Legislature(1993 - 1994)

04/18/1994 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         April 18, 1994                                        
                            8:00 a.m.                                          
  MEMBERS PRESENT                                                              
  Representative Al Vezey, Chairman                                            
  Representative Pete Kott, Vice-Chairman                                      
  Representative Gary Davis                                                    
  Representative Harley Olberg                                                 
  Representative Fran Ulmer                                                    
  MEMBERS ABSENT                                                               
  Representative Bettye Davis                                                  
  Representative Jerry Sanders                                                 
  COMMITTEE CALENDAR                                                           
  HJR 53:        Proposing amendments to the Constitution of                   
                 the State of Alaska relating to the length of                 
                 a regular session and establishing a                          
                 unicameral legislature; and providing for an                  
                 effective date for each amendment.                            
                 MOVED FROM COMMITTEE WITH NO RECOMMENDATIONS                  
  HJR 51:        Requesting the governor to file suit in the                   
                 United States Supreme Court against the                       
                 United Sates government alleging violations                   
                 of the civil rights of Americans listed as                    
                 prisoners of war or missing in action in                      
                 Southeast Asia; and requesting the other                      
                 states to join in this suit."                                 
                 MOVED FROM COMMITTEE AS CSHJR 51(STA) WITH DO                 
                 PASS RECOMMENDATIONS                                          
  *HCR 33:       Requesting the governor to offer the United                   
                 States Congress $10,000,000,000 in cash, or                   
                 other terms that may be negotiated between                    
                 the state and the federal government, to                      
                 purchase all federal land, water, or land and                 
                 water, including any surface or subsurface                    
                 interests, in Alaska other military                           
                 reservations and federal offices, to have the                 
                 federal government relinquish all dominion,                   
                 control, and regulatory authority over all                    
                 land, water, or land and water, including                     
                 surface or subsurface interests, in Alaska                    
                 other than military reservations and federal                  
                 offices, and providing a bonus if certain                     
                 federal agencies are removed from the state                   
                 within six months of the federal sale to the                  
                 state and relinquishment of control.                          
                 HELD IN COMMITTEE                                             
  SB 342:        "An Act relating to risk based capital for                    
                 insurers; and providing for an effective                      
                 HELD IN COMMITTEE                                             
  SB 355:        "An Act relating to errors in surveys of                      
                 HELD IN COMMITTEE                                             
  (*First public hearing)                                                      
  WITNESS REGISTER                                                             
  REPRESENTATIVE JEANNETTE JAMES                                               
  Alaska State Legislature                                                     
  Alaska State Capitol, Room 501                                               
  Juneau, AK  99811-0460                                                       
  Phone:  465-3743                                                             
  POSITION STATEMENT:  Sponsor of HJR 51                                       
  DAVID WALSH, Director                                                        
  Division of Insurance                                                        
  Department of Commerce & Economic Development                                
  P.O. Box 110805                                                              
  Juneau, AK  99811-0805                                                       
  Phone:  465-2515                                                             
  POSITION STATEMENT:  Addressed CSSB 342                                      
  JOHN GEORGE                                                                  
  American Council on Life Insurance                                           
  National Association of Independent Insurers                                 
  9515 Moraine Way                                                             
  Juneau, AK  99801                                                            
  Phone:  789-0172                                                             
  POSITION STATEMENT:  Supported CSSB 342                                      
  KATIE CAMPBELL, Life & Health Actuary                                        
  Division of Insurance                                                        
  Department of Commerce & Economic Development                                
  P.O. Box 110805                                                              
  Juneau, AK  99811-0805                                                       
  Phone:  465-2515                                                             
  POSITION STATEMENT:  Answered questions on CSSB 342                          
  ANNE RINGSTAD, Staff                                                         
  Senator Steve Rieger                                                         
  Alaska State Capitol, Room 516                                               
  Juneau, AK  99811                                                            
  Phone:  465-3879                                                             
  POSITION STATEMENT: Addressed SB 355 for Senator Steve                       
                      Rieger, Sponsor                                          
  PREVIOUS ACTION                                                              
  BILL:  HJR 53                                                                
  SPONSOR(S): REPRESENTATIVE(S)GREEN,Navarre,                                  
  JRN-DATE     JRN-PG               ACTION                                     
  02/04/94      2255    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/04/94      2255    (H)   STATE AFFAIRS,JUDICIARY,FINANCE                  
  04/16/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  04/16/94              (H)   MINUTE(STA)                                      
  BILL:  HJR 51                                                                
  SHORT TITLE: SUIT RE POWS & MIAS AGAINST U.S. & OTHERS                       
  SPONSOR(S): REPRESENTATIVE(S) JAMES,Therriault,                              
  JRN-DATE     JRN-PG               ACTION                                     
  01/19/94      2108    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/19/94      2109    (H)   MLV, STATE AFFAIRS                               
  02/09/94      2327    (H)   COSPONSOR(S): MARTIN, MULDER                     
  02/10/94              (H)   MLV AT 05:00 PM CAPITOL 17                       
  02/10/94              (H)   MINUTE(MLV)                                      
  02/22/94      2474    (H)   MLV RPT  CS(MLV) 3DP 1NR                         
  02/22/94      2475    (H)   DP:  MULDER, KOTT, FOSTER                        
  02/22/94      2475    (H)   NR:  NAVARRE                                     
  02/22/94      2475    (H)   -INDETERMINATE FISCAL NOTE                       
                              (LAW) 2/22/94                                    
  02/22/94      2475    (H)   REFERRED TO STATE AFFAIRS                        
  02/22/94      2484    (H)   FIN REFERRAL ADDED                               
  03/28/94      3028    (H)   COSPONSOR(S):  HUDSON                            
  04/16/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  04/16/94              (H)   MINUTE(STA)                                      
  BILL:  HCR 33                                                                
  SHORT TITLE: PURCHASE FEDERAL LAND FROM THE U.S.                             
