine when a conflict of interest arises. This would be a
matter subject to conflict and could be litigated. The Alaska
Division of Insurance is charged with enforcing all of Title 21,
which includes all provisions within the title. He said there
may be some problems with enforcement. In closing, he noted that
the California is in the California Civil Code of Procedure. He
said this law would be better placed in the Code of Civil
Procedure rather than in the insurance code.
Number 417
REPRESENTATIVE ROKEBERG asked where the provision was located in
the Senate committee substitute (CS).
Number 420
MR. STEBING said he wasn't sure if it was in the current version
of the bill.
Number 427
CHAIRMAN KOTT said it is not in the current version of the bill.
MR. STEBING said it was his understanding this was an amendment.
Number 430
REPRESENTATIVE ROKEBERG asked Chairman Kott if there was an
amendment.
CHAIRMAN KOTT responded there would be.
REPRESENTATIVE ROKEBERG asked if that would be to insert the
Cumis rule.
MR. STEBING responded, "To insert the independent counsel
provision."
REPRESENTATIVE ROKEBERG said, "Which is consistent with the
Alaska Supreme Court, is that correct?"
MR. STEBING said it seeks to implement the CHI decision.
REPRESENTATIVE ROKEBERG questioned whether or not Mr. Stebing
agreed with that.
Number 434
MR. STEBING responded that he believes it has some problems. It
may define conflict of interest more narrowly than the Supreme
Court intended.
REPRESENTATIVE ROKEBERG inquired who the parties of interest
were.
Number 441
MR. STEBING responded he hadn't had any feed back from anyone.
He reiterated that the provision was added onto the same bill
last year without the knowledge of the division.
REPRESENTATIVE ROKEBERG commented they had been discussing
amendments instead of the bill.
CHAIRMAN KOTT stated they had been discussing a proposal.
Number 453
REPRESENTATIVE SANDERS questioned why the provision was taken out
of the bill.
MR. STEBING said he wasn't sure. He was told that someone
outside of the Division of Insurance had it added last year which
was unknown to the division. When the bill was reintroduced this
year, it was removed. He said this amendment would require a
title change and could slow the process for the omnibus bill.
Number 475
CHAIRMAN KOTT noted this was a Senate Labor and Commerce
Committee bill. He and asked Sherman Ernouf if he would like to
comment on this.
SHERMAN ERNOUF, ADMINISTRATIVE ASSISTANT TO SENATOR TIME KELLY,
ALASKA STATE LEGISLATURE, testified that the Senate Labor and
Commerce Committee had introduced SB 53 at the request of the
Division of Insurance. It's important to the DOI that this
passes the legislature this legislative session for accreditation
purposes. He said they removed the independent counsel
provisions in the Senate Labor and Commerce CS. He said he would
try to answer any questions the committee had.
Number 485
REPRESENTATIVE SANDERS inquired on the background as to why they
removed it.
Number 490
MR. ERNOUF responded they had removed it because of the very
questions that were being raised now. They wanted to make sure
SB 53 passes this session.
REPRESENTATIVE ROKEBERG asked why it was put in.
MR. ERNOUF responded no.
REPRESENTATIVE ROKEBERG asked who added it.
Number 494
MR. ERNOUF replied at the time the bill was drafted they got
proposed language from the DOI. When the committee took
testimony, it became a controversial issue so the bill was
amended to take out that provision.
Number 500
CHAIRMAN KOTT thanked Mr. Ernouf for his testimony and asked the
director of the DOI, Marianne Burke to join them.
CHAIRMAN KOTT referred to the Senate version, CSSB 53(JUD) and
asked why on page 4, line 9, the wording, "The director may close
an examination hearing to the public when the director finds the
closure is necessary to protect a person against unwarranted
injury or is in the public interest," was inserted. He asked
what type of situation would warrant conclusion that closing
examination hearings are in the public's interest.
MARIANNE K. BURKE, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF
COMMERCE AND ECONOMIC DEVELOPMENT, responded if information of a
proprietary nature were being discussed in a hearing that would
give the insurance companies competitors an advantage, then the
meeting would be closed.
Number 515
CHAIRMAN KOTT referred to page 7, line 6, and asked what the
purpose was of filing with the National Association of Insurance
Commissioners (NAIC).
