Legislature(2001 - 2002)

2002-05-13 House Journal

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2002-05-13                     House Journal                      Page 3652
SB 191                                                                                            
The following, which had been read the second time and returned to                                  
the Rules Committee (page 3526), was again before the House in                                      
second reading:                                                                                     
                                                                                                    
    CS FOR SENATE BILL NO. 191(JUD)                                                                 
    "An Act relating to insurance pooling by air carriers."                                         
                                                                                                    
Representative James moved and asked unanimous consent that the                                     
House rescind previous action in failing to adopt the House Rules                                   
Committee Substitute.                                                                               
                                                                                                    
Representative James moved and asked unanimous consent to                                           
withdraw the motion.  There being no objection, it was so ordered.                                  
                                                                                                    
Amendment No. 1 was offered  by Representatives Berkowitz and                                        
Kott:                                                                                               
                                                                                                    
 Delete all material and insert:                                                                    
                                                                                                    

2002-05-13                     House Journal                      Page 3653
"An Act relating to insurance pooling by air carriers; amending                                   
the definition of group health insurance, and allowing the                                        
Department of Administration to obtain a policy or policies of                                    
group health care insurance for employers that are small                                          
businesses, nonprofit organizations, special services organizations,                              
or small associations for insurance purposes; and providing for an                                
effective date."                                                                                  
                                                                                                    
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF                                                  
ALASKA:                                                                                           
                                                                                                    
                                                                                                    
   * Section 1.  The uncodified law of the State of Alaska is amended                             
by adding a new section to read:                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
    FINDINGS AND INTENT.  (a)  Concerning secs. 2, 4, and 5 of                                      
this Act, the legislature has made the following findings regarding the                             
facts that support a group insurance policy for qualified entities:                                 
         (1)  the latest United States Census data indicate that 19                                 
percent of Alaskans are uninsured;                                                                  
         (2)  in 2000, about 700 companies were licensed to offer                                   
health insurance in the state, about 250 companies wrote some form of                               
health insurance in the state, and fewer than 114,000 Alaskans were                                 
covered under individual and group comprehensive health insurance                                   
policies written in the state;                                                                      
         (3)  in 2000, 18 insurers wrote small employer health                                      
insurance in the state; 80 percent of small group policies are written by                           
three health insurers;                                                                              
         (4)  small businesses are having problems finding and keeping                              
adequate insurance coverage for employees;                                                          
         (5)  nonprofit and special services organizations are having                               
problems finding and keeping adequate insurance coverage for                                        
employees;                                                                                          
         (6)  nonprofit and special services organizations provide many                             
services that government cannot supply; and                                                         
         (7)  adequate and stable health insurance is important to                                  
Alaskans;                                                                                           
    (b)  It is the intent of the legislature that secs. 2, 4, and 5 of this                         
Act assist in providing access to adequate and stable health insurance                              

2002-05-13                     House Journal                      Page 3654
for small businesses, nonprofit organizations, and special services                                 
organizations.                                                                                      
    (c)  The Department of Administration, in procuring the policy or                               
policies permitted by secs. 2, 4, and 5 of this Act, should explore all                             
options, including preferred provider organizations and lower cost                                  
options such as limited benefit and high deductible coverage.                                       
   * Sec. 2.  AS 21.54.060 is amended by adding a new paragraph to                                
read:                                                                                               
  (7)  under a policy or policies issued under AS 39.30.097.                                        
   * Sec. 3.  AS 21 is amended by adding a new chapter to read:                                   
               Chapter 77.  Joint Aviation Insurance Arrangements.                                
         Sec. 21.77.010.  Authority to establish joint aviation                                   
    insurance arrangements.  (a)  Air carriers may enter into                                     
    cooperative agreements with each other for the purpose of                                       
    establishing, operating, or participating in joint aviation insurance                           
    arrangements through which the participating members agree to                                   
    pool contributions in order to either assume risks from losses to                               
    the participants on a group basis or purchase coverage for the                                  
    participants on a group basis.                                                                  
         (b)  A joint aviation insurance arrangement                                                
             (1)  may be for any kind of insurance defined by this title                            
    except for health insurance, life insurance, and title insurance; and                           
             (2)  shall be considered an alternative or supplement to                               
    any other policy or contract of insurance authorized or required by                             
    law, including insurance under AS 21.75.                                                        
         (c)  For purposes of AS 23.30.075, a joint aviation insurance                              
    arrangement is considered to be an association duly authorized to                               
    transact workers' compensation insurance in the state.                                          
         Sec. 21.77.020.  Regulation by division of insurance,                                    
    notice, and annual report.  (a)  A joint aviation insurance                                   
    arrangement may not be considered insurance for the purpose of                                  
    any other law of the state and is not subject to regulations adopted                            
    by the director.                                                                                
         (b)  Before an air carrier signs a cooperative agreement, the                              
    joint aviation insurance arrangement shall notify the air carrier in                            
    writing that the joint aviation insurance arrangement is not                                    
    licensed in this state, is not subject to this state's supervision, and,                        
    in the event of the insolvency of the joint aviation insurance                                  
    arrangement, losses will not be covered under AS 21.80 (Alaska                                  
    Insurance Guaranty Association Act).                                                            