  SPONSOR(S): STATE AFFAIRS                                                    
  JRN-DATE     JRN-PG               ACTION                                     
  03/29/94      3050    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  03/29/94      3050    (H)   STATE AFFAIRS                                    
  04/18/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  SB 342                                                                
  SHORT TITLE: RISK BASED CAPITAL FOR INSURERS                                 
  SPONSOR(S): LABOR & COMMERCE BY REQUEST                                      
  JRN-DATE     JRN-PG               ACTION                                     
  03/03/94      3057    (S)   READ THE FIRST TIME/REFERRAL(S)                  
  03/03/94      3057    (S)   LABOR & COMMERCE, JUDICIARY                      
  03/15/94              (S)   L&C AT 01:30 PM FAHRENKAMP                       
                              ROOM 203                                         
  03/18/94      3266    (S)   L&C RPT CS 1DP 3NR  SAME TITLE                   
  03/18/94      3266    (S)   ZERO FN TO SB & CS (DCED)                        
  04/06/94              (S)   JUD AT 01:30 PM BELTZ ROOM 211                   
  04/08/94              (S)   RLS AT 00:00 AM FAHRENKAMP                       
                              ROOM 203                                         
  04/08/94      3523    (S)   JUD RPT  3DP 2NR (L&C)CS                         
  04/08/94      3523    (S)   PREVIOUS ZERO FN (DCED)                          
  04/11/94      3556    (S)   RULES RPT  3CAL 1NR   4/11/94                    
  04/11/94      3561    (S)   READ THE SECOND TIME                             
  04/11/94      3561    (S)   L&C  CS ADOPTED UNAN CONSENT                     
  04/11/94      3561    (S)   ADVANCED TO THIRD READING                        
                              UNAN CONSENT                                     
  04/11/94      3561    (S)   READ THE THIRD TIME                              
                              CSSB 342(L&C)                                    
  04/11/94      3562    (S)   PASSED Y19 N1                                    
  04/11/94      3562    (S)   EFFECTIVE DATE  SAME AS PASSAGE                  
  04/11/94      3562    (S)   Adams NOTICE OF RECONSIDERATION                  
  04/12/94      3609    (S)   RECON TAKEN UP-IN THIRD READING                  
  04/12/94      3610    (S)   PASSED ON RECONSIDERATION                        
                              Y18 N1 A1                                        
  04/12/94      3610    (S)   EFFECTIVE DATE SAME AS PASSAGE                   
  04/12/94      3611    (S)   TRANSMITTED TO (H)                               
  04/13/94      3400    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  04/13/94      3400    (H)   STATE AFFAIRS, JUDICIARY                         
  04/18/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  SB 355                                                                
  SHORT TITLE: ADJUSTMENTS FOR DEFECTIVE SURVEY                                
  SPONSOR(S): COMMUNITY & REGIONAL AFFAIRS                                     
  JRN-DATE     JRN-PG               ACTION                                     
  03/10/94      3149    (S)   READ THE FIRST TIME/REFERRAL(S)                  
  03/10/94      3149    (S)   CRA, RES                                         
  03/15/94              (S)   CRA AT 9:00 AM BUTROVICH RM 205                  
  03/15/94              (S)   MINUTE(CRA)                                      
  03/16/94      3241    (S)   CRA RPT  1DP 2NR                                 
  03/16/94      3241    (S)   ZERO FISCAL NOTE PUBLISHED                       
  03/30/94              (S)   RES AT 3:30 PM BUTROVICH RM 205                  
  03/31/94      3425    (S)   RES RPT CS 3DP 1NR   SAME TITLE                  
  03/31/94      3425    (S)   PREVIOUS ZERO FN APPLIES (DCRA)                  
  04/07/94              (S)   RLS AT 09:00 AM FAHRENKAMP                       
                              ROOM 203                                         
  04/11/94      3556    (S)   RULES TO CALENDAR  4/11/94                       
  04/11/94      3562    (S)   READ THE SECOND TIME                             
  04/11/94      3562    (S)   RES  CS ADOPTED UNAN CONSENT                     
  04/11/94      3562    (S)   ADVANCED TO THIRD READING                        
                              UNAN CONSENT                                     
  04/11/94      3562    (S)   READ THE THIRD TIME                              
                              CSSB 355(RES)                                    
  04/11/94      3563    (S)   PASSED Y15 N5                                    
  04/11/94      3567    (S)   TRANSMITTED TO (H)                               
  04/12/94      3367    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  04/12/94      3367    (H)   STATE AFFAIRS, RESOURCES                         
  04/18/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  ACTION NARRATIVE                                                             
  TAPE 94-49, SIDE A                                                           
  Number 000                                                                   
  CHAIRMAN AL VEZEY called the meeting to order at 9:05 a.m.                   
