Legislature(2001 - 2002)
2002-05-13 House Journal
Full Journal pdf2002-05-13 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.