03/25/2013 03:15 PM House LABOR & COMMERCE

                    HB 168-TRAVEL INSURANCE                                                                                 
                                                                                                                                
3:20:08 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL  NO. 168,  "An Act amending  the definition  of travel                                                               
insurance for the  purpose of describing a person  eligible for a                                                               
travel  insurance limited  producer  license;  and authorizing  a                                                               
person  selling  travel  services  to transact  the  business  of                                                               
travel  insurance on  behalf  of  and under  the  direction of  a                                                               
person licensed as a travel insurance limited producer."                                                                        
                                                                                                                                
3:20:22 PM                                                                                                                    
                                                                                                                                
ANNA  LATHAM,  Staff,  Representative Kurt  Olson,  Alaska  State                                                               
Legislature,  on behalf  of Representative  Kurt Olson,  sponsor,                                                               
stated  that HB  168 is  based on  National Council  of Insurance                                                               
Legislators (NCOIL) recommendations, who  have worked with states                                                               
for  the  goal  of  improving consumer  protection  and  creating                                                               
consistency in travel  insurance sales.  She  provided a section-                                                               
by-section analysis.  Section 1  would redefine travel insurance,                                                               
which provides  insurance coverage  for personal  risks connected                                                               
to  travel  including  trip  interruptions,  cancellations,  lost                                                               
baggage or  personal effects, damage to  accommodations or rental                                                               
vehicles, for sickness, accident,  disability, or death occurring                                                               
during  travel.   This insurance  does not  include comprehensive                                                               
medical insurance  that provides  coverage for trips  lasting six                                                               
months or  longer.  She  reiterated that this is  NCOIL's attempt                                                               
to  standardize the  definition  of travel  insurance  in all  50                                                               
states.  Alaska's version is slightly modified, she said.                                                                       
                                                                                                                                
MS.  LATHAM said  Section  2  would add  a  new section  defining                                                               
travel  insurance   and  identifying  who  may   transact  travel                                                               
insurance.    It  would  allow  a  person  who  transacts  travel                                                               
services the ability  to sell those products  under the direction                                                               
of  a  person  holding  a  travel  insurance  limited  producer's                                                               
license.    It would  also  require  a travel  insurance  limited                                                               
producer to maintain a register  of all persons selling insurance                                                               
on their  behalf, and to  provide a  training program.   It would                                                               
limit the information that a  person transacting travel insurance                                                               
may and  may not  provide to a  customer.  It  also would  make a                                                               
travel  insurance  limited producer  liable  for  the acts  of  a                                                               
person selling travel insurance on the producer's behalf.                                                                       
                                                                                                                                
3:22:06 PM                                                                                                                    
                                                                                                                                
MS.  LATHAM said  NCOIL  prepared this  model  sine 41  different                                                               
qualifications  were   required  for  travel  agents   to  become                                                               
licensed to  sell insurance across  the U.S.   Additionally, many                                                               
states  do not  accept  the same  electronic applications,  which                                                               
impact  the length  of time  it takes  to become  licensed in  an                                                               
industry with high  job turnover.  Further,  travel agents really                                                               
are not in  the insurance business since  insurance sales account                                                               
for approximately 2  percent of the overall revenue.   The travel                                                               
industry  has changed  significantly in  the past  20 years  from                                                               
brick  and  mortar  to Internet  transactions  that  cross  state                                                               
lines.   This NCOIL model  would establish a  licensing framework                                                               
that reflects the unique distribution  system of travel insurance                                                               
in  the industry  and will  place  the regulatory  burden on  the                                                               
insurer, who  develops and distributes  the product.   This would                                                               
improve  consumer protection  by  requiring clear  accountability                                                               
and notice to  the consumer and regulator with respect  to who is                                                               
responsible  for  the  sale.  This  model  clearly  distinguishes                                                               
between licensed  and non-licensed  activities for  limited lines                                                               
of  product,   such  as  travel  insurance,   and  would  promote                                                               
uniformity  to   help  states   more  effectively   govern  these                                                               
products.   Thus far,  a version of  this model  travel insurance                                                               
has been enacted  in eight states and  awaits governor signatures                                                               
in two other  states, with bills pending in  16 states, including                                                               
Alaska.  She  concluded that this bill is  deregulatory in nature                                                               
and would bring Alaska in line with the national model.                                                                         
                                                                                                                                
CHAIR  OLSON  related  this  is  similar  with  what  occurs  for                                                               
customers of  car rentals when  the person at the  counter offers                                                               
them a limited insurance product.                                                                                               
                                                                                                                                
