Legislature(1995 - 1996)
03/02/1995 01:40 PM Senate L&C
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SENATE LABOR AND COMMERCE COMMITTEE
March 2, 1995
1:40 P.M.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator John Torgerson, Vice Chairman
Senator Mike Miller
Senator Jim Duncan
Senator Judy Salo
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 53
"An Act relating to insurance, to the licensing, accreditation,
examination, regulation, and solvency of persons engaged in the
insurance business, including insurers, nonadmitted insurers,
purchasing groups, risk retention groups, and United States
branches of alien insurers; relating to the management of and the
filing of reports by persons licensed or otherwise doing business
under the insurance code; amending Alaska Rule of Civil Procedure
45; and providing for an effective date."
WITNESS REGISTER
Joan Brown, Administrative Officer
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, AK 99811-0805
POSITION STATEMENT: Briefed Committee on SB 53.
Sherman Ernouf, Legislative Aide
Senator Kelly
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 53.
Gloria Glover
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, AK 99811-0805
POSITION STATEMENT: Answered questions regarding SB 53.
Bruce Heath
P.O. Box 1117
Seward, AK 99664
POSITION STATEMENT: Questioned a provision in SB 53.
Linda Hall
3111 C St., No 300
Anchorage, AK 99503
POSITION STATEMENT: Supported SB 53.
Keith Silver
7520 Beluga Circle
Anchorage, AK 99508
POSITION STATEMENT: Supported SB 53.
ACTION NARRATIVE
TAPE 95-9, SIDE A
SL&C 3/2/95
SB 53 OMNIBUS INSURANCE REFORM
VICE CHAIRMAN TORGERSON called the Senate Labor and Commerce
Committee meeting to order at 1:40 p.m. and announced SB 53 to be
up for consideration.
JOAN BROWN, Administrative Officer, Division of Insurance, gave the
Committee a brief overview of SB 53. She said SB 53 was the
successor bill to SB 362 and HB 534 which were introduced at the
request of the Division last year, but they both failed to pass.
She said SB 53 includes language to address new areas of insurance
regulation, adopt new accreditation standards added by the National
Association of Insurance Commissioners(NAIC), and make needed
corrections to the insurance statutes. These changes will bring
the statutes up-to-date with the insurance market and allow the
division to maintain its NAIC accreditation which was granted in
December 1992. A zero fiscal note has been submitted. She then
reviewed the minor changes to the bill from last years version.
They are as follows:
Numerous language cleanups to reflect the 1992 change in
license classes from agent and broker to producer and general
agent to managing general agent;
Rivision of language pertaining to the standard valuation law
(Sec. 22 - 25).
Replacing a reference to the Federal Savings and Loan Ins.
Corp. (which no longer exists) with the Federal Deposit Ins.
Corp.
Clarifying that a reciprocal insurer insuring municipalities
or nonprofit utilities or providing marine insurance does not
have to participate in the assigned risk plan for motor
vehicle coverages (Sec. 105). and
Including the division's actuary and assistant actuary as
exempt employees (Sec. 106).
The bill includes 22 sections related to continuance of our NAIC
accreditation such as:
regulation of risk retention groups and purchasing groups as
allowed by federal law (Sec. 3, 15, 102);
modifying the examination hearing provision t allow for
closing it to the public under certain circumstances (Sec. 6);
requiring insurer financial statement filings to the NAIC on
electronic media (Sec. 11 and 12);
requiring disclosure by an insurer of material transactions of
purchase or disposal of assets or reinsurance (Sec. 15);
credit for reinsurance (Sec. 16 and 17)
risk based capital provisions (Sec. 15 and 18)
reserve calculations (Sec. 19, 20 and 21)
actuarial opinions (Sec. 23, 24, and 25)
holding company reporting requirements (Sec. 30, 31, and 33)
allowing the director to file civil actions for damages caused
by violations of statute by Managing General Agents,
Reinsurance Intermediary Brokers, and Reinsurance Intermediary
Managers (Sec. 46, 48, and 49); and
cleanup of the definition of member insurer of the life and
disability guaranty association (Sec. 97).