  The meeting had been delayed from 8 to 9 o'clock due to a                    
  lack of a quorum.  Members present were REPRESENTATIVES                      
  KOTT, G. DAVIS and OLBERG.                                                   
  HJR 53 - UNICAMERAL LEGISLATURE/SESSION LIMIT                                
  CHAIRMAN VEZEY, under bills previously heard, opened HJR 53.                 
  He noted the committee did not have a quorum at the April 16                 
  meeting when it voted to move HJR 53 from committee.                         
  Therefore, for technical reasons, the vote would be taken                    
  CHAIRMAN VEZEY asked for a motion to move HJR 53 with                        
  individual recommendations and attached House State Affairs                  
  Committee fiscal note.                                                       
  REPRESENTATIVE HARLEY OLBERG so moved.                                       
  CHAIRMAN VEZEY asked the committee secretary to call the                     
  IN FAVOR:      REPRESENTATIVES VEZEY, G. DAVIS, OLBERG.                      
  OPPOSED:       REPRESENTATIVE KOTT.                                          
  ABSENT:        REPRESENTATIVES B. DAVIS, SANDERS, ULMER.                     
  MOTION FAILED                                                                
  HJR 51 - SUIT RE POWS & MIAS AGAINST U.S. & OTHERS                           
  Number 045                                                                   
  CHAIRMAN VEZEY, under bills previously heard, opened CSHJR
  51 for discussion.  He stated a the committee had a                          
  committee substitute prepared reflecting the amendments                      
  adopted April 16.  CSHJR 51(STA) was before the committee.                   
  REPRESENTATIVE GARY DAVIS commented page 1, line 9, had been                 
  one of his concerns in the CSHJR 51(MLV).  The language was                  
  REPRESENTATIVE OLBERG noted page 1, line 12, the general's                   
  name was corrected to read "Kwang."  He directed to the                      
  letter from the American Legion in the packet and said the                   
  four suggested amendments at the bottom had been adopted.                    
  Number 092                                                                   
  REPRESENTATIVE PETE KOTT asked if there had been discussion                  
  on April 16 as to what the Administration has done that                      
  would imply the state has taken this position.  He referred                  
  to page 1, line 9.                                                           
  CHAIRMAN VEZEY answered he did not believe there was not                     
  anything indicating the U.S. government had taken this                       
  position.  The phrase "implied" was inserted because he                      
  believed they had not taken an official position on the                      
  disposition of all POWs.                                                     
  REPRESENTATIVE KOTT commented general use of "implied" is                    
  the result of some type of action.  He felt CSHJR 51 was                     
  saying the governmental action was in fact inaction.                         
  CHAIRMAN VEZEY clarified the committee interpreted "implied"                 
  is default, and not saying otherwise.                                        
  (REPRESENTATIVE OLBERG left the meeting at 9:11 a.m.)                        
  Number 134                                                                   
  REPRESENTATIVE G. DAVIS directed to page 2, line 15, reading                 
  "WHEREAS the executive branch of the federal government has                  
  not even attempted to negotiate the release of Americans                     
  that may still be held in Southeast Asia and is not actively                 
  searching for remaining Americans;..."  He was not                           
  comfortable agreeing with this statement, unless it was in                   
  fact the case.  This was the amended language.                               
  (REPRESENTATIVE OLBERG rejoined the meeting at 9:12 a.m.)                    
  the committee table to answer questions.  She responded she                  
  did not know if there was justification for the statement on                 
  page 2, line 15.  The problem is that when HJR 51 began                      
  certain conditions existed; however, there has been a lot of                 
  pressures since then.  She had no objection to making the                    
  language more gentle.                                                        
  CHAIRMAN VEZEY responded the simplest way to do it would be                  
  to extricate it.                                                             
  REPRESENTATIVE JAMES stated from what she had heard in the                   
  news, the U.S. government is saying the search is over.  She                 
  noted there had been testimony, however, which indicated                     
  some people were there looking for remains.  They are not                    
  looking for live people only remains, according to the news.                 
  REPRESENTATIVE JAMES said as a side note there had not been                  
  testimony from Fairbanks on April 16 because the Legislative                 
  Information Office had been closed.  Anchorage was also.                     
  (REPRESENTATIVE ULMER joined the meeting at 9:15 a.m.)                       