MS. BURKE responded the purpose of going towards a central filing
was for the added efficiency of filing throughout the United
States. The insurers must still file with the department. She
said they hope to get to the point where it will all be
electronically submitted so not only Alaska would be able to
access data base, but other states would as well. Currently,
they receive "tons" of paper.
CHAIRMAN KOTT asked what would justify a waiver.
Number 532
MS. BURKE replied it would have to be a most unusual
circumstance. At this time she couldn't think of a situation.
Perhaps being technically impossible or impractical for them to
meet their filing deadlines.
CHAIRMAN KOTT asked if there were procedures in place to
electronically file the annual reports, and if there wasn't
wouldn't there be some fiscal application?
MS. BURKE explained the NAIC is working on the data base
themselves, and would be filing it. With the membership in the
NAIC, the division would have the ability to access it.
CHAIRMAN KOTT asked how a foreign company comply with the filing.
Number 535
MS. BURKE said a foreign company is really a company domiciled in
another state. NAIC is nationwide so every company would have
the ability to comply.
CHAIRMAN KOTT asked how an alien company would file.
MS. BURKE said there are efforts underway to have a consistent
and uniform way of providing information. The filing requirement
for alien companies, those outside the U.S., the filing
requirement are not precisely the same as inside the U.S.
REPRESENTATIVE PORTER joined the committee at 3:45 p.m.
Number 547
REPRESENTATIVE ELTON said his understanding is that the NAIC is a
professional organization. He said he would like the rationale
explained to him about mandating, in state law, that a private
business report to a professional organization and further saying
that if you don't do that, the state imposes a fine of $100.
Number 558
MS. BURKE said this is a group of insurance commissioners who
have joined together and have been in existence since the 1870s.
She explained that if a company only does business in the state
of Alaska the director could exempt them from this. However, if
an insurer is doing business nationwide, it would be to their
advantage to also cut down on the number of filings. They could
do this electronically. Ms. Burke said to her knowledge, there
has been encouragement on the part of the insurers for the
electronic filing. Currently, there are penalties for late
filing or non filing of the paper form.
Number 576
REPRESENTATIVE ELTON asked the chair's intention and commented
that he didn't want to take up a lot of time today if they were
going to move the bill. However, he would like an answer as to
why they were mandating filing with a professional organization,
and if they don't, why would the state would collect $100 per
day. He said if they weren't planning on moving it today, the
staff could get back to him.
Number 581
CHAIRMAN KOTT responded it was his intent to move the bill today.
Number 584
KEN SYKES, MARKET ANALYST, DIVISION OF INSURANCE, DEPARTMENT OF
COMMERCE AND ECONOMIC DEVELOPMENT, testified the NAIC is a
clearing house whose main purpose is to carry out the McCarran-
Ferguson Act. The reason the division asks companies doing
business on a national basis to file with NAIC is to cut down on
paperwork for departments who regulate the domestics that have to
send this information out if required. He said this is public
information within the division's purview. Once they receive a
certain companies financial statements, anyone would be entitled
to a copy of that financial statement. Instead of the department
handling 100,000 requests from different individuals, the NAIC is
equipped to handle this electronically.
MR. SYKES referred to the question regarding foreign companies
and told the committee that the foreign companies look to file
with the NAIC because there is a type of insurance called surplus
lines. This means in some states you'd go into that state and
say, "I would like to do business in your state." In other
states you could go in and say, "I want to do business in your
state but I don't want to go through your registration process."
From there, that state can go to the NAIC or back to the
domiciliary state and obtain the electronic information. He said
this is a check and balance between the both the NAIC and the
stated domicile.
MR. SYKES continued that the NAIC also collects electronic data
filings from those alien companies outside the United States
under the acronym NAIIO. The NAIIO handles companies such a
Lloyd's of London, Madagascar Indemnity, etc.
Number 607
REPRESENTATIVE PORTER asked if this was an unusual requirement
based on what other states require.
MR. SYKES answered no.
Number 609
CHAIRMAN KOTT referred to page 8, lines 1 and 2, and said talks
of a monetary refund. He asked why not carry that over into the
second and subsequent years as far as a tax refund.
MS. BURKE said there is that option. The insurer may prefer to
have the tax refund paid to them or they could carry it over, it
gives latitude.