Some other key provision included:
authority to respond to catastrophic situations (Sec. 5)
the ability to suspend the certificate of authority of an
insurer for non-renewal (Sec.9);
provide for voluntary surrender of an Alaska certificate of
authority by an insurer domiciled in another state (Sec. 10);
authority to refund or grant credits for overpayment of
premium tax by an insurer due to error or misinterpretation
(Sec. 13);
provide requirements for licensing of U.S. branches of alien
(non-U.S. domiciled) insurers to allow these insurers to use
Alaska as a base of operations for business written throughout
the United States (NAIC model law)(Sec. 15);
provide authority to require continuing education for licensed
insurance producers (agents/brokers)(Sec. 36);
require that the insurance premium fiduciary accounts of
resident insurance licensees be located in Alaska (Sec. 41);
provide that a single fiduciary bond can cover multiple
producer office locations (Sec. 44);
add incorporated insurers to the definition of a group to
reflect recent changes at Lloyd's of London (Sec. 16 and 50);
clarify when rate changes may be made to outstanding policies
(Sec. 57-60);
provide that false statements made in regard to a claim may
result in prosecution under Alaska law (Sec. 67);
allow the director to specify the format and content of rate
and policy form filings made to the division (Sec. 68-71);
clarify health insurance coverage of newborn and adoptive
children (Sec. 72);
provide for updated regulation of consumer credit insurance
(NAIC model law) (Sec. 1, 2, 75-89, and 108);
provide for redomestication of insurers domiciled in Alaska
and moving to another state or requesting to move their
domicile from another state to Alaska (Sec. 90);
provide the authority to request quarterly financial
statements from all entities regulated by the division (Sec.
12, 91, 92, 99, and 100);
allow insurers to pay claims by electronic funds transfer
(Sec. 101);
provide authority to the director to specify requirements for
electronic data transfer (Sec. 102); and
otherwise make corrections and clarify statute provisions.
The Committee Substitute incorporates amendments suggested by the
division as follows:
A new bill section was added giving the director discretion to
accept an insurer examination report from a non-accredited
state and would give the director clear authority to require
extra examination supervision if a state was performing
substandard examinations.
Revisions were made to the sections pertaining to risk
retention groups to avoid conflict with federal law.
The fraudulent insurance acts provisions were modified to
reflect the recommendations of the Department of Law.
Language was added to various health insurance contract
statutes to make them applicable to health maintenance
organizations.
And the section "Appointment of Independent Counsel:
Conflicts of Interest" was deleted. This independent counsel
provision was not authored by the division. Legal counsel
recently advised that this provision is neither necessary nor
consistent with the Alaska Supreme Court decision (CHI of
Alaska, Inc. v. Employers Reinsurance Corporation, 844P.2d
1113(Alaska 1993)
it seeks to implement.
Number 138
SENATOR MILLER moved to adopt the CS to SB 53 for discussion
purposes. There were no objections and it was so ordered.
MS. BROWN said she has a proposed amendment on continuing education
provisions. It contains language worked out between them and the
Agents and Brokers Association. She clarified for Senator Kelly
that it does still require continuing education.
SENATOR KELLY asked why lawyers were not required to have
continuing education when almost all other professionals required
it.
SENATOR MILLER moved to adopt the proposed amendment. There were
no objections and it was so ordered.
SENATOR MILLER moved to adopt the Title amendment. There were no
objections and it was so ordered.
SENATOR KELLY asked if there was any opposition to the bill.
SHERMAN ERNOUF, Legislative Aide to Senator Kelly, said there was
no opposition.
Number 190
SENATOR DUNCAN asked what was the Alaska Rule of Civil Procedure
45. SENATOR KELLY said that it passed last year.
GLORIA GLOVER said it was based on a request by the Department of
Law. One of provisions in the law affects that Rule and they,
therefore, recommended to include it in this bill.
BRUCE HEATH, Seward resident, said he had a problem with Section
30.
MS. GLOVER clarified that Section 30 refers to Chapter 22 of the
Insurance statutes. This is the Holding Company Act requiring that
a person who is going to acquire an insurance company must file
documents with them to review and approve that acquisition. This
Section allows the director to get experts to review that filing in
order to advise them on the approval or disapproval.
LINDA HALL said she was the past President of Alaska Agents
Association and supported this bill. Accreditation is very
important for the Alaskan Insurance market place and is protection
for the consumer.
Number 288
KEITH SILVER, President-elect of the Alaska Agents Association,
supported SB 53.
SENATOR MILLER moved to pass CSSB 53 (L&C) from committee with
individual recommendations. There were no objections and it was so
ordered.
SENATOR KELLY adjourned the meeting at 2:00 p.m.
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