  CHAIRMAN VEZEY noted REPRESENTATIVE ULMER's arrival.                         
  Number 231                                                                   
  REPRESENTATIVE G. DAVIS moved to delete page 2, lines 15, 16                 
  and 17.                                                                      
  CHAIRMAN VEZEY, hearing no objection, passed the motion.                     
  REPRESENTATIVE KOTT observed page 1, line 9, and conveyed                    
  "implied" would be satisfactory to use.                                      
  REPRESENTATIVE G. DAVIS clarified he understood "implied"                    
  meant implied by the makers of the resolution.                               
  CHAIRMAN VEZEY added he interpreted "implied" as it is                       
  implied to whomever wanted to listen.  Not stated, but                       
  REPRESENTATIVE KOTT agreed.  He mentioned, based on the                      
  WHEREAS clause on page 2, lines 4-8, the committee could use                 
  the word "implied."  There is an implication based on                        
  federal intelligence agencies.                                               
  CHAIRMAN VEZEY indicated another committee substitute would                  
  have to be drawn up; however, he would consider a motion to                  
  move CSHJR 51(STA) reflecting the amendment out of                           
  committee.  He emphasized it was very late in the session                    
  and he was sure it would not get another committee hearing.                  
  REPRESENTATIVE G. DAVIS moved to pass CSHJR 51(STA), as                      
  amended, from committee with individual recommendations.                     
  CHAIRMAN VEZEY, hearing no objection, passed the motion.                     
  MOTION PASSED                                                                
  Number 299                                                                   
  REPRESENTATIVE G. DAVIS moved to rescind the committee's                     
  action on HJR 53, whereby it failed to pass it from                          
  REPRESENTATIVE KOTT objected.                                                
  CHAIRMAN VEZEY clarified the motion to rescind is not                        
  correct, as long as a motion to reconsider is available.                     
  Therefore, he ruled the motion to rescind out of order.                      
  REPRESENTATIVE G. DAVIS could move to reconsider.                            
  REPRESENTATIVE G. DAVIS moved to reconsider HJR 53.                          
  REPRESENTATIVE KOTT said he maintained his objection.  He                    
  said he voted against moving HJR 53 from committee because                   
  it has two additional committee referrals, one of which is                   
  Judiciary.  Being so late into the session he assured the                    
  committee, as a member of Judiciary, HJR 53 would not be                     
  heard.  He emphasized Judiciary has already addressed the                    
  unicameral legislature and regular session length, therefore                 
  it would be frivolous for Judiciary to deal with the issue                   
  CHAIRMAN VEZEY added he did not think "anyone at the table                   
  had illusions of HJR 53 becoming law."  The passage was a                    
  gesture on the committee's part.                                             
  REPRESENTATIVE G. DAVIS said he did not disagree with either                 
  REPRESENTATIVE KOTT or CHAIRMAN VEZEY; however, he wanted to                 
  be a part of supporting HJR 53 and moving it out of                          
  CHAIRMAN VEZEY reiterated the motion to reconsider.  He                      
  asked the committee secretary to call the roll.                              
  IN FAVOR:      REPRESENTATIVES VEZEY, ULMER, G. DAVIS,                       
  OPPOSED:       REPRESENTATIVE KOTT.                                          
  ABSENT:        REPRESENTATIVES B. DAVIS, SANDERS.                            
  MOTION PASSED                                                                
  Number 345                                                                   
  CHAIRMAN VEZEY opened HCR 33 for discussion.  He noted the                   
  committee had been waiting for the companion bill in the                     
  Senate to come over.  He said HCR 33 is calling for the                      
  governor to offer the U.S. $10 billion for the federal                       
  government's interest in Alaska.                                             
  REPRESENTATIVE FRAN ULMER commented $10 million would be a                   
  great deal, but she was not so sure about $10 billion.                       
  CHAIRMAN VEZEY, hearing no more comments, held HCR 33 in                     
  (REPRESENTATIVE G. DAVIS left the meeting at 9:27 a.m. to                    
  testify on a bill in Finance Committee.)                                     
  SB 342 - RISK BASED CAPITAL FOR INSURERS                                     
  Number 370                                                                   
  CHAIRMAN VEZEY opened CSSB 342 for discussion.                               
  COMMERCE & ECONOMIC DEVELOPMENT (CED), addressed CSSB 342.                   
  He began CSSB 342 is a companion bill to HB 514, which State                 
  Affairs has already heard.  He said CSSB 342 provides a new                  
  system for calculating the solvency of insurance companies.                  
  The old law is a "one size fits all" template that is used                   
  on companies as large as Allstate and as small as the Alaska                 
  Timber Exchange.  With the sophistication of financial                       
  products and the diversification of assets of all financial                  
  institutions over the last 10 years arises the need for a                    
  new system.                                                                  
  MR. WALSH explained the new formula calculates the various                   
  risk, (e.g., asset, underwriting, etc...) that an individual                 
  insurance company undertakes.  Insurance companies insure                    
  different types of people and things, therefore the                          
  reserving each company must do is different based upon their                 
  asset risk.  Likewise their investment risk.  Alaskan                        
  domestic companies are conservative and tend to invest in T                  
  bills, which are very safe with low risk.  Other companies                   
  tend to invest in higher risk items.  Under the old system,                  
  each type of company got equal credit on their financial                     
  statement for the value of those assets, regardless of where                 
  they were invested.  Risk based capital would weight them.                   