CHAIRMAN KOTT acknowledged having the latitude but asked if it
would be cleaner if the money was left for the subsequent year
rather than having to go through the paperwork.
MS. BURKE said there is the paperwork, tracking credits and
keeping those monitored through the next year. She said there
are costs associated either way.
CHAIRMAN KOTT inquired if it was common to have a tax premium
credit at the end of the year.
MS. BURKE responded that it wasn't.
Number 626
CHAIRMAN KOTT referred to page 28, line 5, Section 27 and asked
why the language was changed from "domestic insurer may acquire,"
versus how it was previously "may not acquire."
TAPE 95-56, SIDE B
Number 000
REPRESENTATIVE KUBINA said, "You're going from `not' though to
`may,' instead of `may not' it's `may acquire.'"
REPRESENTATIVE PORTER said, "In number one, you're going from
`it's got to exceed,' to `cannot exceed.' It's double shift."
MS. BURKE said, "We're adding does not exceed" in the next....
REPRESENTATIVE KUBINA commented that it is a double negative.
Number 011
CHAIRMAN KOTT referred to page 30, lines 18 and 19, "An insurer
subject to registration under (a) of this section shall register
annually by April 1 of each year" and asked why the date of April
1 was chosen. He asked if this was accommodating the insurers.
MS. BURKE responded the insurers have a December 31, year end, to
give them sufficient time and it also to gives the division
enough time.
Number 025
CHAIRMAN KOTT referred to page 31, lines 13 and 14, "(1)
additional educational or experience requirements may not apply
to a licensee who has been licensed by the division of insurance
before January 1, 1980;" and inquired as to why 1980 was selected
as the cutoff date.
MS. BURKE replied that the language was agreed to by the
Association of Independent Agents and Insurance Brokers.
Number 039
MR. SYKES added that at the agents and brokers convention, this
language came from their educational committee. They felt this
to be an appropriate cutoff date and proposed it to the division.
Since they will be responsible for certifying courses and helping
to carry on this chapter, the division honored the request.
Number 046
CHAIRMAN KOTT said further down the page on line 29, it states,
"The director shall establish a continuing education advisory
committee." He asked whether there would be some kind of a
fiscal application.
MS. BURKE said the educational advisory committee is not
envisioned as being part of the division. This would be part of
the professional groups themselves and they bear their own costs.
CHAIRMAN KOTT referred to line 31 and asked what a limited lines
insurance representative was.
Number 064
MR. SYKES answered that AS 21.27.150 is the current statute, and
explained a limited lines insurance license are for the those
insurance lines which typically do not have a high exposure. For
instance that would be a travel agency which sells a limited type
of insurance called travel insurance. It only covers a specific
item like domestic tickets or your trip insurance. Another line
is credit life and credit disability insurance which can only be
sold if it is tied to a credit transaction. It cannot be sold in
conjunction with any other product. Title insurance is another.
Number 085
REPRESENTATIVE ELTON asked who enforces this.
MS. BURKE replied the industry wants this and would be part of
the licensing process. Prior to renewal, the division would
access the data to show they had met the requirements for their
continuing education. It is tied to a licensing process which is
the same as is done with just about every profession in the state
with the exception of attorneys.
Number 106
CHAIRMAN KOTT referred to page 32, subsection (h) and said it
states, "The director may make arrangements, including
contracting with an outside agency, for administrative services,"
and asked if this would have a fiscal application.
MS. BURKE said she would defer the question to her staff who
handles fiscal notes.
Number 116
JOAN BROWN, ADMINISTRATIVE OFFICER, DIVISION OF INSURANCE,
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified the
way the continuing education provisions are envisioned is that
there would be a course fee. The division would establish
regulations for a course approval fee and probably there probably
would be an associated filing fee for the completion of the
course. The NAIC is developing a continuing education clearing
house, where (indisc.--coughing). There are also national
contractors where providers register with them. The agents or
producers file their paperwork with them. They in turn file with
the division. Continuing education has the potential of becoming
paper intensive. They want to get rid of the paper. She said
any fees would be born by the producers.
Number 139
CHAIRMAN KOTT referred to Section 56 and asked if the 10 percent
was a standard within the industry. He asked it that basically
something the NAIC is purporting to push.
