Legislature(2023 - 2024)GRUENBERG 120
04/28/2023 01:00 PM House JUDICIARY
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Audio | Topic |
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Start | |
HB29 | |
HB181 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | HB 29 | TELECONFERENCED | |
+= | HB 181 | TELECONFERENCED | |
+ | TELECONFERENCED |
HB 29-INSURANCE DISCRIMINATION 1:06:16 PM CHAIR VANCE announced that the first order of business would be HOUSE BILL NO. 29, "An Act relating to insurance discrimination." [Before the committee was CSHB 29(L&C).] 1:06:30 PM REPRESENTATIVE KEVIN MCCABE, Alaska State Legislature, prime sponsor, presented CSHB 29(L&C). He said insurance companies were in the business of discrimination. These companies segregate the insured into separate risk pools based on their differences and risk profiles for two main reasons: to charge different premiums to different groups based on their risk; and to incentivize risk production by the insured. There are, however, limits to the type of discrimination that insurers can engage in, which was decided upon at the national and local levels of government. He reported that insurance companies had been denying coverage to Alaskans based solely on their political affiliation, expression, or elected status. The bill sought to prohibit discrimination based solely on those factors. Specifically, CSSB 29(L&C) would amend the insurance code in Alaska from using political expression, affiliation, or elected status as the sole reason for refusing to ensure or renew insurance coverage; limiting the scope of insurance coverage; canceling an existing policy; denying a claim covered by an existing insurance policy; or increasing the premium policy fees or rates charged on an insurance policy. He emphasized that the bill would not prohibit refusals, limitations, or fees based on sound underwriting or actuarial principles. Given that insurance products are necessary to protect the health of property and in some instances, required by law, he believed that it was in the public interest to ensure that consumers were protected by discriminatory practices. He opined that the proposed legislation would assist in that effort. 1:09:08 PM BUDDY WHITT, Staff, Representative Kevin McCabe, Alaska State Legislature, on behalf of Representative McCabe, prime sponsor, presented the sectional analysis for CSHB 29(L&C), [included in the committee packet], which read as follows [original punctuation provided]: Section 1 amends Sec. 21.36 to add a new section that prohibits a person transacting insurance in this state from discriminating against a person based solely on a person's political affiliation or expression or a person's status as an elected state official as defined in AS 44.99.205. Section 2 amends uncodified law of the State of Alaska by adding a new section regarding applicability and effective dates to insurance policies and/or contracts. CHAIR VANCE sought questions from members of the committee for Ms. Wing-Heier. 1:13:11 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community & Economic Development (DCCED), introduced herself for the record and welcomed questions from committee members. 1:13:26 PM REPRESENTATIVE GROH questioned the inspiration for the bill. MS. WING-HEIER informed the committee that she had not heard of elected officials being denied insurance because of their elected status before being approached by the bill sponsor. However, she said that independent agents and brokers confirmed that it was, in fact, happening, highlighting instances of state officials, including school board members and borough members, not being able to obtain insurance. She noted that she could not find any instances [of discrimination] in reference to political party. REPRESENTATIVE GROH said he had never heard of this issue and characterized it as "illogical." He expressed a desire to understand the nature of the problem and the apparent cause. MS. WING-HEIER reiterated that after being presented with the bill she conducted some research with insurance companies who confirmed that their guidelines did not permit underwriting excess liability of public officials. 1:15:09 PM REPRESENTATIVE MCCABE noted that that the term "excess liability" was commonly known as an umbrella policy. He shared a personal anecdote about being denied an umbrella policy based on his status as an elected official. 1:16:07 PM REPRESENTATIVE GROH asked why this was happening. MS. WING-HEIER stated that insurance companies considered overall risk. She shared her belief that elected officials were viewed as targets for being sued, which was the reason for the policy denial. REPRESENTATIVE ALLARD shared that she had also been denied an umbrella policy. She expressed her belief that the refusal was discriminatory, based on either her status as an elected official or her political affiliation. 