  MR. WALSH stated risk based capital has been worked out on a                 
  national basis for the last 5-6 years.  Contributors were                    
  insurance commissioners with input from consumer groups and                  
  also from the industry.  CED is very pleased with CSSB 342.                  
  MR. WALSH expressed Alaskan companies would be able to                       
  expand their distribution of money, and hopefully provide                    
  better coverage at lower cost.  At 100 percent of risk based                 
  capital CED must take the company over, at 150 percent they                  
  must have a rehabilitation plan, at 200 CED works out a                      
  voluntary way to bring the company back into good health.                    
  He said the average solid company in the U.S. has a risk                     
  based capital number around 485-500.  The 10 Alaska domestic                 
  companies range from 934-24,000.  Therewith, Alaska has very                 
  small conservatively run companies.  This value has not been                 
  apparent under the old system, however, it would be under                    
  the new.  He noted CSSB 342 would hopefully result in                        
  premium decrease which will make Alaskan companies much more                 
  competitive with outside companies who are competing for the                 
  same risk.                                                                   
  MR. WALSH stated CSSB 342 passed the Senate, 19-1.  CED                      
  noticed as it passed through there was one additional change                 
  they wanted to make.  He referred to page 2 where it states                  
  whatever system is passed must be substantially similar to                   
  that passed by the National Association Insurance                            
  Commissioners.  He recommended the committee delete this                     
  sentence because the sentence is redundant, and they have                    
  jealously guarded both the legislative and administrative                    
  prerogative to tailor the national models for what is best                   
  for the Alaskan marketplace.  With its removal, the emphasis                 
  would be put on the establishment of risk based capital                      
  instructions by regulation in the state, and for the state.                  
  Number 445                                                                   
  CHAIRMAN VEZEY mentioned he was surprised because he had                     
  only received one letter of support from an insurance                        
  company on this issue.                                                       
  MR. WALSH said he felt likewise.  He said he talked with the                 
  CEOs or the representatives of probably a half dozen of                      
  Alaska's domestic companies and they all said they were in                   
  support and would contact the committee.                                     
  CHAIRMAN VEZEY explained he did not solicit their input.  He                 
  said he thought SB 342 was an "absolutely outstanding idea"                  
  for encouraging competition to come into Alaska and improve                  
  the options available to customers.  He noted it would be                    
  the most major change in insurance since statehood.                          
  MR. WALSH agreed, one of them.                                               
  CHAIRMAN VEZEY further stated he thought they should use a                   
  slow approach.  He reiterated his concern for little input                   
  even from those outside Alaska.                                              
  MR. WALSH responded everyone on a nationwide basis is                        
  "delighted" with CSSB 342.  CSSB 342 provides regulators                     
  with a much better tool to identify a company as they start                  
  to descend and to intervene.  He noted the overwhelming                      
  majority of the 6,000 insurance companies in the U.S. are                    
  not in any trouble at all.  The new formula would merely                     
  allow everyone to see how strong the companies are.                          
  Number 481                                                                   
  ASSOCIATION OF INDEPENDENT INSURERS, answered questions on                   
  CSSB 342.  He explained he had not signed up to testify                      
  because he wanted to stay out of the way, thereby expediting                 
  CSSB 342 from committee faster.  He stated they feel CSSB
  342 is good solid regulation and urge its passage.                           
  CHAIRMAN VEZEY reiterated his concern about the lack of                      
  input because he felt CSSB 342 to be a major piece of                        
  MR. GEORGE agreed.  They were trying to stay out of the way                  
  because the director was tending to it.  He said if they had                 
  opposed CSSB 342, they would have made efforts to make                       
  amendments or kill it.                                                       
  CHAIRMAN VEZEY observed people think CSSB 342 is more                        
  positive than negative.  He would like both sides of the                     
  MR. GEORGE commented the companies he represents are not                     
  Alaska domestic companies, they do business on a national                    
  basis and are basically domiciled in another state.  He                      
  believed CSSB 342 would have the greatest impact on Alaska                   
  domestics.  He has not heard any opposition.                                 