2002-05-13                     House Journal                      Page 3655
         (c)  By October 1 of each year, the administrator of a joint                               
    aviation insurance arrangement shall prepare and deliver to the                                 
    Legislative Budget and Audit Committee and the director a report                                
    showing the true and correct financial condition of the joint                                   
    aviation insurance arrangement.  The report must                                                
             (1)  be attested to by the administrator and the board of                              
    directors;                                                                                      
             (2)  include an analysis, certified by a member of the                                 
    American Academy of Actuaries, of the sufficiency of the loss                                   
    reserves; and                                                                                   
             (3)  be certified by a certified public accountant.                                    
         Sec. 21.77.030.  General provisions of cooperative                                       
    agreements.  (a)  A cooperative agreement must provide for the                                
    proper operation of the joint aviation insurance arrangement and                                
    include provisions for                                                                          
             (1)  administration of the arrangement by a board of                                   
    directors, specifying the number of members of the board and                                    
    other requirements necessary for the proper functioning of the                                  
    board;                                                                                          
             (2)  appointment of an administrator and other persons as                              
    necessary for the proper functioning of the arrangement;                                        
             (3)  organization of the arrangement, including a roster of                            
    participating members and the names of the members of the board                                 
    of directors;                                                                                   
             (4)  procedures to establish and promote an aggressive                                 
    risk management program among the members of the                                                
    arrangement, including procedures for identifying and reducing                                  
    the risks that can be reduced through implementing better safety                                
        technologies and improved work techniques and procedures;                                  
             (5)  enforcing the collection of contributions or payments                             
    in default from members of the arrangement;                                                     
             (6)  the addition of new members to the arrangement or                                 
    the withdrawal of members from the arrangement;                                                 
             (7)  the method of apportioning costs and disposition of                               
    excess contributions;                                                                           
             (8)  transmission of financial statements and audit reports                            
    of the arrangement to participating members;                                                    
             (9)  terminating the arrangement and disposing of its                                  
    assets; and                                                                                     
                                                                                                    

2002-05-13                     House Journal                      Page 3656
             (10)  establishing and administering a joint aviation                                  
    insurance fund.                                                                                 
         (b)  A cooperative agreement may                                                           
             (1)  authorize the board of directors to enter into contracts                          
    for services necessary to perform the functions of a joint aviation                             
    insurance arrangement; a person contracting to perform functions                                
    under this paragraph is subject to the licensing requirements of                                
    this title;                                                                                     
             (2)  delegate to the board of directors, or authorize                                  
    delegation by the board to another person or group, the power to                                
    compromise, arbitrate, or otherwise settle claims on behalf of the                              
    arrangement;                                                                                    
             (3)  authorize the board of directors to adopt rules not                               
    inconsistent with law for the fair and equitable administration of                              
    the joint aviation insurance arrangement and the joint aviation                                 
    insurance fund.                                                                                 
         (c)  The board of directors shall file a copy of the cooperative                           
    agreement with the director at least 60 days before the effective                               
    date of the agreement.  The agreement shall be available for public                             
    inspection.                                                                                     
         Sec. 21.77.040.  Financial provisions of agreements.  (a) A                              
    joint aviation insurance arrangement formed in accordance with                                  
    the provisions of this chapter shall                                                            
             (1)  have and maintain a surplus no less than an amount                                
    equal to the total of the capital and one-half of the surplus that                              
    would be required of a domestic stock insurer writing the same                                  
    lines as the joint aviation insurance arrangement; or                                           
             (2)  post a bond for an amount equal to the capital that                               
    would be required of a domestic stock insurer writing the same                                  
    lines of insurance as the joint aviation insurance arrangement and                              
    maintain a surplus of $500,000 in admitted assets or a surplus                                  
    sufficient to operate the joint aviation insurance arrangement for                              
    one year, whichever is greater.                                                                 
         (b)  A cooperative agreement must include a provision                                      
    requiring an annual determination by a casualty actuary who is a                                
    member of the American Academy of Actuaries that procedures                                     
    for establishing reserves for losses of the joint aviation insurance                            
    arrangement are actuarially sound.                                                              
         (c)  A joint aviation insurance arrangement shall be subject to                            
    an annual independent audit.  The audit shall be conducted in                                   

