Legislature(2023 - 2024)GRUENBERG 120
04/28/2023 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| 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 HB 29 was 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 |