05/06/1997 02:30 PM House FIN

  HOUSE BILL 116                                                               
                                                                               
       "An    Act    relating    to   workers'    compensation                 
       self-insurance."                                                        
                                                                               
  GEORGE DOZIER,  STAFF, REPRESENTATIVE PETE KOTT,  noted that                 
  HB  116   contained  numerous  substantive   and  procedural                 
  requirements designed to  ensure that worker's  compensation                 
  self-insurance  groups  remain  fiscally sound  and  able to                 
  fulfill Alaska's workers compensation requirements.                          
                                                                               
  Co-Chair Therriault MOVED to  adopt Amendment #1.  [Copy  on                 
  file].                                                                       
                                                                               
  PAUL GROSSI,  DIRECTOR, DIVISION  OF WORKERS'  COMPENSATION,                 
  DEPARTMENT  OF LABOR,  advised  that  the  Department  would                 
  support Amendment #1.                                                        
                                                                               
  Mr. Dozier explained that Amendment  #1 would impose a  duty                 
  of care  which would  be exercised  by the  trustees of  the                 
  groups created by the bill and would be a standard  level of                 
  care.                                                                        
                                                                               
  MARIANNE BURKE, DIRECTOR, DIVISION OF INSURANCE,  DEPARTMENT                 
  OF  COMMERCE AND  ECONOMIC DEVELOPMENT,  commented that  the                 
  Department  supports  Amendment  #1  which  would  address a                 
  concern regarding  investment criteria  for excessive  money                 
  and how  it would  be handled.   There  being NO  OBJECTION,                 
  Amendment #1 was adopted.                                                    
                                                                               
  Co-Chair Therriault MOVED  to adopt Amendment #2.   [Copy on                 
  file].     Discussion  followed   regarding  Amendment   #2.                 
                                                                               
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  [Temporary tape malfunction for five minutes].                               
                                                                               
  Mr.  Grossi noted that  funding would  be needed  within the                 
  group and  that there should be included a safety net to pay                 
  claims should the group fail.  He suggested that it would be                 
  essential to place  liquid assets inside the  group in order                 
  to properly fund the initial stage of the revenue stream and                 
  the safety protection  at that end.   Insurance requirements                 
  for an insurance company is $1.75 million dollars.                           
                                                                               
  Representative  J.  Davies  asked if  the  director  had the                 
  authority to control the  amount.  He believed that  if they                 
  don't  have  adequate   insurance,  they  shouldn't   be  in                 
  business.   Mr. Grossi  replied that in  order for it  to be                 
  affordable for the size of the group, there would need to be                 
  a high enough  retention self insurance.   Representative J.                 
  Davies believed that the amounts  should be self regulating.                 
                                                                               
                                                                               
  Ms.  Burke  pointed out  that  through Department  research,                 
  similar  organizations  typically  have  $200-$500  thousand                 
  dollars in a retention fund, critical to the organization.                   
                                                                               
  Representative  J. Davies  questioned how  the numbers  were                 
  determined.    Ms.  Burke pointed  out  that  they had  been                 
  provided in  the proposed legislation.   In order  to become                 
  established, they  must have  a minimum of  a $500  thousand                 
  dollars premium for the year, of which they need 25% of that                 
  cost  to  begin.    The  25%  is  broken  down  between  the                 
  administrative  and claims portion.   She noted  that it was                 
  her intent  that the  system work  while at  the same  time,                 
  protecting the  workers.  That is why an alternative funding                 
  source has been proposed and would require money up-front.                   
                                                                               
  Representative  Kohring MOVED to report CS  HB 116 (FIN) out                 
  of Committee  with individual  recommendations and with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CS  HB  116  (FIN)  was  reported  out  of  Committee   with                 
  "individual  recommendations" and  with fiscal notes  by the                 
  Department  of  Commerce   and  Economic  Development  dated                 
  4/25/97 and the Department of Labor dated 4/25/97.