Legislature(2013 - 2014)BELTZ 105 (TSBldg)
04/06/2013 09:00 AM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB71 | |
| HB175 | |
| HB168 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 71 | TELECONFERENCED | |
| + | HB 175 | TELECONFERENCED | |
| + | HB 168 | TELECONFERENCED | |
HB 168-TRAVEL INSURANCE
9:18:25 AM
CHAIR DUNLEAVY announced the consideration of HB 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." He noted that this was the first
hearing and that CSHB 168(L&C) was before the committee.
9:19:05 AM
ANNA LATHAM, Staff, Representative Kurt Olson, sponsor of HB
168, stated that HB 168 is based on National Council of
Insurance Legislators (NCOIL) model legislation that is being
implemented nationwide. It has a goal of improving consumer
protection and creating consistency in travel insurance sales.
Section 1 redefines travel insurance so that the definition is
standardized in all 50 states. She noted that Alaska's
definition was slightly modified. Section 2 adds a new section
defining travel insurance, and who may transact travel
insurance. It allows a person that transacts travel services the
ability to sell those products under the direction of a person
holding a travel insurance limited producer license. It requires
a travel insurance limited lines producer to maintain a register
of all persons selling insurance on their behalf, and to provide
a training program. The bill limits the information that a
person transacting travel insurance may and may not provide to a
customer. It makes the travel insurance limited producer liable
for the acts of a person selling travel insurance on their
behalf.
MS. LATHAM explained that NCOIL developed this model legislation
to streamline the process for selling travel insurance on the
Internet or across state lines. The problem is that there are 41
different licensing qualification codes to become licensed to
sell travel insurance in all 50 states and many states do not
accept the same electronic application. As a result, it takes
about six months to become licensed. This is burdensome for this
high turnover industry when insurance sales account for just two
percent of travel agents overall revenue.
The NCOIL model establishes a licensing framework that reflects
the unique distribution system of travel insurance in the
industry and places the regulatory burden on the insurer who
develops and distributes the product. This improves consumer
protection by requiring clear accountability and notice to the
consumer and regulator regarding who is responsible for the
sale. To date, a version of this model legislation has been
enacted in eight states and is awaiting governor signatures in
two other states. Legislation is pending in 16 other states,
including Alaska.
MS. LATHAM said the only difference between the original bill
and the committee substitute (CS) appears on page 5, line 7. The
phrase "an employee of the person transacting travel insurance"
was changed to "a person transacting travel insurance" because
the former lacked clarity.
9:23:08 AM
SENATOR OLSON asked how many people purchase travel insurance.
MS. LATHAM said there are 259 resident and non-resident licensed
producers within the state, and she could get that information
from them.
SENATOR OLSON asked if the trend was up, down, or stable.
MS. LATHAM said the trend is toward on-line sales. She estimated
that up to 90 percent of policies are purchased that way.
SENATOR MICCICHE commented that most people don't realize that
the option to purchase insurance is available whenever a person
purchases a ticket.
9:26:18 AM
MARTIN HESTER, Deputy Director, Division of Insurance,
Department of Commerce, Community and Economic Development
(DCCED), Juneau, AK, introduced himself.
SENATOR STEDMAN asked if the department had received any
complaints about travel insurance.
MR. HESTER replied he wasn't aware of any. He said this
legislation allows an employee to sell insurance under their
employer's limited producer license, and the Division of
Insurance has no problems with the language. It is model
legislation.
SENATOR STEDMAN asked if the model included recommendations for
the training program and how that comports with the division's
regulatory responsibilities.
9:28:24 AM
MR. HESTER offered to follow up with information, but his
understanding was that the legislation does not lay out the
training regimen. It simply states that the employer must
implement a training program for employees.
SENATOR STEDMAN requested the information.
9:29:50 AM
VICE-CHAIR MICCICHE, acting as chair, asked if this was any
different than purchasing travel insurance from an employee at a
rental car counter.
MR. HESTER said that scenario is similar to what this
legislation would do. His understanding was that the employee at
the rental car counter is acting under the authority of the
limited producer license that belongs to the rental car company.
SENATOR OLSON asked the administration's position on the bill.
MR. HESTER reiterated that DCCED has no objection to the
language in HB 168.
9:31:22 AM
VICE-CHAIR MICCICHE opened public testimony, and noted it would
remain open through the next meeting.
9:31:37 AM
JOHN FIELDING, Attorney, Steptoe & Johnson, LLP, stated that his
firm represents U. S. Travel Insurance Association (USTIA). He
urged the committee to support HB 168, describing it as a step
forward for consumers, regulators and industry players. The
legislation is good for consumers because it requires employee
training and disclosures to the consumers, neither of which is
currently required. With regard to the question about training,
he said that some states have asked the insurers to provide
copies of the training materials to the regulatory department to
ensure that the training is sufficiently robust. He suggested
that Alaska might do that in the future. The legislation is good
for the regulators because it provides a more streamlined
process. It is also good for the industry because it places much
of the regulatory burden on the insurers or intermediaries that
develop and distribute the products. He urged the committee to
support HB 168.
9:35:34 AM
SENATOR OLSON asked about the penalties for noncompliance.
MR. FIELDING said the current authority of the insurance
department remains intact.
SENATOR OLSON questioned the need for the legislation since Mr.
Hester said there have been no complaints. He commented that it
appeared to add to bureaucracy.
MR. FIELDING said this lessens the bureaucracy. It streamlines
the process by focusing on the insurers and intermediaries that
put the product together and provide it. It's a process his firm
has worked through with other stakeholders as it was debated by
NCOIL and other states. They all thought it would be helpful,
less burdensome, and more effective.
SENATOR OLSON asked where training would be held.
MR. FIELDING said there is a requirement for a training program
to be in place, but it doesn't dictate the type of training or
location. The training could take place on-line.
SENATOR OLSON maintained that it was another level of
bureaucracy and quite possibly unnecessary since there have been
no complaints.
9:39:23 AM
VICE-CHAIR MICCICHE noted that Paul Brown with AIG was available
for questions. Finding no further questions or public testimony,
he stated that he would hold HB 168 in committee.