  CHAIRMAN VEZEY noted CSSB 342 came up fairly late in the                     
  session, therefore he was not sure if they should rush into                  
  it.  He considered waiting for the next legislative session                  
  to move it through then.                                                     
  REPRESENTATIVE ULMER questioned if CSSB 342 had another                      
  MR. WALSH answered CSSB 342 would be referred to Judiciary                   
  next; however, they have indicated they will waive it.  He                   
  noted REPRESENTATIVE GENE THERRIAULT had heard HB 514 in                     
  Labor & Commerce and was supportive.                                         
  REPRESENTATIVE ULMER noted if CSSB 342 passed with 19 `yes'                  
  votes in the Senate it was a fairly good indication there is                 
  not a problem it.  She stated the packet does not show                       
  opposition and there is potential for significant benefit                    
  for Alaskans, therefore, she was ready to pass CSSB 342 out                  
  of committee.                                                                
  CHAIRMAN VEZEY replied significant risk comes with                           
  significant benefits.                                                        
  Number 528                                                                   
  REPRESENTATIVE OLBERG moved to delete on page 2, lines 18,                   
  19 and 20 of CSSB 342(L&C), as recommended by MR. WALSH.                     
  CHAIRMAN VEZEY stated a another committee substitute had                     
  been prepared reflecting the proposed amendment.                             
  REPRESENTATIVE OLBERG, therefore, moved to adopt the House                   
  CS for CSSB 342(STA), version J, for purposes of discussion.                 
  CHAIRMAN VEZEY, hearing no objection, adopted the HCS for                    
  CSSB 342(STA).  He recalled MR. WALSH to the table for                       
  questions.  He questioned MR. WALSH'S reference to the state                 
  taking over at 100 percent, whereby he had thought the bill                  
  mentioned 70 percent.                                                        
  Number 565                                                                   
  answered CHAIRMAN VEZEY.  She clarified 70 percent was the                   
  mandatory control event.                                                     
  MR. WALSH corrected himself and said the formula is based                    
  upon 100 percent calculation of risk based capital and 70                    
  percent is the mandatory takeover.                                           
  CHAIRMAN VEZEY clarified the mandatory control level is 70                   
  MS. CAMPBELL stated the first level where the director is                    
  required to take action is at the regulatory action level.                   
  This means the company action the company has to take.                       
  CHAIRMAN VEZEY clarified the regulatory action event was at                  
  150 percent.                                                                 
  MS. CAMPBELL said correct.  She noted 200 percent is where                   
  the company has to file a financial plan of action.                          
  MR. WALSH explained one of the problems with the current                     
  formula is that it is subject to varying interpretations.                    
  He gave the example of Executive Life, whereby there was                     
  serious debate as to whether or not the company was                          
  "underwater" when it was taken over.  Some argue it was                      
  "underwater" a year earlier.                                                 
  MR. WALSH expressed risk based capital sets up a fair and                    
  more certain formula.  There is no question that at 200                      
  percent of risk based capital the company must come into the                 
  regulator with a plan.  This plan is then shared with all                    
  the regulators from the states in which that company writes.                 
  If the company continues descent to 150 percent, some                        
  regulatory action is required.  CED would put in a plan.                     
  When the company reaches the mandatory 70 percent level, CED                 
  shuts the company down.  There would be no debate as there                   
  has been with Executive Life.  He noted the failure of the                   
  old system with Executive Life provided the impetus to                       
  resolve a better system.                                                     
  Number 609                                                                   
  CHAIRMAN VEZEY observed the formula, which was not before                    
  him, was a rather complex algorithm of accounting                            
  MR. WALSH affirmed CHAIRMAN VEZEY.  He had attended numerous                 
  meetings with experts and has confidence in the formula.  He                 
  said he does not have the educational background or                          
  capability to explain in any form other than the most                        
  general policy terms.                                                        
  CHAIRMAN VEZEY asked MR. GEORGE to join the table again.  He                 
  inquired who MR. GEORGE was representing.                                    
  MR. GEORGE answered the American Council of Life Insurance                   
  (ACLI), a trade association of life insurance companies, and                 
  the National Association of Independent Insurers (NAII), a                   
  property/casualty insurance company trade association.  He                   
  noted Allstate, USAA, Progressive and Nationwide.                            
  CHAIRMAN VEZEY clarified he did not represent major carriers                 
  such as Great Northwest, Aetna, Blue Cross and Willis                        
  Corroon, within the state.                                                   
  MR. GEORGE replied Aetna is a member of the ACLI.  Major                     
  property/ casualty insurance companies such as the Firemen's                 
  Fund, Aetna Property & Casualty and Continental Casualty,                    
  are not members of the NAII.  He noted a large portion of                    
  the property insurance in the state is written by the NAII.                  
  Members of the ACLI write virtually all of the life and                      
  health insurance in Alaska.                                                  
  CHAIRMAN VEZEY explained there is an imposed deadline of                     
  April 20 for moving Senate Bills, therefore, he would hold                   
  HCSCSSB 342 in committee because he did not feel comfortable                 
  with it yet.  He would like assurance from the industry.                     
  Number 643                                                                   
  REPRESENTATIVE ULMER asked CHAIRMAN VEZEY to identify which                  
  companies he would like to hear from.                                        
  MR. GEORGE stated he did not represent any of the domestic                   
  companies such as Alaska National, and others formed in the                  
  state of Alaska.                                                             
  CHAIRMAN VEZEY asked if MR. GEORGE was referring to the                      
  underwriters as opposed to the brokers.                                      