2002-05-13                     House Journal                      Page 3657
    accordance with generally accepted auditing standards and must                                  
    include a review of the actuarial assumptions used for establishing                             
    the reserves under (b) of this section.  The audit report must                                  
    include certification from a casualty actuary who is a member of                                
    the American Academy of Actuaries that the actuarial                                            
    assumptions continue to be sound and the level of the reserves is                               
    adequate.                                                                                       
         (d)  A cooperative agreement may authorize the board of                                    
    directors to purchase excess or catastrophic insurance on behalf of                             
    the joint aviation insurance arrangement.  The cost of the                                      
    insurance shall be apportioned in the manner specified in the joint                             
    aviation insurance agreement.  The board may purchase insurance                                 
    under this subsection only from an insurer authorized to do                                     
    business in the state, except insurance under this subsection may                               
    be purchased from a risk-sharing pool established by a national                                 
    association of similar entities if the risk-sharing pool meets the                              
    qualifications for an unauthorized insurer under AS 21.34.040(b)                                
    and (d) and 21.34.220 and has capital and policyholders surplus in                              
    an amount at least as great as would be required if the association                             
    were a domestic multiple line insurer.  An arrangement may                                      
    purchase insurance under this subsection for property and liability                             
    risks from unauthorized insurers allowed for use by licensed                                    
    Alaska surplus lines brokers.                                                                   
         Sec. 21.77.050.  Joint aviation insurance fund.  (a)  A joint                            
    aviation insurance arrangement shall establish a joint aviation                                 
    insurance fund.  The fund consists of money                                                     
             (1)  contributed by members of the joint aviation                                      
    insurance arrangement through budgetary appropriations or                                       
    transfers from a self-insurance reserve;                                                        
             (2)  contributed by officers and employees of members of                               
    the joint aviation insurance arrangement under an employee                                      
    benefit plan; and                                                                               
             (3)  collected by the joint aviation insurance arrangement                             
    through subrogation of a claim paid from the fund to a member of                                
    the arrangement.                                                                                
         (b)  An expenditure may be made from a joint aviation                                      
    insurance fund only to                                                                          
             (1)  pay claims, losses, or benefits, including interest on                            
    claims, losses, or benefits, and the administrative and adjustment                              
    expenses incurred in connection with claims, losses, or benefits,                               

2002-05-13                     House Journal                      Page 3658
    involving the types of protection for which the fund provides                                   
    coverage as specified in the joint aviation insurance agreement;                                
    and                                                                                             
             (2)  purchase insurance coverage for members of a joint                                
    aviation insurance arrangement on a group basis.                                                
         (c)  The administrator shall keep the fund separate from other                             
      funds of a member of a joint aviation insurance arrangement.                                 
         (d)  For each type of protection offered by the joint aviation                             
    insurance arrangement, the method of accounting must show the                                   
     order, source, date, and amount of each payment from the fund.                                
         (e)  Within 150 days of the end of the fiscal year, the                                    
    administrator shall furnish a detailed report of the operation and                              
    condition of the fund to the board of directors and the director.                              
         (f)  Money held by a fund as reserves and money not needed                                 
     for daily operations may be invested by the board of directors.                               
         (g)  A fund may not be terminated unless the administrator                                 
    certifies that an amount of money sufficient to pay accrued and                                 
    contingent expenditures has been placed in a fully collateralized                               
    escrow account.                                                                                 
         Sec. 21.77.250.  Definitions.  In this chapter,                                          
             (1)  "adjustment expenses" means expenses for                                          
    investigative, processing, legal, actuarial, arbitration, and                                   
    settlement services incurred in the adjustment of losses, claims, or                            
    benefits;                                                                                       
             (2)  "administrator" means a person or group appointed                                 
    by the board of directors to administer a joint aviation insurance                              
    arrangement or a joint aviation insurance fund;                                                 
             (3)  "board" or "board of directors" means the board of                                
    directors provided for in a cooperative agreement;                                              
             (4)  "cooperative agreement" means a written agreement                                 
    entered into by two or more air carriers described in AS 21.77.010                              
    for the purpose of establishing, operating, or participating in a                               
    joint aviation insurance arrangement;                                                           
             (5)  "fund" or "joint aviation insurance fund" means a                                 
    fund established under AS 21.77.050;                                                            
             (6)  "joint aviation insurance arrangement" means a joint                              
      aviation insurance arrangement authorized under AS 21.77.010.                                
   * Sec. 4.  AS 39.30 is amended by adding a new section to read:                                
         Sec. 39.30.097.  Procurement of group health care                                        
    insurance policies for qualified entities.  (a)  The department                               