MS. BURKE responded yes.
Number 146
CHAIRMAN KOTT referred to page 39, line 26, of Section 56, "(1)
at least 20 days before expiration of a personal insurance
policy;" and asked if that includes auto insurance.
MS. BURKE replied there was a section which specifically address
auto insurance.
Number 153
CHAIRMAN KOTT commented that this brought him to the next
section. He said he understood that there was a requirement when
the insurance industry raises their rates, they must provide the
consumer with the reason for the increase on their annual
statement.
MR. SYKES explained there is only two reasons for an insurer to
raise the rates. Based on the language in this section, the
insurer would has to let the insured know within 20 days whether
the raise in rates was based on a change in risk or a raise in
premium.
Number 177
CHAIRMAN KOTT asked if the reason for change would be if you had
been cited and convicted for a traffic violation.
MS. BURKE stated that would be a raise in risk.
CHAIRMAN KOTT asked if this was supported by the NAIC.
MR. SYKES answered yes.
Number 187
REPRESENTATIVE ROKEBERG inquired if the 20 day period was a
national standard or something the NAIC had agreed to.
MR. SYKES answered that it was a national standard.
Number 197
REPRESENTATIVE ROKEBERG commented that 20 days wasn't much notice
particularly if you were to have major increase. He asked if
this would also apply to cancellation notices.
MR. SYKES said there is notification and cancellations. However,
cancellation is a different animal in relation to this section.
When you cancel, you are given five or six situations under which
you could cancel, and the time of notice varies based on the
situation.
Number 215
CHAIRMAN KOTT referred to Section 63 and asked Mr. Sykes to
explain the difference between a criminal insurance act and a
fraudulent insurance act.
MR. SYKES would defer to AS 09.11.100 where it states the
differences between the criminal act and a fraudulent act. He
told the committee the division had a number of prosecutions last
year and they had gotten an education on this. They said please
(indisc.) definitions for which you need to do to get more
convictions.
Number 230
CHAIRMAN KOTT said in Section 66, they have omitted "is guilty of
a felony." He asked what the current violation is the violator
would be convicted of.
MR. SYKES said they revised the statutes in Chapter 36, which
speaks to trade practices. What that his means anyone doing the
business of insurance in the state of Alaska is subject to any
provision under Chapter 36. The division has updated what they
consider to be criminal or fraudulent acts to coincide with the
criminal statutes of AS 09.11.100.
Number 255
CHAIRMAN KOTT referred to the word "phenylketonuria" in Section
75 and asked the meaning. He then commented that it was brain
damage, due to an accumulation of toxic metabolic products.
REPRESENTATIVE ELTON asked why Section 3, gives the director the
extraordinary authority to precede the Governor on a catastrophe.
Number 274
MS. BURKE pointed out the perfect examples of this is the
earthquake in California or the explosion in Oklahoma. They need
to be able to waive some provisions to get claim adjusters on
site to begin payment and investigation of claims in meeting the
needs of the victims as quickly as possible. This specifically
addresses these types of issues. It does put some limits that it
can't go on forever.
Number 283
REPRESENTATIVE ELTON said he understood the reasoning. However,
you could apply the same reasoning toward an outbreak of some
horrendous disease in Western Alaska or Southeast Alaska. He
asked if this was standard language that other states use.
MS. BURKE replied this is language to facilitate the division's
continuing accreditation. Dealing with an outbreak you might not
have to have the same licensing and noticing requirements to deal
with that outbreak as you would to have someone authorized to
start making payments. For example, there are provisions as to
how those payments must be made.
REPRESENTATIVE ELTON asked if other states had this language.
MS. BURKE responded yes.
Number 300
REPRESENTATIVE ELTON referred to page 10, line 7, and asked
why the language dealing with confidentiality was included.
Number 322
MS. BURKE responded that the amount of information the division
requires to be presented for them to affectively monitor the
solvency of the insurer, requires that they divulge a lot of
proprietary confidential information. If that information were
made available to competitors, it would impose disadvantages.
Number 334
REPRESENTATIVE ELTON asked why they can't say, "The director may
not release for proprietary business information," rather than
having the broad language saying the "upon the director's
discretion."