  MR. GEORGE clarified he did not represent the brokers.                       
  CHAIRMAN VEZEY asked for names of the some of the                            
  underwriters he did not represent.                                           
  MR. GEORGE answered Firemen's Fund, Industrial Indemnity and                 
  Aetna Property & Casualty.  He noted there are major                         
  companies on the national basis he did represent, however,                   
  he had not heard opposition from them.  Those companies                      
  would be members of the American Insurance Association,                      
  which does have a lobbyist.  He assumed if they were in                      
  opposition they would have been present.                                     
  CHAIRMAN VEZEY stated he believed the committee should move                  
  with due deliberation because of the complex subject matter.                 
  CSSB 355 - ADJUSTMENTS FOR DEFECTIVE SURVEY                                  
  Number 690                                                                   
  CHAIRMAN VEZEY opened CSSB 355, sponsored by Senate                          
  Community & Regional Affairs, for discussion.                                
  TAPE 94-49, SIDE B                                                           
  Number 000                                                                   
  355.  She stated CSSB 355 provides that a person or a local                  
  governing body, upon the resolution of a local governing                     
  body can request a resurvey and replat of a manifestly                       
  defective survey of subdivision lines, and subsequent                        
  changes in individual lots through Superior Court action.                    
  CSSB 355 provides a remedy for grossly incorrect subdivision                 
  MS. RINGSTAD indicated the municipality of Anchorage                         
  requested CSSB 355 to correct two manifestly defective                       
  surveys in the Anchorage area, although it applies to                        
  surveys statewide.  She stated CSSB 355 is the only                          
  practical solution to offer assistance to property owners in                 
  correcting this defect and establish their ownership status.                 
  The municipality of Anchorage has recently changed their                     
  municipal ordinances to include a special assessment                         
  district for resurvey and replatting of manifestly                           
  inaccurate surveys of record.  They are also in the process                  
  of petitioning the property owners of record of two                          
  particular subdivisions.  She stated by this legislation                     
  they must also pass a resolution supporting this action                      
  before any action can be taken.  The cost of the resurvey                    
  will be allocated by the court and could be on a per lot, or                 
  mil basis.                                                                   
  MS. RINGSTAD mentioned the municipality of Anchorage,                        
  William Mendenhall, Patrick Kalen, and various land title                    
  companies support CSSB 355.                                                  
  MS. RINGSTAD commented she understood, from their                            
  constituents in the subdivisions, that about 20 years ago                    
  there was a very notorious surveyor, who has since left the                  
  state.  He surveyed the outside subdivision lines of the                     
  properties, thereby manifestly incorrect.  Therefore, there                  
  are about 300 lots in those two subdivisions that cannot                     
  claim clear title until the matter is resolved.  She noted,                  
  in some cases, the property lines are 20 feet off.                           
  CHAIRMAN VEZEY expressed there is nothing new about that                     
  occurrence because it happens everyday.  He stated there is                  
  nothing in CSSB 355 that cannot be accomplished under                        
  existing law.  Therefore, why incorporate defective surveys                  
  into a statute that "equates to acts of God."  He commented                  
  there have been defective surveys in the matters of equity                   
  for going on 4,000 years.  The court system deals with this                  
  routinely.  He believed there was nothing in CSSB 355 to                     
  correct why defective surveys occur.  He noted the packet                    
  did not include information from the Alaska Professional                     
  Surveyors Association (APSA) stating their support.  He                      
  failed to see the purpose of CSSB 355.                                       
  MS. RINGSTAD replied the municipality of Anchorage has been                  
  working for a long time to remedy this situation.                            
  Number 088                                                                   
  CHAIRMAN VEZEY interjected the example of Nome, whereby it                   
  replatted the entire townsite without the law proposed in                    
  CSSB 355.  The problem arises when there are arguments                       
  between the affected property owners.  If adjoining owners                   
  agree, the problem can be worked out technically.  However,                  
  if they disagree, the courts intervene, which they do                        
  MS. RINGSTAD explained they had argued that point with legal                 
  services and the municipality of Anchorage, however, they                    
  still felt CSSB 355 was necessary.  There are apparent                       
  problems throughout the two subdivisions.  In order for them                 
  to go to court, each party would have to provide a suit,                     
  which would enjoin all of the owners of record to go into                    
  one suit to remedy the problem.                                              
  (REPRESENTATIVES OLBERG and ULMER left the meeting at 10:00                  
  CHAIRMAN VEZEY stated there are still surveyors in Alaska                    
  who do poor work.  Therefore, he could not see how CSSB 355                  
  would be to anyone's benefit.  He interpreted CSSB 355 as                    
  excusing surveyors for malpractice.                                          
  MS. RINGSTAD interjected, in this case, the surveyor is no                   
  where to be found and may not even be alive anymore.  She                    
  noted there are remedies if the survey was done within the                   
  past two years; however, it has been more than two years in                  
  this case.                                                                   
  CHAIRMAN VEZEY responded it would not matter if the survey                   
  was done 100 years ago.  The courts deal with this problem                   
  even if they do not like to.  Lacking better support for                     
  CSSB 355, he said he could not let it pass from committee.                   
