04/19/2000 02:15 PM Senate JUD

          HB 310-ALASKA INSURANCE GUARANTY ASSOCIATION                                                                          
                                                                                                                                
REPRESENTATIVE NORM ROKEBERG explained that HB 310 is a revision of                                                             
the Alaska Insurance Guaranty Association (AIGA) for property                                                                   
casualty groups.  Two different associations do business in Alaska.                                                             
HB 310 contains the National Association of Insurance                                                                           
Commissioners' (NAIC) recommendations.  He urged committee members                                                              
to support the bill.                                                                                                            
                                                                                                                                
CHAIRMAN TAYLOR asked what happens when an insurance company goes                                                               
insolvent.                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG replied that the director of the Division                                                               
of Insurance requires that a receiver is involved in the                                                                        
establishment of the receivorship.  One of the provisions in the                                                                
bill pertains to the location of the insolvent corporation and the                                                              
position of the State as it relates to the insolvency of a foreign                                                              
corporation.                                                                                                                    
                                                                                                                                
MR. MIKE LESSMEIER, representing State Farm Insurance, noted that                                                               
three people were available to testify via conference:  Don Thomas,                                                             
the drafter of HB 310; Tom Andritch, President of the AIGA; and                                                                 
Dane Haberg (ph), a contract administrator for the AIGA.  Those                                                                 
people worked to update this statutory scheme.                                                                                  
                                                                                                                                
MR. TOM ANDRITCH, President of the AIGA, stated support for HB 310.                                                             
                                                                                                                                
MR. DANE HABERG, Alaska Insurance Guaranty Association, explained                                                               
that when an insurance company is found insolvent, the Alaska                                                                   
Insurance Guaranty Association has the responsibility of assessing                                                              
other insurance companies who are admitted and licensed in Alaska                                                               
to collect funds.  Those funds are used to pay claims of the                                                                    
insolvent insurance carrier.                                                                                                    
                                                                                                                                
CHAIRMAN TAYLOR said that it looks as though the bill amends                                                                    
various provisions that might impact AIGA on the proration of                                                                   
claims, depending upon the amount in the fund.                                                                                  
                                                                                                                                
MR. HABERG asked what section of the bill Chairman Taylor was                                                                   
referring to.                                                                                                                   
                                                                                                                                
Number 540                                                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR referred to new language in Section 7(C) on page 5                                                              
which reads, "the association may pay claims in any order that it                                                               
determines reasonable, including the payment of claims as they are                                                              
received from claimants or in groups or categories of claims;                                                                   
however,.... "  That language modifies the remainder of that                                                                    
section which provides for proration.  Chairman Taylor noted that                                                               
AIGA would have to wait for all claims to be submitted before it                                                                
could prorate them and pay anything.                                                                                            
                                                                                                                                
MR. HABERG replied that is correct and it presented a problem                                                                   
because claims do not come in evenly when the insolvent carrier                                                                 
goes down.                                                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR asked if HB 310 provides cleanup language so that                                                               
AIGA can do a more efficient job of handling an insolvent carrier                                                               
and the resulting claims.                                                                                                       
                                                                                                                                
MR. HABERG answered that is correct and HB 310 brings Alaska                                                                    
statutes more in form with the model act so that when AIGA is                                                                   
dealing with other states it can avoid some conflicts.                                                                          
                                                                                                                                
SENATOR DONLEY moved HB 310 from committee with individual                                                                      
recommendations.  There being no objection, the motion carried.