3:25:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  moved to adopt the  committee substitute                                                               
(CS)  for  HB  168,  Version  O,  [labeled  28-LS0562\O,  Bailey,                                                               
3/22/13]  as  the working  document  [Version  O was  before  the                                                               
committee.]                                                                                                                     
                                                                                                                                
CHAIR OLSON objected for purpose of discussion.                                                                                 
                                                                                                                                
3:25:59 PM                                                                                                                    
                                                                                                                                
MS. LATHAM explained  the changes made in  the proposed committee                                                               
substitute (CS) for HB 168, Version  O.  She highlighted that the                                                               
changes were  technical in nature,  for purposes of  clarity, and                                                               
none were substantive changes.  She  referred to page 4, line 26,                                                               
which  reorganizes   the  language   that  requires   the  travel                                                               
insurance limited  producer to maintain  a register.   Everything                                                               
in the register is contained in   subsection (a), (b), & (c).  On                                                               
page 5 line 7, the  language requires a person transacting travel                                                               
insurance to complete a training program.                                                                                       
                                                                                                                                
CHAIR OLSON removed his objection.                                                                                              
                                                                                                                                
3:27:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether  this  bill will  create                                                               
difficulties when  people feel  they need  recourse and  have not                                                               
received  benefits  of the  travel  insurance.   He  assumed  the                                                               
people would still go to the original broker for assistance.                                                                    
                                                                                                                                
MS.  LATHAM answered  that HB  168 contains  consumer protection,                                                               
such  that  complaints  or  comments would  be  directed  to  the                                                               
producer.   She previously asked the  department about complaints                                                               
with the 259 resident and  nonresident limited lines of insurance                                                               
registered  in the  state.    She advised  that  the Division  of                                                               
Insurance reported  very few complaints; however,  she agreed any                                                               
complaints would be addressed by the producer.                                                                                  
                                                                                                                                
3:29:13 PM                                                                                                                    
                                                                                                                                
JOHN  FIELDING, Attorney,  Steptoe  & Johnson,  LL&C, stated  his                                                               
firm represents the U.S. Travel  Insurance Association.  He urged                                                               
members  to adopt  HB 168.   He  said the  U.S. Travel  Insurance                                                               
Association   believes  this   bill   is   good  for   consumers,                                                               
regulators,  and the  industry.   First,  this bill  is good  for                                                               
consumers since it will provide  training to retail travel agents                                                               
who  offer  and  disseminate  the products.    It  also  requires                                                               
disclosures  to consumers,  not currently  required, in  terms of                                                               
the product and  the retail travel agents permitted  to offer it.                                                               
Second,  it   is  good  for   regulators  since  it   provides  a                                                               
streamlined  process to  provide regulators  information in  case                                                               
anything goes  wrong.   Finally, it  is   good for  the industry,                                                               
such as  the U.S. Travel  Insurance Association  (USTIA) members,                                                               
since  the  process is  difficult  for  retail travel  agents  to                                                               
comply with  obligations throughout  the U.S.   The  industry has                                                               
changed  significantly  and  some  agents  must  be  licensed  in                                                               
numerous states across  the country, but these  agents are travel                                                               
agents and not  insurance agents.  This  bill would appropriately                                                               
place the  onus on the  insurance members and  the intermediaries                                                               
who  are the  insurance "players"  in  this program.   They  must                                                               
comply and ensure  that everyone in the system  is in compliance.                                                               
He urged members to support HB 168.                                                                                             
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 168.                                                                                     
                                                                                                                                
3:32:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  stated he would support  the bill since                                                               
it  is a  good  bill.   People  need to  be  careful about  their                                                               
policies, he  said.  He recalled  his own experience in  which he                                                               
represented four  deceased Germans  who died west  of Whitehorse.                                                               
The  case  became  a  vicious   dispute  about  jurisdiction  and                                                               
questions arose as to whether the  case should be filed in Alaska                                                               
or in  Canada.  This bill  just brought back his  experiences and                                                               
he reiterated his support for HB 168.                                                                                           
                                                                                                                                
3:34:09 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON remarked he has been  involved with the bill from the                                                               
NCOIL perspective  and declared a  conflict.  The intent  of this                                                               
bill is to provide standardization,  level the playing field, and                                                               
remove unnecessary hurdles.                                                                                                     
                                                                                                                                
3:34:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  moved to  report the  proposed committee                                                               
substitute  (CS) for  HB 168,  Version  O, [labeled  28-LS0562\O,                                                               
Bailey,    3/22/13]   out    of    committee   with    individual                                                               
recommendations and  the accompanying fiscal notes.   There being                                                               
no  objection, the  CSHB  168(L&C) was  reported  from the  House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
3:34:57 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:34 p.m. to 3:38 p.m.