2002-05-13                     House Journal                      Page 3659
    may obtain a health care insurance policy or policies to cover a                                
    group of qualified entities.                                                                    
         (b)  In procuring a health care insurance policy or policies                               
    under this section, the commissioner of administration shall                                    
    comply with the procedure for obtaining policies of insurance                                   
    under AS 39.30.090(a)(4) and (5).                                                               
         (c)  A qualified entity is eligible for coverage under (a) of this                         
    section if the qualified entity                                                                 
             (1)  submits a written request for registration to the                                 
    department; and                                                                                 
             (2)  receives written confirmation from the commissioner                               
    of administration that the qualified entity is registered to                                    
    participate.                                                                                    
         (d)  The request for registration submitted by a qualified                                 
    entity under (c) of this section must contain a statement certifying                            
    that the entity meets the definition of a qualified entity under this                           
    section and that the entity agrees to pay the required premiums to                              
    the insurance company.  The owner, a principal, or another legally                              
    qualified representative of the entity shall sign the statement under                           
    penalty of unsworn falsification and fraud.  The department shall                               
    register an entity that submits a request for registration and meets                            
    the requirements of this subsection.  The department shall                                      
    maintain a list of entities registered to participate under this                                
    section and shall make the list available for public inspection.                               
         (e)  The department may not procure benefits under this                                    
    section by means of self-insurance.                                                             
         (f)  In this section,                                                                      
             (1)  "association for insurance purposes" means an                                     
    association                                                                                     
                  (A)  composed of businesses or nonprofit                                          
         organizations or both; and                                                                 
                  (B)  organized and operating in Alaska;                                           
             (2)  "business" means a business                                                       
                  (A)  located in Alaska;                                                           
                  (B)  organized under the relevant provisions of the                               
         Alaska Statutes; if the form of business is not required to be                             
         organized under a statute, then the sole proprietor or joint                               
         venturers who own the business must be Alaska residents; and                               
                  (C)  that employed an average of at least two but not                             
         more than 50 eligible employees on the business days during                                

2002-05-13                     House Journal                      Page 3660
         the preceding calendar year and employs at least two eligible                              
         employees on the first day of a health benefit plan;                                       
             (3)  "department" means the Department of                                              
    Administration;                                                                                 
             (4)  "employee" has the meaning given in AS 21.54.500;                                 
             (5)  "health care insurance" has the meaning given in                                  
    AS 21.12.050;                                                                                   
             (6)  "nonprofit organization" means a nonprofit                                        
    corporation, association, club, or society organized and operating                              
    in Alaska exclusively for charitable, religious, scientific, or                                 
    educational purposes or for the promotion of social welfare and                                 
    that has received an exemption from the payment of federal                                      
    income tax;                                                                                     
             (7)  "policy" has the meaning given in AS 21.90.900;                                   
             (8)  "qualified entity" means a business, nonprofit                                    
    organization, association for insurance purposes, or special                                    
    services organization;                                                                          
             (9)  "special services organization" means an entity,                                  
    corporation, or nonprofit organization organized and operating in                               
    Alaska that is                                                                                  
                  (A)  an entity, including a sole proprietorship and a                             
         corporation solely owned by one person,                                                    
                      (i)  operating a child care facility that is licensed                         
             under AS 14.37;                                                                        
                      (ii)  operating a residential child care facility,                            
             child placement agency, foster home, or maternity home                                 
             that is licensed under AS 47.35;                                                       
                      (iii)  operating an assisted living home that is                              
             licensed under AS 47.33;                                                               
                      (iv)  operating a community-based center for                                  
             adult day care as that term is defined in AS 47.65.290; or                             
                      (v)  providing home care services as defined in                               
             AS 47.65.290;                                                                          
                  (B)  a corporation incorporated under AS 10.20 that                               
                      (i)  receives state grants to provide services; or                            
                      (ii)  makes grants to other corporations                                      
             incorporated under AS 10.20 that receive state grants to                               
             provide services; or                                                                   
                                                                                                    
                                                                                                    