1:18:01 PM REPRESENTATIVE GRAY asked whether [excess liability] insurance was required of all elected officials. MS. WING-HEIER said she could not tell Representative Gray what to purchase. She indicated that it was more common for people to buy higher policy limits in today's litigious society. REPRESENTATIVE GRAY shared his understanding that Article 2, Section 6, of the Alaska Constitution, offered legislative immunity. He stated his belief that he could not be sued for his words or actions in the legislature. 1:20:14 PM MS. WING-HEIER acknowledged that some legislative immunity was provided; however, in a personal capacity, legislators were not protected by immunity outside of their role as a senator or representative. She shared, for example, that a legislator could be held liable for a "horrific" car accident. REPRESENTATIVE GRAY pointed out that any reckless driver could be held liable. He acknowledged that he was not understanding the purpose of the bill. 1:20:57 PM REPRESENTATIVE MCCABE shared a personal anecdote to contextualize the purpose of the bill. REPRESENTATIVE GRAY asked whether Representative McCabe was denied [excess liability] because he was an elected official. REPRESENTATIVE MCCABE said, "That's correct." 1:22:40 PM REPRESENTATIVE EASTMAN shared a personal anecdote. He pointed out that a member of the legislature's home had been recently burglarized, indicating that the insurance company may ask questions and wonder whether the theft was related to her status as an elected official. He explained that insurance companies may not want to incur additional risk by providing coverage to legislators who are more likely to be victims of theft or a slashed tire, for example. 1:25:28 PM REPRESENTATIVE GROH pointed out that there was often a difference between someone's legal rights and the reason they were asserting them. CHAIR VANCE asked whether the bill would cover all insurance types. MS. WING-HEIER answered yes. 1:26:20 PM CHAIR VANCE questioned the need for the bill's inclusion of political party. REPRESENTATIVE MCCABE explained that "political affiliation" was changed to "political party" in the House Labor and Commerce Standing Committee. He acknowledged that the language may not be necessary; nonetheless, he argued that an individual could be denied umbrella insurance due to his/her party affiliation. REPRESENTATIVE ALLARD shared a personal anecdote, claiming that she watched her premiums "skyrocket," in part, due to her political party. 1:29:58 PM REPRESENTATIVE GRAY asked whether an umbrella policy would pay for the damages if a legislator was sued for making defamatory statements to a constituent. REPRESENTATIVE MCCABE did not know the answer. MR. WHITT offered to follow up with the requested information. He expounded on the change made in the previous committee of referral, indicating that the purpose of the amendments was to tighten up ambiguous language. 1:34:11 PM REPRESENTATIVE EASTMAN asked whether the reference to political party was included based on specific incidents that had already happened or specific incidents that may happen in the future. REPRESENTATIVE MCCABE answered "future incidents," in reference to divisiveness and polarization in the country. 1:35:22 PM REPRESENTATIVE EASTMAN directed attention to page 1, line 11 and asked whether the scope of the bill related to new policies, increases to new policies, or increases to current policies. REPRESENTATIVE MCCABE said he envisioned all of the above. REPRESENTATIVE EASTMAN considered a scenario in which a legislator was a victim of theft. He asked whether the bill would allow the insurance company to "jack up their rates accordingly based on the fact that it's now more likely that they'll be a victim of future theft." MR. WHITT said if an insurance company decided to increase the premium or refused to renew a policy based on something other than the individual's status as an elected official, there must be a level of proof. Alternatively, per the bill language, a refusal based only on the elected official's status would be against the law. REPRESENTATIVE MCCABE added that there was no retroactive clause in the bill. 1:40:30 PM REPRESENTATIVE GRAY said he could envision a scenario in which a hypothetical legislator was sued often for "[pushing] the envelope." He asked whether that legislator would get dropped from the policy for multiple lawsuits. REPRESENTATIVE MCCABE responded that the insurance policy would have every right to raise that person's rates to "cover [its] bases." He reiterated that the bill only contemplated situations in which rates were raised, or policies were denied based solely on an elected official's status. 