Number 341
MS. BURKE said, "An all inclusive list would -- say for some
proprietary information, there are also terms and conditions of
reinsurance agreements. That is it really proprietary."
REPRESENTATIVE ELTON referred to page 32, Section 36, and
inquired if there was a penalty for noncompliance.
MS. BURKE replied there is. The violations of license and
statutes can result in loss of license or imposing penalties.
Number 356
REPRESENTATIVE ELTON noted that on page 34, Section 42, and said
it seems odd to him. We're saying that the director may issue or
renew a license with restrictions on the scope of that person's
license if the director determines the person has violated
provisions for this title. He can't do that unless he has the
consent of the applicant of the licensee.
Number 365
MR. SYKES responded, "In this provision here, we do get into a
situation where a licensee may not cause a substantial -- or may
not be a substantial danger or harm to the public, but we want to
his activities and his exposure to the public so we may put a
condition on his license that he transact certain types of
insurance and that he report to us the people he is doing
business with. Also, additional reporting requirements for who
he is producer for."
Number 380
REPRESENTATIVE ELTON said he understands that. However, the
initial words in paragraph (c), you have that ability but only if
you have the consent of the applicant or the licensee.
MR. SYKES responded this was in lieu of one of the more stringent
provisions within the licensing code. For example, revocation or
suspension.
Number 388
REPRESENTATIVE ELTON noted that if you have this stutter step
toward a more full enforcement action, it seems you would be
invalidating the stutter step if it's left to the discretion not
just of the director but also of the person who is being
licensed. If the licensee doesn't agree to the limitations, you
would be forced to go to....
MS. BURKE said, "To revocation".
REPRESENTATIVE ELTON asked if that seemed strange to Ms. Burke.
REPRESENTATIVE ELTON explained that the way he understands
regulation of the insurance industry is regulation is
accomplished by 50 different states. There is not a national
regulatory body which enforces national standards. It seems to
him that the state is leaning toward a body of law which applies
NAIC standards. His concern is that there is no central federal
body of law regulating the industry. It seems they will be
consolidating that central authority into a professional
organization. That professional organization has the ability to
either accredit or not accredit Alaska. The choice Alaska makes
is we better go along with what they want because if we don't, we
might lose our accreditation and access to information. He asked
how NAIC makes their mind up. He asked if they are they
inundated with lobbyists from the industry.
MR. BURKE said, "You ask how these come about." She said the
staff in Alaska is active in pulling together and proposing these
standards. They are on many committees that they have input.
They have effectively gotten things this state and this division
feels are critical to do their job. A number of these are
uniform from state to state.
Number 434
MR. SYKES added that the division goes through the same process
that the legislature does. For example, the Division of Alaska
participates on a number of committees dealing with health care,
property, casualty, licensing. They participate with other
states, and solicit the input of the other 50 states to find a
common ground, a common thread and then draft broad language that
would be a minimum standard that all states could impose. Once
they have the minimum standard, all states vote on it.
MR. SYKES commented on the lobbying efforts from the insurance
industry. The lobbyist might be looking for a provision which
might be too protective of the consumer. Ms. Burke has the final
vote on that language. He said the division sits on committees,
just like the legislature, they send things to subcommittees.
Their process in adopting uniform laws, which are just minimum
standards, that the NAIC looks at a state enacting just the
minimum language and then allows for amendments to fit their
particular situation.
Number 456
REPRESENTATIVE ELTON said as he went through the bill several
things had struck him. They were adopting standards which are
NAIC standards, extending the scope to reinsurance groups and
purchasing groups, mandating filings with the NAIC, and
determining how risk retention groups are reformed. This is all
because of NAIC.
Number 470
REPRESENTATIVE ROKEBERG asked Mr. Sykes to give the committee an
update on the movement to bring the regulation of the national
insurance business under federal statute because of the privacy
of the state on New York and the insurance commissioner of the
state of New York and their influence on the national trade
groups.
Number 476
MR. SYKES responded that there was a movement under Dingle.
Dingle wanted to looked at bringing the regulation of insurance
under federal statute with, federal (indisc.), and with the
repeal of the McCarran-Ferguson Act. At that time the DOI
director, Mr. David Walsh, was also President of the NAIC. He
led the charge of that organization to the federal government to
show why the NAIC and the processes with the 50 states worked
better as a regulatory framework than as a federal government.
