Legislature(2021 - 2022)

2021-02-22 Senate Journal

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2021-02-22                     Senate Journal                      Page 0292
SB 88                                                                                                                         
SENATE BILL NO. 88 BY THE SENATE RULES COMMITTEE                                                                                
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           
             "An Act relating to the state insurance catastrophe                                                               
            reserve account; and providing for an effective date."                                                             
was read the first time and referred to the Labor and Commerce and                                                              
Finance Committees.                                                                                                             
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, Department of Administration                                                                                
Governor's transmittal letter dated February 17:                                                                                
Dear President Micciche:                                                                                                        
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to the State Insurance                                                          
Catastrophe Reserve Account.                                                                                                    
The State of Alaska, through its self-insurance program, maintains                                                              
insurance coverage to protect state assets and operations, and adequate                                                         
reserves to satisfy all foreseeable claims or judgements. The State                                                             
Insurance Catastrophe Reserve Account was established in 1987 to                                                                
obtain insurance, establish a self-insurance reserve, and to satisfy                                                            
ongoing claims and judgments. When it was originally established, the                                                           
account was primarily intended as a reserve against large catastrophic                                                          
losses. However, because the reserve balance is capped at $5,000,000,                                                           
the State has been acquiring excess coverage on the market to                                                                   
adequately protect against catastrophic losses. Market forces have                                                              
changed, insurance rates continue to increase, and it is no longer cost                                                         
effective for the state to purchase excess insurance. The Reserve’s                                                             
balance is typically capitalized through lapsing appropriations at the                                                          
end of the fiscal year. By increasing the statutory cap to $50,000,000                                                          
and slowly increasing the Reserve balance, the State will once again                                                            
be able to fully self-insure against property losses. This change is                                                            
estimated to save $3 million the first year and up to $6 million                                                                
annually within four years.                                                                                                     

2021-02-22                     Senate Journal                      Page 0293
This measure will provide the State flexibility, control, and cost                                                              
savings in its self-insurance program.                                                                                          
I urge your prompt and favorable action on this measure.                                                                        
Mike Dunleavy