1:42:11 PM MR. WHITT read page 1, line 13, which read as follows [original punctuation provided]: (b) The provisions of (a) of this section do not apply if the refusal, limitation, cancellation, denial, or increase is (1) based on sound underwriting or actuarial principles reasonably related to actual or anticipated loss experience; or MR. WHITT added that if an elected official continued to create liability for himself/herself, the insurance company, through sound actuarial principles, could point to that liability as a reason to increase a current policy or deny a new policy, which would be covered under the law. 1:43:19 PM REPRESENTATIVE GRAY asked whether insurance companies had weighed in on the bill. MR. WHITT reported that the bill sponsor's office had not received any letters in support of or opposition to the bill. REPRESENTATIVE MCCABE suspected that insurance companies would not be in favor of the bill, as they were in the business of limiting their risk. He asserted that there were enough insurance companies providing umbrella policies in Alaska that if one decided to stop insuring in the state as a result of the proposed legislation, it would not materially affect Alaskans. He opined that the risk to the average Alaskan was minimal. 1:45:08 PM REPRESENTATIVE EASTMAN asked whether insurance companies should be allowed to discriminate based on age. REPRESENTATIVE MCCABE indicated that a certain level of discrimination was inherent to the industry. He explained that because a twenty-year-old person lives a more active lifestyle than a fifty-year-old, the life insurance policy for the fifty- year-old individual would cost more based on sound actuarial principles. 1:46:51 PM REPRESENTATIVE EASTMAN posited that, based on Representative McCabe's previous statement, it wasn't considered discrimination if there was proof to support the insurance company's argument [that fifty-year-olds were less active than twenty-year-olds]. He asserted that it should be easy to demonstrate that elected officials were more likely to end up in court or make an insurance claim due to injury, for example. REPRESENTATIVE MCCABE expected insurance coverage for a legislator to be more expensive; however, he reiterated his belief that complete denial based on someone's status as an elected official was wrong. 1:48:41 PM REPRESENTATIVE CARPENTER asked how discrimination based solely on politics would be proven. REPRESENTATIVE MCCABE deferred to Ms. Wing-Heier. He shared his belief that the director [of the Division of Insurance] had enforcement capabilities. 1:50:23 PM REPRESENTATIVE GRAY asked for the definition of "umbrella policy." CHAIR VANCE clarified that [the bill] covered all types of insurance. REPRESENTATIVE GRAY asked whether it was his duty to disclose that he was an elected official when purchasing insurance. REPRESENTATIVE ALLARD nodded in the affirmative. REPRESENTATIVE GRAY shared that he was not asked to disclose his status as an elected official when purchasing his auto policy. REPRESENTATIVE MCCABE explained that an umbrella policy was excess liability, which covered "over and above" [the general liability]. MR. WHITT stated that when issuing policies, every insurance company asked different questions regarding their actuarial and risk models. He reiterated that the bill covered all types of insurance policies, including umbrella policies. He offered to follow up with the Division of Insurance. 1:54:09 PM REPRESENTATIVE CARPENTER explained that Errors and Omissions (E&O) Insurance was often sought out by elected officials and Chief Executive Officers (CEOs) to protect from liability. REPRESENTATIVE EASTMAN asked why insurance companies were being asked to bear the additional risk, as opposed to the state. REPRESENTATIVE MCCABE agreed that the state should be indemnifying the governor, for example. He indicated that the decision would be a policy call. 1:58:26 PM CHAIR VANCE announced that the bill would be held over.
Document Name | Date/Time | Subjects |
---|---|---|
HB 29 - Sponsor Statement.pdf |
HFSH 5/3/2023 1:00:00 PM HJUD 4/28/2023 1:00:00 PM |
HB 29 |
HB 29 - v.B.PDF |
HFSH 5/3/2023 1:00:00 PM HJUD 4/28/2023 1:00:00 PM |
HB 29 |
HB 29 - Sectional Analysis.pdf |
HFSH 5/3/2023 1:00:00 PM HJUD 4/28/2023 1:00:00 PM |
HB 29 |
HB 29 - Fiscal Note DCCED (04-05-23).pdf |
HFSH 5/3/2023 1:00:00 PM HJUD 4/28/2023 1:00:00 PM HJUD 5/3/2023 1:00:00 PM |
HB 29 |