They were able to show that in the process of accreditation, if
you look at all the laws in the 50 states, you have a minimum
standard that is the same language throughout. That is enforced
the same way throughout except for one other provision that may
be unique to that area. Obviously, we don't have the population
base of New York and we don't have the number of domestic
companies like New York. However, the minimum standards that we
have - the (indisc.) standards that we have - the risk retention,
etc., are laws that were developed by the 50 states. There were
actual problems, i.e. insolvencies by risk retention.
Number 496
CHAIRMAN KOTT asked how long we have been a member of the NAIC.
MS. BROWN said she believes it has been as long as there has been
a state insurance department. She said they have been accredited
since 1992.
CHAIRMAN KOTT asked if there was a break in accreditation.
MS. BROWN said it was a new program and Alaska was the fifteenth
state to become accredited.
Number 513
There being no further testimony, CHAIRMAN KOTT stated he had a
couple of amendments. He said he would offer Amendment 2 first
as he believes the department desires it to be in the bill.
Chairman Kott indicated the amendment is extensive and deals with
consumer credit. He moved Amendment 2 be adopted.
Number 426
REPRESENTATIVE KUBINA objected for the purpose of hearing from
the department.
MS. BURKE explained consumer credit insurance is, for the most
part, directed at the least sophisticated buyer of insurance.
She referred to fliers that people may have received with their
credit card billings and said they relate to getting insurance
for paying off your unpaid bill in the event of disability or
death. It is also the type of insurance that if you go to buy a
car, quite often they'll say, "Well you must secure the debt with
insurance." She said there are a number of other products on the
market that can do the same sort of thing. The proposed
Amendment 2 was a gain of product of the NAIC, but it was
spearheaded by the Alaska DOI personnel. They feel this is an
extremely important protection for the consumer. It requires
disclosure that the DOI feels is absolutely essential for the
protection of the consumer, for example, that they do not have to
buy that particular product. They can buy term life or other
types of insurance. The freedom is there for the consumer. Ms.
Burke indicated the amount of coverage a company offers may not
be sufficient to pay off your debt. It alerts the consumer to
the fact that it may not be sufficient.
MS. BURKE said it is not a area of the product line that is
properly regulated at this point, it is directed at
unsophisticated purchasers. She said the DOI feels it is
extremely important that the DOI be able to insist on minimum
disclosures of what the people are buying and if they have
options.
Number 557
REPRESENTATIVE ROKEBERG asked if the insurance includes mail
orders in terms of marketing. He said if that is the case, how
would the DOI be able to enforce that on an interstate bases.
MS. BURKE said there is telemarketing and the DOI would require
that the product be regulated by the DOI. For example, if they
do have an advertisement for a particular product by
telemarketing, the DOI will be aware of it. If it is misleading,
it would be subject to the same sort of misleading and fraudulent
statutes that currently exist. Ms. Burke said it currently goes
on and they may get complaints about it. They don't have a lot
of (indisc.) to do anything about it.
MS. BURKE said she would like to point out that they have
incorporated suggestions made by marketers office product to the
extent that it didn't totally erode the regulatory nature of this
product. She said the DOI is not requesting that they file it
before they do it. There was a complaint lodged that if they had
to file a copy of every single piece of paper they sent out, it
would be onerous. The DOI did amend that portion to say that
they would still have the right to regulate it and if it were
false or misleading, they would take appropriate action.
CHAIRMAN KOTT asked if the amendment was in the original version
of the bill.
MS. BURKE indicated it was. She said they did make some minor
changes to accommodate comments that were made in a Senate
Judiciary Committee meeting. It was deleted in Senate Judiciary.
Ms. Burke noted a lot of testimony was given from organizations
in the lower 48 via teleconference. She said the DOI wasn't
aware that they would be objecting to this. There was no
testimony in opposition to the provisions last year in the
hearing process. Ms. Burke said Senator Taylor requested that
people providing testimony via teleconference present that to
them in writing since it was so voluminous. They did and that is
the information that the DOI incorporated again to the extent
that they could without eroding the product.
Number 584
REPRESENTATIVE SANDERS asked if he could assume that the
controversial part is not in Amendment 2.
CHAIRMAN KOTT said that is a safe assumption.