  He commented CSSB 355 might cause people to abrogate their                   
  existing rights.                                                             
  MS. RINGSTAD mentioned Patrick Kalen had said the APSA would                 
  support CSSB 355.                                                            
  CHAIRMAN VEZEY agreed if the APSA knew about CSSB 355 they                   
  would have provided a letter.  He suggested the National                     
  Society of Professional Engineers.  He said he felt CSSB 355                 
  was a very poor piece of legislation, however, he could                      
  stand to be corrected.  CSSB 355 states what the courts                      
  already have the power to do.  His first suspicion was that                  
  someone was trying to coerce someone else into a binding                     
  arbitration situation.                                                       
  Number 208                                                                   
  MS. RINGSTAD expressed she would get various testimony,                      
  including from the municipality, and bring it back to the                    
  CHAIRMAN VEZEY commented some of the best experts on land                    
  law are some professional surveyors.  They might be better                   
  than some attorneys in the area.  He mentioned Robert Hicks                  
  in Anchorage, who did the legal work for the city of Nome.                   
  MS. RINGSTAD added she would seek testimony from William                     
  Mendenhall who supported CSSB 355, as well.                                  
  CHAIRMAN VEZEY said he would be interested in hearing from                   
  Number 234                                                                   
  REPRESENTATIVE KOTT referred to the sponsor statement which                  
  reads the municipality has exhausted all their aspects of                    
  law to correct this problem, and finds that the legislation                  
  is the only practical solution.  He inquired who developed                   
  this position in the municipality.                                           
  MS. RINGSTAD answered George Newsham, Assistant Municipal                    
  REPRESENTATIVE KOTT asked if there was a letter of support                   
  from him in the packets.                                                     
  MS. RINGSTAD replied the letter from George Newsham in the                   
  packet only serves to correct a provision in CSSB 355.  He                   
  had contacted Senator Rieger's office for the drafting of                    
  the bill.                                                                    
  REPRESENTATIVE KOTT said he felt a letter from Mr. Newsham,                  
  articulating why he felt CSSB 355 was the only solution                      
  would be beneficial.  The letter may dispel concerns.                        
  CHAIRMAN VEZEY interjected the letter might complicate the                   
  concerns because CSSB 355 is not a subdivision specific                      
  piece of legislation.  CSSB 355 is generic Alaska law.                       
  MS. RINGSTAD agreed.  She noted in the packet an approved                    
  ordinance change by the Anchorage assembly to specifically                   
  address resurvey and replatting of manifestly inaccurate                     
  surveys in record.                                                           
  CHAIRMAN VEZEY explained certain words, such as "manifestly                  
  inaccurate" or "reasonably diligent searches," would have to                 
  be defined.  The law would go back to the courts to be                       
  MS. RINGSTAD agreed.  She expressed CSSB 355 was left open                   
  for the court to define it.  In some cases where the                         
  property line is only a couple of feet off, it is up to the                  
  court to decide whether it is manifestly defective or not.                   
  In most cases it is not; therefore, should not be changed.                   
  She emphasized only in the cases where the property lines                    
  are completely off does CSSB 355 apply.                                      
  CHAIRMAN VEZEY commented the nature of property ownership is                 
  external boundaries cannot be changed without going to                       
  court.  Internal boundaries can shift substantially.                         
  MS. RINGSTAD agreed, and noted the internal boundaries are                   
  off because the external boundaries are off.  The community                  
  cannot even line up the roads because the external                           
  boundaries are off.  She explained that until this problem                   
  is resolved, they cannot realign a number of roads in that                   
  CHAIRMAN VEZEY pointed out this has happened before.  If                     
  property owners are obstructions and uncooperative, then the                 
  process can be difficult.  He suspected the impetus for CSSB
  355 came from property owners who are surrounded by a lot of                 
  land that is not able to be developed because of defective                   
  lot lines.  Therefore, they have a private park and do not                   
  want to see it corrected.  Those who own the undeveloped                     
  property want to see it corrected.  He noted he could be                     
  MS. RINGSTAD pointed out none of the property owners there                   
  can be afforded clear title until the problem is solved.                     
  Therefore, anyone who wants to sell their property cannot                    
  because they have no clear title.                                            
  CHAIRMAN VEZEY clarified everyone is eager to solve the                      
  MS. RINGSTAD affirmed CHAIRMAN VEZEY.                                        
  CHAIRMAN VEZEY further stated then there would be no                         
  problem.  The problem would be taken care of technically.                    
  MS. RINGSTAD suggested when MR. NEWSHAM presents his support                 
  to CSSB 355 that he also include the circumstances of the                    
  CHAIRMAN VEZEY held CSSB 355 in committee.                                   
  Number 319                                                                   
  CHAIRMAN VEZEY, having no more business before the                           
  committee, adjourned the meeting at 10:10 a.m.                               

Document Name Date/Time Subjects