2002-05-13                     House Journal                      Page 3661
                  (C)  a nonprofit organization, regardless of whether                              
         incorporated, whose primary purpose is to provide assistance                               
         to disadvantaged classes or groups;                                                        
   * Sec. 5.  The uncodified law of the State of Alaska is amended by                             
adding a new section to read:                                                                       
    INITIAL COST RECOVERY.  The commissioner of                                                     
administration shall recover the initial administrative costs of                                    
procuring group health care insurance policies as provided in                                       
AS 39.30.097, added by sec. 4 of this Act, over a period of five years.                             
The commissioner shall fairly allocate the administrative costs among                               
the qualified entities seeking coverage under AS 39.30.097 based on                                 
the numbers of persons covered.  The commissioner shall distribute                                  
the administrative costs recovered pro rata to the funds from which                                 
initial funding was made.                                                                           
   * Sec. 6.  This Act takes effect July 1, 2002.                                                 
                                                                                                    
                                                                                                    
Representative Berkowitz moved and asked unanimous consent that                                     
Amendment No. 1 be adopted.                                                                         
                                                                                                    
Representative Rokeberg objected.                                                                   
                                                                                                    
                                                                                                    
Amendment to Amendment No. 1 was offered  by Representative                                          
Rokeberg:                                                                                           
                                                                                                    
 Delete all references to small businesses from Amendment No. 1.                                    
                                                                                                    
                                                                                                    
Representative Bunde objected.                                                                      
                                                                                                    
The question being:  "Shall Amendment to Amendment No. 1 be                                         
adopted?"  The roll was taken with the following result:                                            
                                                                                                    
CSSB 191(JUD)                                                                                       
Second Reading                                                                                      
Amendment to Amendment No. 1                                                                        
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
YEAS:  7   NAYS:  27   EXCUSED:  0   ABSENT:  6                                                   
                                                                                                    

2002-05-13                     House Journal                      Page 3662
Yeas:  Coghill, Dyson, Foster, Kohring, Meyer, Rokeberg, Stevens                                    
                                                                                                    
Nays:  Berkowitz, Bunde, Chenault, Cissna, Crawford, Croft, Fate,                                   
Green, Guess, Halcro, Harris, Hayes, Hudson, James, Joule, Kapsner,                                 
Kerttula, Kookesh, Kott, Lancaster, Morgan, Moses, Murkowski,                                       
Porter, Scalzi, Whitaker, Wilson                                                                    
                                                                                                    
Absent:  Davies, Masek, McGuire, Mulder, Ogan, Williams                                             
                                                                                                    
And so, Amendment to Amendment No. 1 was not adopted.                                               
                                                                                                    
Representative Rokeberg withdrew the objection to Amendment                                         
No. 1.  There being no further objection, Amendment No. 1 was                                       
adopted.                                                                                            
                                                                                                    
The Speaker stated that, without objection, Conference Committee                                    
members Representatives Williams, Mulder, and Davies would be                                       
excused from a call of the House.                                                                   
                                                                                                    
                                                                                                    
Representative Chenault placed a call of the House and lifted the call.                             
                                                                                                    
                                                                                                    
Representative James moved and asked unanimous consent that CSSB
191(JUD) am H be considered engrossed, advanced to third reading,                                   
and placed on final passage.  There being no objection, it was so                                   
ordered.                                                                                            
                                                                                                    
CSSB 191(JUD) am H was read the third time.                                                         
                                                                                                    
The question being:  "Shall CSSB 191(JUD) am H pass the House?"                                     
The roll was taken with the following result:                                                       
                                                                                                    
CSSB 191(JUD) am H                                                                                  
Third Reading                                                                                       
Final Passage                                                                                       
                                                                                                    
YEAS:  31   NAYS:  5   EXCUSED:  3   ABSENT:  1                                                   
                                                                                                    
Yeas:  Berkowitz, Bunde, Cissna, Crawford, Croft, Dyson, Fate,                                      
Foster, Green, Guess, Halcro, Harris, Hayes, Hudson, James, Joule,                                  
Kapsner, Kerttula, Kohring, Kookesh, Lancaster, Meyer, Morgan,                                      
Moses, Murkowski, Porter, Rokeberg, Scalzi, Stevens, Whitaker,                                      
Wilson                                                                                              

2002-05-13                     House Journal                      Page 3663
                                                                                                    
Nays:  Chenault, Coghill, Kott, Masek, Ogan                                                         
                                                                                                    
Excused:  Davies, Mulder, Williams                                                                  
                                                                                                    
Absent:  McGuire                                                                                    
                                                                                                    
And so, CSSB 191(JUD) am H passed the House.                                                        
                                                                                                    
Representative James moved and asked unanimous consent that the                                     
roll call on the passage of the bill be considered the roll call on the                             
effective date clause.  There being no objection, it was so ordered.                                
                                                                                                    
                                                                                                    
Representative Berkowitz gave notice of reconsideration of the vote                                 
on CSSB 191(JUD) am H.