Number 593
REPRESENTATIVE ROKEBERG asked if it was deleted in Senate
Judiciary Committee this year. MS. BURKE responded that it was,
but Senator Taylor also agreed to introduce a separate piece of
legislation. She noted it hasn't been introduced to date.
Number 595
REPRESENTATIVE PORTER asked if would be a fair statement to say
that the bill is a product of incorporating some of the
suggestions that lead to the other one being taken out. He said,
"This isn't precisely what was taken out, this is a softened up
version, if you will." MS. BURKE responded, "That's correct."
REPRESENTATIVE ELTON said, "I was willing to take on faith, kind
of 60 or some page bill with over 90 sections in the
waining(sp.?) days of the legislative session, and I mean
absolutely no disrespect to the division or the department or
anybody else, but -- and they're pulling all the right chains for
me -- consumer protection, outside groups are nervous about it.
I mean I kind of -- made me feel good when Mari K. didn't want
something and some of the others I thought `well, you know why
are all these national groups...' Obviously, were maybe doing
something right. So the arguments that I have heard from the
department all want me to vote with my heart and say, `Hey, right
on, lets do it.' But, Mr. Chair, I guess -- I mean I'm probably
going to make a statement here and I am going to go with my head
rather than my heart, in that I don't think it's good public
process to get a bill this big, move it out of committee and add
a 16 page amendment to it that I haven't had a chance to read. I
mean I've read this one and I thought my god, I'm going to pat
myself on the back for getting through it. I was willing to not
object to moving it out. I think if we do this despite the fact,
then I think we're probably doing the right thing. Without
seeing any of the backup material of what made people nervous,
without a good explanation of what was in that's now out of it
that was making people nervous that kind of process just pushes
me over the edge. I'm going to... If somebody makes a move to
amend with this, I'll object for whatever good it may do. I
guess if somebody had come to me a week ago and said, `Kim, this
is very important for these reasons' and given me an opportunity
to think about it, make at least a few phone calls, I'd have
probably gone `yea,' and I would have been an enthusiastic
supporter. I probably will be an enthusiastic supporter when it
comes back, but I'm not right now."
Number 630
REPRESENTATIVE ROKEBERG stated he agrees with Representative
Elton. REPRESENTATIVE SANDERS said he also does.
TAPE 95-57, SIDE A
Number 001
CHAIRMAN KOTT withdrew Amendment 2. He then distributed
Amendment 1. He asked the drafting attorney to come forward.
Number 037
MIKE FORD, ATTORNEY, LEGISLATIVE LEGAL SERVICES, LEGISLATIVE
AFFAIRS AGENCY, informed Chairman Kott he is the drafting
attorney for SB 53.
CHAIRMAN KOTT explained the committee had before them a work
draft of the bill, dated 3/30/95, Version G. He said the
official bill packet has the same CS, 9-LS0467\G. There appears
to be some difference between the two versions. He asked Mr.
Ford if he was correct in that assumption.
MR. FORD said he was just informed of that by Mr. Dozier. He
said he believes there was a change in the title made by the
Senate Labor and Commerce Committee. Mr. Ford said he can't
explain why the title in the committee files is different than
the printed copy, but it is. It could be that there has been an
error in printing. He both should be the same.
CHAIRMAN KOTT said if there is a difference, it probably would be
in the title. MR. FORD said that is the error that has been
pointed out to him. He said he would have to check his file as
to what the problem is. He said he has a G Version of CSSB
53(JUD). He said he believes that is the version before the
committee. Occasionally, there are errors in printing. He said
that could be the problem and he indicated he would have to check
his file.
CHAIRMAN KOTT asked Mr. Ford if he is looking at the copy that
has "WORK DRAFT" stamped on it. MR. FORD indicated he wasn't.
He was looking at a printed (indisc.).
REPRESENTATIVE ROKEBERG said the difference is on line 8 of the
title.
Number 076
CHAIRMAN KOTT said the amendment basically resolves the Supreme
Court case that has ruled that in litigation where there is a
conflict of interest between the insurance company and the
insured, the latter is entitled to retain independent counsel.
The amendment requires independent counsel to have at least 40
years experience in civil litigation, including substantial
defense experience in the subject at issue in the civil action.
Unless the policy states otherwise, the prepaid independent
counsel is limited to the right that the insurer pays to
attorneys in the regular course of doing business in this area.
In subsection (f), it makes changes to require independent
counsel to consult with the insurer on all matters related to the
case and disclosure of the relevant matters except those which
are privileged and relevant to the disputed coverage. It also
defines what does not constitute a conflict of interest.
Chairman Kott noted this was in the original bill with the
exception that some (indisc.) changes were made. He asked Mr.
Ford if he would like to elaborate further.
MR. FORD said he has seen the language before in a different
version. His only concern is that the title of the Senate bill
is fairly narrow. At present, it describes all the provisions in
the bill in a manner that was intended to preclude the addition
of other material unless it fits within those specific
categories. Mr. Ford said he would be concerned that this
material would not fit under the existing title.
Number 120
CHAIRMAN KOTT said he would concur with that assessment. He said
Amendment 1 or Amendment 2 would not conform to the title and
would require a resolution. He said he has been told there was
support for a title change if the committee desires to do that.
MR. FORD said aside from that, he doesn't have any legal
concerns.
Number 140
CHAIRMAN KOTT moved Amendment 1.
REPRESENTATIVE ROKEBERG objected. He asked for a brief at ease.
The meeting was called back to order at which point a roll call
vote was taken. Representative Kott, Sanders, Elton, Kubina and
Porter voted in support of the amendment. Representative
Rokeberg voted against the amendment. So Amendment 1 was
adopted.
Number 167
There was some confusion as to the committee members having the
right version before them. REPRESENTATIVE KUBINA moved, for the
record, that the version before the committee was 9-LS0467\G,
Judiciary, Senate Judiciary Committee, and it is NOT marked "WORK
DRAFT." CHAIRMAN KOTT said there is a motion to adopt the
correct version. Hearing no objection, it was so ordered.
Number 179
CHAIRMAN KOTT said, "To ensure that we are correct, I'm going to
ask that we rescind our action in adopting Amendment Number 1."
Hearing no objection, it was so ordered.
CHAIRMAN KOTT then moved Amendment 1. He asked if there was an
objection. REPRESENTATIVE ROKEBERG objected and called for a 30
second at ease. He informed the committee that he had taken the
time to review a law review article. He said he would like to
know what the opinion is of the DOI before it is adopted.
MS. BURKE said the DOI feels that it is more of an attorney legal
issue and they don't have a position.
REPRESENTATIVE ROKEBERG asked if Mr. Stebing was still on line
via teleconference. He said in the testimony given by him, it
seemed he wasn't an advocate of the amendment.
MS. BURKE said that is true. He has some strong legal
considerations and concerns on the issue. He has expressed those
concerns.
REPRESENTATIVE ROKEBERG said according to information he has
there was a 3 - 2 split in the Alaska Supreme Court, and the
ruling was contained in the CHI case ruling which indicated that
this goes against the preponderant adoption and state
jurisdictions throughout the country. The arguments brought
fourth by the descending justices and the Chief Justice of the
Alaska Supreme Court indicated this would be (indisc.) public
policy. He said he would prefer that the amendment be held until
this could be clarified.
Number 225
REPRESENTATIVE KUBINA noted that he doesn't have a problem with
either amendment.
CHAIRMAN KOTT said there is a motion to adopt Amendment 1. He
asked for a roll call vote. Representative Kott, Porter, Kubina,
Elton and Sanders voted in support of the amendment.
Representative Rokeberg voted against the amendment. So
Amendment 1 was adopted.
REPRESENTATIVE KUBINA moved Amendment 2. CHAIRMAN KOTT asked if
there was an objection. Hearing none, Amendment 2 was adopted.
CHAIRMAN KOTT said the committee had before them CSSB 53(JUD), as
amended by the House Labor and Commerce Committee.
Number 247
REPRESENTATIVE KUBINA moved to pass SB 53 out of the House Labor
and Commerce Committee. CHAIRMAN KOTT said there is a motion to
move CSSB 53, as amended, out of committee with individual
recommendations and accompanying fiscal notes. Hearing no
objection, HCS CSSB 53(L&C) was passed out of committee.
ADJOURNMENT
CHAIRMAN KOTT adjourned the meeting.
| Document Name | Date/Time | Subjects |
|---|